Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018 for a cost of $1,600,000. As at the date of acquisition, all assets and liabilities of Expert Ltd were fairly valued except a land that has a carrying value $150,000 less than the fair value. The recorded balance of equity of Expert Ltd as at 1 July 2018 were as: Share capital Retained earnings General Reserve $800,000 $200,000 $400,000 Total $1,400,000 Additional information: a) b) The management of Giant Ltd values non-controlling interest at the proportionate share of Expert Ltd identifiable net assets. Expert Ltd has a profit after tax of $200,000 for the year ended 30 June 2019. During the financial year to 30 June 2019, Expert Ltd sold inventory to Giant Ltd for a price of $120,000. The inventory costs Expert Ltd $60,000 to produce. 25 percent of the inventory are still on the hand of Giant Ltd as at 30 June 2019. During the year Expert Ltd paid $60,000 in consultancy fees to Giant Ltd. On 1 July 2018, Expert Ltd sold an item of plant to Giant Ltd $80000. The equipment had a carrying value of $60,000 (Cost $100,000, accumulated depreciation $40,000). At the date of sale, it was expected that the equipment had a remaining life of 4 years and no residual value. The tax rate is 30 percent. Required: Based on the above information, calculate the non-controlling interest as at 30 June 2019. Prepare the necessary journal entries to recognise the non-controlling interest as at 30 June 2019. Question 5 The Daddy Group has the following group structure: 80% 80% 70% 55% 30 % 10% 5%45% 95% 27% Daddy Ltd Son 1 Ltd Son 2 Ltd Son 3 Ltd Son 4 Ltd Son 5 Ltd Son 6 Ltd Son 7 Ltd (a) Reproduce and complete the following controlling and non-controlling interest table. Show your calculations. (b) What percentage of the voting in Son 7 Ltd will be controlled by the Daddy Ltd? (c) What percentage of the dividend declared by Son 7 Ltd will be received by the Daddy Ltd? Daddy Interest Direct % Indirect % Non-controlling Interest Direct % Indirect % Total Son 1 Son 4 Son 2 Son 5 Son 7 Son 6 Son 3
Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018 for a cost of $1,600,000. As at the date of acquisition, all assets and liabilities of Expert Ltd were fairly valued except a land that has a carrying value $150,000 less than the fair value. The recorded balance of equity of Expert Ltd as
at 1 July 2018 were as:
Share capital
$800,000 $200,000 $400,000
Total $1,400,000
Additional information:
a) b)
The management of Giant Ltd values non-controlling interest at the proportionate share of Expert
Ltd identifiable net assets.
Expert Ltd has a profit after tax of $200,000 for the year ended 30 June 2019.
During the financial year to 30 June 2019, Expert Ltd sold inventory to Giant Ltd for a price of $120,000. The inventory costs Expert Ltd $60,000 to produce. 25 percent of the inventory are still
on the hand of Giant Ltd as at 30 June 2019.
During the year Expert Ltd paid $60,000 in consultancy fees to Giant Ltd.
On 1 July 2018, Expert Ltd sold an item of plant to Giant Ltd $80000. The equipment had a carrying value of $60,000 (Cost $100,000,
expected that the equipment had a remaining life of 4 years and no residual value.
The tax rate is 30 percent.
Required:
Based on the above information, calculate the non-controlling interest as at 30 June 2019.
Prepare the necessary
Question 5
The Daddy Group has the following group structure:
80% 80%
70% 55% 30 %
10% 5%45% 95%
27%
Daddy Ltd
Son 1 Ltd
Son 2 Ltd
Son 3 Ltd
Son 4 Ltd
Son 5 Ltd
Son 6 Ltd
Son 7 Ltd
-
(a) Reproduce and complete the following controlling and non-controlling interest table. Show your calculations.
-
(b) What percentage of the voting in Son 7 Ltd will be controlled by the Daddy Ltd?
-
(c) What percentage of the dividend declared by Son 7 Ltd will be received by the Daddy Ltd?
Daddy Interest
Direct %
Indirect %
Non-controlling Interest
Direct % Indirect % Total
Son 1
Son 4
Son 2
Son 5
Son 7
Son 6
Son 3
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