QA Before Week 8 Tute PDF

Tutorial Week 8 Moodle Questions and Solutions
Chapter 18: CFS: Non-controlling interest

REVIEW QUESTIONS
1.
What is meant by the term non-controlling interest (NCI)?

NCI is the term used for the ownership interest in a subsidiary other than the parent.
It is defined in AASB 127 as:
The equity in a subsidiary not attributable, directly or indirectly, to a parent.
3. Explain whether the NCI is entitled to a share of subsidiary equity or some other
amount.
If the NCI is classified as equity, it is entitled to a share of consolidated equity. Note
that consolidated equity is basically subsidiary equity adjusted for the effects of
intragroup transactions that is, realised subsidiary equity.
If it were classified as a liability of the subsidiary then the calculation of the NCI would
be based on the obligation held by the subsidiary.
6. Why is it necessary to change the format of the worksheet where a NCI exists in the
group?
The AASB require the disclosure of the equity of the group, as well as the relative
proportions of the parent and the subsidiary. For a wholly owned subsidiary situation,
the final column in the worksheet represents the group position which is also the
parents position, as there is no NCI. Where an NCI exists, having determined the
group position, the equity must be divided into parent share and the NCI share. Hence,
the worksheet must have additional columns to divide the group equity into the relative
shares of the parent and the NCI. This is done by calculating the NCI share and
subtracting it from the group equity so that the final column is then the parent entitys
share.
7.
Explain how the adjustment for intragroup transactions affects the calculation of
the NCI share of equity.
The NCI does not affect the adjustment itself, as the full effects of the intragroup
transaction are adjusted for on consolidation. However, where the subsidiary records
profit which is unrealised to the group, this affects the calculation of the NCI. The NCI
is entitled only to a share of consolidated equity rather than subsidiary equity. Hence,
where the subsidiary has recorded unrealised profit, the NCI share of the recorded profit
of the group must be adjusted for any of that profit which is unrealised. In the Step 2 &
Step 3 calculations of the NCI share of equity, this is a share of recorded equity. As
adjustments are made for intragroup transactions, where these transactions reflect
adjustments for unrealised subsidiary profit, an adjustment is also made to the NCI
share of profit. The net result is then that the NCI gets a share of realised subsidiary
equity.
8.
Explain whether an NCI adjustment needs to be made for all intragroup

transactions.
An NCI adjustment does NOT need to be made for all intragroup transactions.
An NCI adjustment only needs to be made where the adjustment is for unrealised profit
recorded by the subsidiary. Hence the transaction must be an upstream subsidiary to
parent transaction in order for an NCI adjustment to be made. Further the upstream
transaction must relate to unrealised subsidiary profit.
PRACTICE QUESTIONS
QUESTION 18.2
NORILSK LTD RUDNY LTD
90%
Norilsk Ltd
Rudny Ltd
Norilsk Ltd 90%
NCI
10%
At 1 July 2012:
Net fair value of identifiable assets
and liabilities of Rudny Ltd
=
(a) Consideration transferred

(b) Non-controlling interest
Aggregate of (a) and (b)
Goodwill of the parent
=
=
=
=
=
=
=
$200 000 + $80 000 (equity)

+ $10 000 (1 30%) (land)
+ $2 000 (1 30%) (inventory)
+ $20 000 (1 30%) (machinery)
$302 400
$290 160
10% x $302 400
$30 240
$320 400
$320 400 - $302 400
$18 000
A. Worksheet entries at 1 July 2012

1. Business combination valuation entries
Land
2.
Dr
Cr
Cr
10 000
Deferred tax liability

Business combination valuation reserve
Machinery
Dr
Cr
Cr
20 000
Inventory
Deferred Tax Liability
Dr
Cr
Cr
2 000
Dr
Dr
Dr
Dr
Cr
180 000
72 000
20 160
18 000
Dr
Dr
Dr
Cr
20 000
8 000
2 240
3 000
7 000
6 000
14 000
600
1 400
Pre-acquisition entries
Share capital
Retained earnings (1/7/12)
Goodwill
Shares in Rudny Ltd
290 160
3. NCI share of equity at 1 July 2012

