COMPANY ACCOUNTING QUESTIONS -
(A) Opperman Ltd owns all the share capital of Jewel Ltd. During the year ended 30 June 2018, Opperman Ltd paid a dividend of $20 000, and Jewel Ltd paid and declared dividends of $10 000 and $30 000 respectively. The tax rate is 30%. Explain in detail the journal entries that would be required in preparing the consolidated financial statements for 30 June 2018.
(B) What is a non-controlling interest and how should it be disclosed? Does the existence of the NCI affect the BCVR entries? Why or why not? Using the following information demonstrate how the existence of an NCI affects the pre-acquisition entry. Explain the journal entry in detail, line by line.
Harnesh Ltd acquired 80% of Maxima Ltd for $450 000 cash on 1 July 2017. At that date the equity of Maxima included the following:
Share Capital $400 000
General Reserve 50 000
Retained Earnings 50 000
500 000
All assets and liabilities of Maxima Ltd are at fair value. The tax rate is 30%.
(C) When calculating the NCI share of equity the step approach is used.
Demonstrate the step approach, explaining in detail each journal entry, using the following information:
Harnesh Ltd acquired 80% of Maxima Ltd for $450 000 cash on 1 July 2016. At that date the equity of Maxima included the following:
Share Capital $400 000
General Reserve 50 000
Retained Earnings 50 000
500 000
All assets and liabilities of Maxima Ltd are at fair value. The partial goodwill method is used. The tax rate is 30%.
On 30 June 2018, Maxima Ltd provided the following information:
Retained earnings (1/7/17) $ 80 000
General Reserve (1/7/17) 70 000
Profit after tax 50 000
Dividend paid 10 000