Step 1

Step 2
Z Investment analysis Parent NCI
Consideration transferred 750,000 750,000
NCI (Fair value) 220,000 220,000
Fair value of net asset 880,000 704,000 176,000
Goodwill 90,000 46,000 44,000

(1) Dr Share capital 550,000 440,000

Dr Retained earnings 330,000 264,000
Dr Goodwill 46,000
Cr Investment in Z 750,000

Y Investment analysis Parent NCI

Consideration transferred 600,000 600,000
NCI (Fair value) 470,000 470,000
Fair value of net asset 705,000 423,000 282,000
Goodwill 365,000 177,000 188,000

(2) Dr Share capital 350,000 210,000

Dr Retained earnings 355,000 213,000
Dr Goodwill 177,000
Cr Investment in Y 600,000

Step 3
Step 4
NCI at acquisition date
Z Co
(3) Dr Share capital 550,000 110,000
Dr Retained earnings 330,000 66,000
Dr Goodwill 44,000
Cr Non-controlling interests 220,000

Y Co
(4) Dr Share capital 350,000 140,000
Dr Retained earnings 355,000 142,000
Dr Goodwill 188,000
Cr Non-controlling interests 470,000

NCI from acquisition date to the beginning of the current period

Z Co At A.D. O.B Changes NCI
Share capital 550,000 550,000 - -
Retained earnings 330,000 560,000 230,000 119,600
Non-controlling interest 119,600

(5) Dr Retained earnings 119,600

Cr Non-controlling interests 119,600
 Y Co At A.D. O.B Changes NCI
Share capital 350,000 350,000 - -
Retained earnings 355,000 537,000 182,000 72,800
Non-controlling interest 72,800

(6) Dr Retained earnings 72,800

Cr Non-controlling interests 72,800

In the current period

Z Co
Profit for the period 240,000
Non-controlling interest 124,800

(7) Dr Retained earnings 124,800

Cr Non-controlling interest 124,800

Y Co
Profit for the period 128,000
Adjustment for
(9) (40,000)
Adjusted profit for the period 88,000
Non-controlling interest 35,200

(8) Dr Retained earnings 35,200

Cr Non-controlling interests 35,200

Dividend distribution
Z Co 50,000

(9) Dr Dividend Income 40,000

Cr Dividend declared 40,000

Dr Non-controlling interest 10,000

Cr Dividend declared 10,000

Dr Dividend payable 40,000

Cr Dividend receivable 40,000

Y Co 65,000

(10) Dr Dividend Income 39,000

Cr Dividend declared 39,000

(11) Dr Non-controlling interest 26,000

Cr Dividend declared 26,000
(12) Dr Dividend payable 39,000
Cr Dividend receivable 39,000

Profit retained 36,000

(13) Dr Profit retained 36,000

Cr Non-controlling interest 36,000

Investment in X Co
Investment analysis
Consideration transferred 500,000
Fair value of net asset 900,000
Goodwill 140,000

From acquisition date to the beginning of the current period

At A.D. O.B. Changes Income
Share capital 500,000 500,000 - -
Other reserve - 250,000 250,000 100,000 I assume this amount existed at the be
Retained earnings 400,000 740,000 340,000 136,000
Total 236,000

(14) Dr Investment in X 236,000

Cr Retained earnings 236,000

In the current period

Profit for the period 200,000
Income from X 80,000

(15) Dr Investment in X 80,000

Cr Income from X 80,000

Dividend distribution 40,000

(16) Dr Dividend income 16,000

Cr Investment in X 16,000

(17) Dr Profit after tax 64,000

Cr Retained earnings 64,000
this amount existed at the beginning of the year. Ok?