Share capital
NCI
30 240

B.
Worksheet entries at 30 June 2013

Land
Dr
Cr
Cr
10 000

Machinery
Dr
Cr
Cr
20 000
Depreciation expense
Accumulated depreciation
(1/10 x $20 000)
Dr
Cr
2 000

Income tax expense
Dr
Cr
600
Cost of sales
Income tax expense
Transfer from business combination
valuation reserve
Dr
Cr
2 000
3 000
7 000
6 000
14 000
2 000
600
600
Cr
1 400
2. Pre-acquisition entries
Share capital
Goodwill
Shares in Rudny Ltd
Dr
Dr
Dr
Dr
Cr
72 000
180 000
20 160
18 000

valuation reserve
Dr
Cr
1 260
Dr
Dr
Dr
Cr
20 000
2 240
8 000
290 160
1 260

Share capital
NCI
30 240

4. NCI share of equity: 1/7/12 - 30/6/13
NCI share of profit
Dr
NCI
Cr
(10% ($20 000 ($2 000 - $600) ($2 000 $600)))
valuation reserve
(10% x $1 400)
Dr
Cr
1 720
1 720
140
140
C. FULL GOODWILL METHOD

NCI has fair value of $31 800
At 1 July 2012:
and liabilities of Rudny Ltd
=

Goodwill
=
=
=
=
=
=
Goodwill of Subsidiary
Fair value of Rudny Ltd
$200 000 + $80 000 (equity)

+ $10 000 (1 30%) (land)
+ $2 000 (1 30%) (inventory)
+ $20 000 (1 30%) (machinery)
$302 400
$290 160
$31 800
$321 960
$321 960 - $302 400
$19 560
=
=
$31 800/10%
$318 000

and liabilities
Goodwill of subsidiary
=
=
$302 400
$15 600
Goodwill of parent
Goodwill acquired
Goodwill of subsidiary
Goodwill of parent (control premium)
=
=
=
$19 560
$15 600
$3 960
There will need to be an additional BCVR entry:

Goodwill
Business combination valuation entry
Dr
Cr
15 600
Dr
Dr
Dr
Dr
Cr
180 000
72 000
34 200
3 960
15 600
The pre-acquisition entry at 1 July 2012 would change to:

Share capital
Business combination valuation reserve *
Goodwill
Shares in Rudny Ltd
* 90% [$22 400 + $15 600]
290 160

The Step 1 NCI would change to:
Share capital
Business combination valuation reserve *
NCI
Dr
Dr
Dr
Cr
20 000
8 000
3 800
31 800
* 10% [$22 400 + $15 600]
QUESTION 18.4
DINGO LTD DUGONG LTD
75%
Dingo Ltd
Dugong Ltd
Dingo Ltd 75%
NCI
25%
Acquisition analysis
1 July 2009
and liabilities of Dugong Ltd
=

Goodwill parent only
=
=
=
=
=
=
($80 000 + $20 000 + $40 000) (equity)

+ $20 000 (1 30%) (land)
+ $6 000 (1 30%) (plant)
+ $4 000 (1 30%) (inventory)
$161 000
$125 750
25% x $161 000
$40 250
$166 000
$5 000
A. Consolidation Worksheet Entries - 1 July 2009

Accumulated depreciation - plant
Plant
Dr
Cr
Cr
Cr
15 000
Inventory
Dr
Cr
Cr
4 000
Dr
Dr
Dr
Dr
Dr
Dr
Cr
30 000
60 000
15 000
10 500
5 250
5 000
9 000
1 800
4 200
1 200
2 800
Share capital
General reserve
Asset revaluation surplus
Goodwill
Shares in Dugong Ltd
125 750

Share capital
General reserve
NCI
B.
Dr
Dr
Dr
Dr
Dr
Cr
20 000
10 000
5 000
3 500
1 750

