question archive On 1 July 2019, ABC Ltd acquired a portion of XYZ Ltd and they use the partial method to account for the 10% share of the NCI
On 1 July 2019, ABC Ltd acquired a portion of XYZ Ltd and they use the partial method to account for the 10% share of the NCI
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On 1 July 2019, ABC Ltd acquired a portion of XYZ Ltd and they use the partial method to account for the 10% share of the NCI. ABC Ltd acquired their portion of the equity at a cost of $500,000 when share capital had a balance of $350,000 and retained earnings was $100,000. Property was required to be revalued on acquisition date. On the books of XYZ Ltd, property was recorded as $950,000. ABC Ltd had an independent valuation completed which confirmed the asset could be sold for $1,000,000. On 1 July 2019, XYZ Ltd sold plant to ABC Ltd that cost $50,000 and had accumulated depreciation $20,000. The selling price of the plant was $40,000. At the date of sale, the plant could be depreciated straight line, 25% per year.
Pre-tax profit for 30 June 2020 is $100,000. During this year there was intragroup sales totalling $60,000 that had a cost price of $30,000. A quarter of this inventory was still on hand at the end of this year. The tax rate relating to all transactions to both entities is 30%. A consultancy fee of $10,000 was paid by the subsidiary to the parent.
pls help Calculate any non-controlling interest and Show all intragroup entries and full workings.
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The non-controlling interest to be reported in the Consolidated Statement of Financial Position is $55,775.
Consolidation falls under IFRS 10 Consolidated Financial Statements. Under IFRS 10, an entity is required to determine whether it is parent by assessing whether it controls another. Control is manifested when an entity has the power over another, exposure to its returns and ability to use such power the affect returns.
IFRS 10 requires measurement of non-controlling interest at fair value. Incidentally, fair value may be:
(a) Full; or
(b) Partial or proportionate to the fair value of the net assets of subsidiary
This problem adheres to partial method.
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