On 1st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was: Share capital$7,600,000 General reserve$2,100,000 Retained earnings$1,200,000 All assets of Hard Ltd were recorded at fair value on acquisition except for an item of marine equipment that had a higher fair value of $360,000 than its carrying amount. Cost of the marine equipment was $2,100,000 accumulated depreciation of $1,372,000. Required: Use the worksheet below to compute Goodwill or Gain on acquisition and the Non-controlling interest using net method. Provide the necessary journal entries for Soft Ltd (parent) to eliminate Hard’s share of pre-acquisition capital and reserves. Prepare the journal entry to recognise the Non-controlling interest. Elimination of investment in Hard Ltd Hard Ltd (S) $,000 Soft Ltd (P) $,000 30% NCI $,000 Fair Value of consideration transferred Less: FV of identifiable assets acquired and liabilities assumed Share capital on acquisition date Revalue surplus-acquisition date Retained earnings-acquisition date Fair value adjustment Goodwill / Gain on acquisition NON-controlling interest
On 1st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was:
Share capital$7,600,000
General reserve$2,100,000
All assets of Hard Ltd were recorded at fair value on acquisition except for an item of marine equipment that had a higher fair value of $360,000 than its carrying amount. Cost of the marine equipment was $2,100,000
Required:
Use the worksheet below to compute
Provide the necessary journal entries for Soft Ltd (parent) to eliminate Hard’s share of pre-acquisition capital and reserves.
Prepare the
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Elimination of investment in Hard Ltd |
Hard Ltd (S) $,000 |
Soft Ltd (P) $,000 |
30% NCI $,000 |
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Fair Value of consideration transferred |
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Less: FV of identifiable assets acquired and liabilities assumed |
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Share capital on acquisition date |
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Revalue surplus-acquisition date |
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Retained earnings-acquisition date |
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Fair value adjustment |
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Goodwill / Gain on acquisition |
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NON-controlling interest |
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