Plant
Dr
Cr
Cr
Cr
15 000
(1/3 x $6 000 p.a.)
Dr
Cr
2 000

Income tax expense
Dr
Cr
600
Cost of sales
Income tax expense
valuation reserve
Dr
Cr
4 000
40 250
Consolidation Worksheet Entries - 30 June 2010
9 000
1 800
4 200
2 000
600
1 200
Cr
2 800
2. Pre-acquisition entry
Share capital
General reserve
Goodwill
Dr
Dr
Dr
Dr
Dr
Dr
Cr
30 000
60 000
15 000
10 500
5 250
5 000

valuation reserve
(75% x 70% x $4 000)
Dr
Cr
2 100
125 750
2 100

Share capital
General reserve
NCI
Dr
Dr
Dr
Dr
Dr
Cr
20 000
10 000
5 000
3 500
1 750
NCI share of profit

Dr
NCI
Cr
(25% [$10 000 ($2 000 - $600) ($4 000 - $1 200)])
1 450
40 250
4. NCI share of equity: 1 July 2009 - 30 June 2010

valuation reserve
(25% x 70% x $4 000)
Dr
Cr
700
Dr
Cr
500

Plant
Dr
Cr
Cr
Cr
15 000
Dr
Dr
Cr
2 000
2 000

Income tax expense
Dr
Cr
Cr
1 200

NCI
(25% x $2 000)
C.
1 450
700
500
Consolidation Worksheet Entries - 30 June 2011
9 000
1 800
4 200
4 000
600
600

Retained earnings (1/7/10) *
Share capital
General reserve
Asset revaluation surplus (1/7/10)
Goodwill
Dr
Dr
Dr
Dr
Dr
Dr
Cr
32 100
60 000
15 000
10 500
3 150
5 000
Dr
Cr
10 500
Dr
Dr
Dr
Dr
Dr
Cr
20 000
10 000
5 000
3 500
1 750
Dr
Dr
Cr
Cr
2 150
500
NCI share of profit

NCI
(25% ($23 000 [$2 000 - $600])
Dr
Cr
5 400
Transfer from asset revaluation surplus

(25% x 70% x $20 000)
Dr
Cr
3 500

NCI
(25% x $5 000)
Dr
Cr
1 250
125 750
*RE: [$30 000 + $2 100 BCVR - inventory]

Transfer from asset revaluation surplus
(75% x 70% x $20 000)
10 500

Share capital
General reserve
NCI
40 250

NCI
(RE: 25% ($10 000 [$2 000 - $600])
ARS: 25% x $2 000
BCVR: 25% x 70% x $4 000)
700
1 950
5 400
3 500
1 250
10

D.
Consolidation Journal entries - 30 June 2012

Depreciation expense - plant
Income tax expense
valuation reserve
Dr
Cr
Dr
2 000
600
2 800
Cr
4 200
Share capital
General reserve
Goodwill
Dr
Dr
Dr
Dr
Dr
Cr
42 600
60 000
15 000
3 150
5 000
Dr
Cr
3 150
Dr
Dr
Dr
Dr
Dr
Cr
20 000
10 000
5 000
3 500
1 750
Dr
Cr
Cr
Cr
7 550
125 750
* $30 000 + 70% x 75% ($20 000 + $4 000)

valuation reserve
(75% x 70% x $6 000)
3 150

Share capital
General reserve
NCI
40 250

NCI
RE: 25% ($10 000 + $23 000 $2 800)
BCVR: 25% (70% x $4 000)
ARS: 25% ($2 000 + $5 000 - $14 000)
11
1 750
700
5 100

NCI
NCI share of profit/loss
(25% [(6 000) ($2 000 - $600)])
valuation reserve
(25% x 70% x $6 000)
NCI
(25% x $7 000)
E.
Dr
Cr
1 850
Dr
Cr
1 050
Dr
Cr
1 750
Dr
Dr
Dr
Dr
Cr
45 750
60 000
15 000
5 000
1 850
1 050
1 750
Consolidation Journal Entries - 30 June 2013
1. Pre-acquisition entry
Share capital
General reserve
Goodwill
125 750
* [$30 000 + 75% x 70%($20 000 + $6 000 + $4 000)]

Share capital
General reserve
NCI
Dr
Dr
Dr
Dr
Dr
Cr
20 000
10 000
5 000
3 500
1 750
Dr
Cr
Cr
6 750
Dr
Cr
5 500
40 250

