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ACW2491 Company Reporting

Tutorial Solution
Semester 1 2016
Topic 10: Consolidations: Non-Controlling Interest_a

CHAPTER 21
PQ 21.9 (**identify the entries made with short descriptions as follows in exam**)
Acquisition analysis
FVINA
Consideration transferred
Gain on bargain purchase

=
=
=

$266 400
$236 400
$30 000

WORKSHEET ENTRIES AT 30 JUNE 2017


BCVR-land
Land
Deferred tax liability
Business combination valuation reserve
BCVR-plant
Gain on sale/carrying amount of plant sold
Depreciation expense
Retained earnings
Income tax expense
Transfer from business combination
valuation reserve
Pre-acq (combined entry)
Retained earnings *
Share capital
General reserve **
Business combination valuation reserve
Goodwill
Shares in Rat Ltd

Dr
Cr
Cr

16 000

Dr
Dr
Dr
Cr

14 000
2 000
2 800

4 800
11 200

4 800

Cr

Dr
Dr
Dr
Dr
Cr
Cr

14 000

25 500
150 000
45 000
18 900
3 000
236 400

* 75%($40 000 + $17 500 BCVR transfer inventory


- $3 500 BCVR transfer accs. receivable
+ $20 000 general reserve transfer) - $30 000 gain on bargain purchase
**75% ($80 000 - $20 000)

Transfer from BCVR


Business combination valuation reserve

Dr
Cr

10 500

NCI Pre-acq NCI


Retained earnings
Share capital
Business combination valuation reserve
General reserve
NCI
Transfer from BCVR
Business combination valuation reserve

Dr
Dr
Dr
Dr
Cr
Dr
Cr

10 000
50 000
9 800
20 000

10 500

89 800
3 500
3 500

ACW2491 Company Reporting


Tutorial Solution
Semester 1 2016
Topic 10: Consolidations: Non-Controlling Interest_a

NCI post-acq RE
Retained earnings
General reserve
Business combination valuation reserve
NCI

Dr
Cr
Cr
Cr

31 050
5 000
3 500
22 550

(RE: 25%($167 000 - $40 000 ($4 000 - $1 200 depn on plant))
GR: 25% x $20 000)

NCI share of equity current


NCI share of profit
Dr
NCI
Cr
(25%($150 000 ($14 000 + $2 000 - $4 800) plant)
Dividend paid
Dividend revenue
Dividend paid

34 700
34 700

Dr
Cr

12 000

4 000

Dividend paid

Dr
Cr

URP Opening inventory


Retained earnings
Income tax expense
Cost of sales

Dr
Dr
Cr

1 750
750

Dr
Cr

437.50

NCI

NCI share of profit


Retained earnings

12 000

4 000

2 500

437.50

PQ 21.11 (**identify the entries made with short descriptions as follows in exam**)
Acquisition analysis
FVINA
= $362 400
Consideration transferred
= $397 200
Goodwill
= $34 800
Unrecorded goodwill
= $4 800
BCVR-inventory
Cost of sales
Income tax expense
Transfer from BCVR

Dr
Cr
Cr

15 000

BCVR-land
Gain on sale of land
Income tax expense
Transfer from BCVR

Dr
Cr
Cr

30 000

4 500
10 500

9 000
21 000

ACW2491 Company Reporting


Tutorial Solution
Semester 1 2016
Topic 10: Consolidations: Non-Controlling Interest_a

BCVR-brands
Brands
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr

15 000

BCVR-plant
Accumulated depreciation - Plant
Plant
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr
Cr

180 000

Depreciation expense - Plant


Accumulated depreciation - Plant
Deferred tax liability
Income tax expense

Dr
Cr
Dr
Cr

6 000

Pre-acq
Retained earnings (1/7/16)
Share capital
General reserve
Asset revaluation surplus
Business combination valuation reserve
Goodwill
Shares in Bettong Ltd

4 500
10 500

150 000
9 000
21 000

6 000
1 800
1 800

Dr
Dr
Dr
Dr
Dr
Dr
Cr

12 000
300 000
12 000
18 000
50 400
4 800

Transfer from general reserve


General reserve
(80% x $12 000)

Dr
Cr

9 600

Transfer BCVR
Business combination valuation reserve
(inventory)
Transfer from BCVR
Business combination valuation reserve
(land)

Dr
Cr

8 400

Dr
Cr

16 800

NCI pre-acq
Retained earnings (1/7/16)
Dr
Share capital
General reserve
Asset revaluation surplus
Business combination valuation reserve
NCI
Transfer from general reserve
General reserve

3 000
Dr
Dr
Dr
Dr
Cr
Dr
Cr

397 200

9 600

8 400

16 800

75 000
3 000
4 500
12 600
98 100
2 400
2 400

ACW2491 Company Reporting


Tutorial Solution
Semester 1 2016
Topic 10: Consolidations: Non-Controlling Interest_a

NCI share of equity current


NCI share of profit*
Dr
1 860
NCI
Cr
1 860
(20% ($45 000 ($15 000 - $4 500) ($30 000 - $9 000) ($6 000 $1 800)))
Transfer from BCVR
Business combination valuation reserve
(inventory and land)

Dr
Cr

6 300

Gains/Losses: asset revaluation surplus


NCI

Dr
Cr

1 500

Interim dividend paid


Dividend revenue
Interim dividend paid

Dr
Cr

12 000

NCI
Interim dividend paid

Dr
Cr

3 000

Dr
Cr
Dr
Cr

4 800

Dr
Cr

1 200

Dr
Cr
Cr
Dr
Cr

12 000

Dr
Cr

112

Dr
Cr
Dr
Cr

7 500

Dr
Cr

1 050

Final dividend declared


Dividend revenue
Dividend declared
Dividend payable
Dividend receivable
NCI
Dividend declared
Intragroup-closing inventory
Sales
Cost of goods sold
Inventory
Deferred tax asset
Income tax expense
NCI
NCI share of profit
Intragroup - plant
Gain on sale of plant
Inventory
Deferred tax asset
Income tax expense
NCI
NCI share of profit
4

6 300

1 500

12 000

3 000

4 800
4 800
4 800

1 200

11 200
800
240
240

112

7 500
2 250
2 250

1 050