On 1 July 2018 Cool Ltd purchased an 80% controlling interest in Sunny Ltd for a consideration of $350,000. On that date the pre-control equity of Sunny consisted of: Paid up capital $200 000 Retained profits $150 000 General reserve $ 50 000 Total equity $400 000 The net assets of Sunny Ltd were recorded
On 1 July 2018 Cool Ltd purchased an 80% controlling interest in Sunny Ltd for a consideration of $350,000. On that date the pre-control equity of Sunny consisted of:
|
Paid up capital |
$200 000 |
|
Retained profits |
$150 000 |
|
General reserve |
$ 50 000 |
|
Total equity |
$400 000 |
The net assets of Sunny Ltd were recorded at fair values.
Relevant financial data for the two companies, for the year ending 30 June 2020, is provided on the worksheet below. Further information:
- During May 2019 Sunny Ltd sold inventory to Cool Ltd at a profit of $8,000. This inventory was sold by Cool Ltd to external parties during the month of July 2019.
- On 30 June 2020 Cool Ltd purchased from Sunny Ltd an item of equipment for $40,000. The equipment has a cost of $90,000 and a carrying amount of $28,000. The equipment has a remaining useful life of 4 years and a residual value of zero.
Consolidation worksheet as at 30 June 2020
|
|
Cool |
Sunny |
Sum |
Eliminations |
Group |
Allocation |
|||
|
|
|
|
|
DR |
|
CR |
|
NCI |
Parent |
|
Sales |
700 000 |
300 000 |
1 000 000 |
|
|
|
|
|
|
|
Cost of sales |
520 000 |
140 000 |
660 000 |
|
|
|
|
|
|
|
Gross profit |
180 000 |
160 000 |
340 000 |
|
|
|
|
|
|
|
Interest revenue |
7 000 |
- |
7 000 |
|
|
|
|
|
|
|
Other revenues |
19 200 |
7 500 |
26 700 |
|
|
|
|
|
|
|
Gain on sale of equipment |
- |
12 000 |
12 000 |
|
|
|
|
|
|
|
Interest expense |
- |
7 000 |
7 000 |
|
|
|
|
|
|
|
Other expenses |
64 200 |
37 000 |
101 200 |
|
|
|
|
|
|
|
Net profit |
142 000 |
135 500 |
277 500 |
|
|
|
|
??? |
|
|
Retained profits 1 July 2019 |
620 000 |
225 000 |
845 000 |
|
|
|
|
|
|
REQUIRED
For the year 2020, what is the amount of net profit that NCI is entitled to?
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