NCI
(RE: [25% ($10 000 + $23 000 - $6 000)]
ARS: 25% ($2 000 + $5 000 + $7 000 - $14 000)
BCVR: 25% x 70% x ($6 000 + $4 000)
1 750
5 000

NCI share of profit
NCI
(25% x $22 000])
5 500
12
QUESTION 18.5
ECHIDNA LTD - EMU LTD
75%
Echidna Ltd
Emu Ltd
Echidna Ltd 75%
NCI
25%
Acquisition analysis
At 1 July 2012:
and liabilities of Emu Ltd

Goodwill
Goodwill of subsidiary:
Fair value of Emu Ltd
and liabilities of Emu Ltd
Goodwill of Emu Ltd
Goodwill of Echidna Ltd:
Goodwill acquired
Goodwill of Emu Ltd
Goodwill of Echidna Ltd
- control premium
=
=
=
=
=
=
=
=
$400 000 + $50 000 + $40 000

+ $30 000 + $40 000(equity)
$560 000
(75% x 400 000 shares) x $1.50 per share
$450 000
$147 000
$597 000
$597 000 - $560 000
$37 000
=
=
$147 000/0.25
$588 000
=
=
=
$560 000
$588 000 - $560 000
$28 000
=
=
$37 000
$28 000
$9 000

Goodwill
Dr
Cr
28 000
Dr
Dr
Dr
Dr
Dr
Dr
Dr
Cr
30 000
300 000
37 500
30 000
22 500
21 000
9 000
28 000
At 1 July 2012
Share capital
General reserve
Other components of equity (1/7/12)
Goodwill
Shares in Emu Ltd
13
450 000

At 30 June 2013:
Share capital
General reserve
Goodwill
Shares in Emu Ltd
Dr
Dr
Dr
Dr
Dr
Dr
Dr
Cr
30 000
300 000
37 500
30 000
22 500
21 000
9 000
Dr
Dr
Dr
Dr
Dr
Dr
Cr
10 000
100 000
12 500
10 000
7 500
7 000
NCI share of profit

NCI
(25% x $223 200)
Dr
Cr
55 800
Gains/Losses - asset revaluation surplus

NCI
(25% [$60 000 - $40 000])
Dr
Cr
5 000
Gains/Losses - other components of equity

NCI
(25%[$40 000 - $30 000])
Dr
Cr
2 500
NCI
Dr
Cr
7 500
Dr
Cr
2 500
Dr
Cr
22 500
450 000
3. NCI share of equity of at 1/7/12

Share capital
General reserve
NCI
4.
147 000
NCI share of equity: 1/7/12 - 30/6/13
Dividend paid
(25% x $30 000)
NCI
Dividend declared
(25% x $10 000)
55 800
5 000
2 500
7 500
2 500
5. Dividend paid
Dividend revenue
Dividend paid
(75% x $30 000)
22 500
14

6. Dividend declared
Dividend payable
Dividend declared
(75% x $10 000)
Dr
Cr
7 500
Dividend revenue
Dividend receivable
Dr
Cr
7 500
Dr
Cr
80 000
7 500
7 500
7. Advance
Advance from Echidna Ltd
Advance to Emu Ltd
80 000
8. Sale of inventory: Echidna Ltd to Emu Ltd

Sales revenue
Cost of sales
Inventory
Dr
Cr
Cr
55 000
Deferred tax asset

Income tax expense
Dr
Cr
1 500
Dr
60 000
50 000
5 000
1 500
9. Sale of equipment: Emu Ltd to Echidna Ltd

Proceeds on sale of equipment other income
Carrying amount of equipment sold
other expenses
Equipment
Cr
Cr
Deferred tax asset

Income tax expense
Dr
Cr
2 400
Dr
Cr
1 400
52 000
8 000
2 400
10. NCI adjustment

NCI
NCI share of profit
(25% ($8 000 - $2 400))
15
1 400

11. Depreciation
(10% x $8 000)
Dr
Cr
800
Income tax expense

Deferred tax asset
Dr
Cr
240
Dr
Cr
140
800
240
12. NCI adjustment

NCI share of profit
NCI
(25% ($800 - $240))
140
16
Financial
Statements
Sales revenue
Cost of sales
Other income
Echidna
Ltd
878 900
374 400
504 500
302 100
Emu
Ltd
388 900
112 400
276 500
112 500
Other expenses
806 600 389 000

