Net amount of identifiable assets acquired and liabilities assumed at

Net amount of identifiable assets acquired and

This preview shows page 24 - 27 out of 57 pages.

Net amount of identifiable assets acquired and liabilities assumed at acquisition date (100 000 + 10 500) 116 050 (110 500) Goodwill on acquisition of Sun Ltd 5 550 C4 Analysis of the owners’ equity of Sun Ltd 100% Summer Ltd 90% 10% Total R At R Since R NCI R At acquisition Share capital Retained earnings 100 000 10 500 90 000 9 450 10 000 1 050 Equity represented by goodwill 110 500 5 550 99 450 5 550 h 11 050 - Consideration and NCI 116 050 105 000 11 050 Since acquisition Retained earnings (63 200 – 10 508 – 10 500) 42 192 37 973 a 4 219 158 242 37 973 15 269 Current year Profit for the year 24 032 21 629 2 403 e Profit for the year Adjustments: Unrealised profit - sale of machinery (C1) Depreciation (C1) Fun Ltd: Profit for the year (C5) 10 508 (6 480) 2 160 17 844 182 274 59 602 g 17 672 j Impairment of goodwill - current year (given) (510) Carrying amount at 28 February 20.17 5 040
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FAC3704/102 25 QUESTION 3 (SUGGESTED SOLUTION)(continued) C5 Analysis of the owners’ equity of Fun Ltd 100% Sun Ltd 80% 20% Total R At R Since R NCI R At acquisition Share capital Accumulated loss (22 305 – 5 405) (see comment) 30 000 (16 900) 24 000 (13 520) 6 000 (3 380) Equity represented by goodwill 13 100 9 520 10 480 9 520 2 620 - Consideration and NCI 22 620 20 000 2 620 Current year Profit for the year 22 305 17 844 4 461 f 44 925 17 844 7 081 j Comment At acquisition - accumulated loss: R Retained earnings at 28 February 20.17 Profit for the year (given) 5 405 (22 305) Accumulated loss at acquisition (16 900) Fun Ltd made R22 305 profit for the year. At the end of the year retained earnings amounted to R5 405. Therefore there was an accumulated loss at the beginning of the year (at acquisition) of R16 900 which is the difference between the retained earnings at the end of the year and the profit for 20.17. C6 Proof of goodwill of Fun Ltd (IFRS 3.32) R Consideration transferred at acquisition date Non-controlling interests at their proportionate share of the identifiable net assets ((30 000 – 22 305 + 5 405) x 20%) 20 000 2 620 Net amount of identifiable assets acquired and liabilities assumed at acquisition date (30 000 – 22 305 + 5 405) 22 620 (13 100) Goodwill on acquisition of Fun Ltd 9 520
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26 QUESTION 3 (SUGGESTED SOLUTION)(continued) C7 Pro-forma consolidation journals Dr R Cr R NCI R J1 Other income Machinery (C1) Elimination of unrealised profit on intragroup sale of machinery 9 000 9 000 J2 Deferred tax (C1) Income tax expense Tax effect on unrealised profit on intragroup sale of machinery 2 520 2 520 J3 Accumulated depreciation (C1) Depreciation Write back of excess depreciation on unrealised profit 3 000 3 000 J4 Income tax expense (C1) Deferred tax (SFP) Tax effect on excess depreciation on intragroup sale of machinery 840 840 J5 Share capital Retained earnings Goodwill Investment in Sun Ltd Non-controlling interests (SFP) Elimination of owners’ equity at acquisition of Sun Ltd 100 000 10 500 5 550 h 105 000 11 050 11 050 J6 Retained earnings Non-controlling interests (SFP) Recording of NCI in retained earnings since acquisition of Sun Ltd (63 200 – 10 508 – 10 500) x 10%) 4 219 4 219 4 219 J7 Non-controlling interests (SP/LOCI) Non-controlling interests (SFP) Recording of NCI in profit for the year of Sun Ltd ((10 508 – 6 480 + 2 160 + 17 844) x 10%) 2 403 2 403 2 403 e J8 Share capital Goodwill Accumulated loss (22 305 – 5 405) Investment in Fun Ltd Non-controlling interests (SFP)
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  • Spring '16
  • Balance Sheet, NCI, Generally Accepted Accounting Principles, Sydney Ltd, York Ltd, Crow Ltd

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