216 200 115 800
Profit before
tax
Tax expense
590 400 273 200
Profit
478 000 223 200
Ret. earnings
(1/7/12)
112 000
Dividend paid
Div. declared
Ret. earnings
(30/6/13)
Share capital
BCVR
General reserve
ARS (1/7/12)
Gains/losses
ARS (30/6/13)
Other comp (op)
Gains/losses
Other comp. (cl)
Total equity:
parent
Total equity:
NCI
Total equity
Current
liabilities
Total liabilities
Total equity
and liabilities
112 400
50 000
40 000
5
6
9
Adjustments
Dr
Cr
55 000
50 000
800
52 000
24 000 50 000
1 724 000 673 200
40 000 40 000
30 000 20 000
70 000 60 000
25 000 30 000
5 000 10 000
30 000 40 000
11
9
Parent
Cr
1 212 800
436 800
776 000
324 600
1 100 600
279 200
821 400
11
240
1 500
2 400
8
9
158 740
662 660 4
12
122 000 3
30 000
22 500
7 500
5
6
2
2
2
300 000
21 000 28 000
37 500
30 000
22 500
1 824 000 773 200

177 000 124 400
NCI
Dr
22 500
7 500
60 000
590 000 263 200

40 000 30 000
50 000 10 000
90 000 40 000
500 000 223 200
1 200 000 400 000
Group
784 660
47 500
52 500
100 000
684 660
1300 000
7 000
36 500
2 028 160
50 000
50 000
100 000
32 500
15 000
47 500
2 175 660
6
7
7 500
80 000
213 900
177 000 124 400

2001000 897 600
213 900
2 389 560
17
55 800
140
10 000
1 400
10
112 000
7 500
2 500
4
4
3 100 000
7 000
3
3 12 500
-3 10 000
5 000
4
3
4
7 500
2 500
4
4
10
7 500
2 500
1 400
608 120
147 000
55 800
5 000
2 500
140
221 840 221 840
720 120
40 000
50 000
90 000
630 120
1 200 000
0
24 000
1 854 120
40 000
45 000
85 000
25 000
12 500
37 500
1 976 620
3
4
4
4
12
199 040
2 175 660

Receivables
320 000 175 000
Inventory
Financial assets
Shares in Emu
Other
investments
Equipment
Accum
depreciation
Deferred tax
asset
Land
Goodwill
287 500 210 600

280 000 204 000
450 000
-47 000
-650 000 360 000
(250 000) (160000) 11
--
--
216 500 108 000

--2 001 000 897 600
8
9
1
2
7 500
80 000
5 000
6
7
8
450 000
8 000
1 002 000
(409 200)
240
11
3 660
800
1 500
2 400
28 000
9 000
715 440 715 440
407 500
493 100
484 000
-47 000
324 500
37 000
2 389 560
18
ECHIDNA LTD
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the financial year ended 30 June 2013
Income:
Sales revenue
Other income
Total income
Expenses:
Cost of sales
Other
Total expenses
Profit before income tax
Income tax expense
Profit for the period
Other comprehensive income:
Asset revaluation surplus: gains
Other components of equity: gains
Comprehensive income for the period
Profit for the period attributable to:
Parent interest
Non-controlling interest
$1 212 800
324 600
1 537 400
436 800
279 200
716 000
821 400
158 740
$662 660
50 000
15 000
$727 660
$608 120
$ 54 540
$662 660
Comprehensive income for the period attributable to:

Parent interest
Non-controlling interest
19
665 620
62 040
$727 660
ECHIDNA LTD
Consolidated Statement of Changes in Equity
for the financial year ended 30 June 2013
Comprehensive income for the period
Group
$727 660
Parent
$665 620
Retained earnings:
Balance at 1 July 2012
Profit for the period
Dividend paid
Dividend declared
Balance at 30 June 2013
$122 000
662 660
(47 500)
(52 500)
$684 660
$112 000
608 120
(40 000)
(50 000)
$630 120
General reserve:
$36 500
$36 500
$24 000
$24 000
Share capital
$1 300 000
$1 300 000
$1 200 000
$1 200 000
Asset revaluation reserve:

Gains/Losses
$50 000
50 000
$100 000
$40 000
45 000
$85 000
$32 500
15 000
$47 500
$25 000
12 500
$37 500
$7 000
$7 000
Other components of equity:

Gains/Losses
Business combination valuation reserve:
20
ECHIDNA LTD
Consolidated Statement of Financial Position
as at 30 June 2013
ASSETS
Current Assets
Receivables
Inventory
Financial assets
Non-current Assets
Property, plant and equipment
Land
Equipment
Goodwill
Deferred tax assets
Other investments
Total Non-current Assets
Total Assets
$407 500
493 100
484 000
$324 500
1 002 000
(409 200)
EQUITY AND LIABILITIES

Equity attributable to equity holders of the parent
Share capital
Reserves: General reserve
Other components of equity
Retained earnings
Parent Interest
Non-controlling Interest
Total Equity
Total Liabilities: Current Liabilities
Total Equity and Liabilities
21
$1 384 600
917 300
37 000
3 660
47 000
1 004 960
$2 389 560
$1 200 000
24 000
85 000
37 500
630 120
1 976 620
199 040
2 175 660
213 900
$2 389 560

QA Before Week 8 Tute PDF

Caricato da

Informazioni sul documento

Descrizione originale:

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

QA Before Week 8 Tute PDF

Caricato da

Copyright:

Formati disponibili

Tutorial Week 8 Moodle Questions and Solutions

Chapter 18: CFS: Non-controlling interest

What is meant by the term non-controlling interest (NCI)?

Tutorial Week 8 Moodle Questions and Solutions

Explain whether an NCI adjustment needs to be made for all intragroup

Tutorial Week 8 Moodle Questions and Solutions

(a) Consideration transferred

$200 000 + $80 000 (equity)

A. Worksheet entries at 1 July 2012

Deferred tax liability

3. NCI share of equity at 1 July 2012

Tutorial Week 8 Moodle Questions and Solutions

Worksheet entries at 30 June 2013

1. Business combination valuation entries

Deferred tax liability

Deferred tax liability

Transfer from business combination

3. NCI share of equity at 1 July 2012

Tutorial Week 8 Moodle Questions and Solutions

C. FULL GOODWILL METHOD

(a) Consideration transferred

$200 000 + $80 000 (equity)

Net fair value of identifiable assets

There will need to be an additional BCVR entry:

The pre-acquisition entry at 1 July 2012 would change to:

Tutorial Week 8 Moodle Questions and Solutions

* 10% [$22 400 + $15 600]

Tutorial Week 8 Moodle Questions and Solutions

(a) Consideration transferred

($80 000 + $20 000 + $40 000) (equity)

A. Consolidation Worksheet Entries - 1 July 2009

Tutorial Week 8 Moodle Questions and Solutions

3. NCI share of equity at 1 July 2009

Accumulated depreciation - plant

Deferred tax liability

Consolidation Worksheet Entries - 30 June 2010

1. Business combination valuation entries

Transfer from business combination

Tutorial Week 8 Moodle Questions and Solutions

NCI share of profit

4. NCI share of equity: 1 July 2009 - 30 June 2010

Transfer from business combination

Accumulated depreciation - plant

Deferred tax liability

Asset revaluation surplus

Consolidation Worksheet Entries - 30 June 2011

1. Business combination valuation entries

Tutorial Week 8 Moodle Questions and Solutions

NCI share of profit

Transfer from asset revaluation surplus

Asset revaluation surplus

*RE: [$30 000 + $2 100 BCVR - inventory]

3. NCI share of equity at 1 July 2009

4. NCI share of equity: 1 July 2009 - 30 June 2010

5. NCI share of equity: 1 July 2010 - 30 June 2011

Tutorial Week 8 Moodle Questions and Solutions

Consolidation Journal entries - 30 June 2012

1. Business combination valuation entries

* $30 000 + 70% x 75% ($20 000 + $4 000)

3. NCI share of equity at 1 July 2009

4. NCI share of equity: 1 July 2009 - 30 June 2011

Tutorial Week 8 Moodle Questions and Solutions