Question 4 (10 marks) On July 1 2022, Bermuda Ltd acquired 60% of share capital of Triangle Ltd for $40,000,000. Equity of Triangle Ltd at the acquisition date was: Share capital $ 36,000,000 General reserve $ 8,000,000 Retained earnings $ 4,000,000 All assets of Triangle Ltd were recorded at fair Value on acquisition except for an item of machinery that had a higher fair value ($1000,000) than its carrying amount. Cost of equipment was $10,000,000 with an accumulated depreciation of $6,000,000.
Required: (a) Complete the worksheet below using the NET method. (5 marks) (b) Prepare the consolidation adjustments and eliminations entries and to recognise the NCI in the pre-acquisition equity of Triangle Ltd. (5 marks)
Elimination of Investment in Triangle Ltd Triangle Ltd (S) $,000 Bermuda Ltd (60% of Triangle) (P) $,000 40% NCI $,000 Fair Value of consideration transferred Less: FV of identifiable assets acquired & liabilities assumed Share capital on acquisition date 36,000 General reserve-acquisition date 8,000 Retained earnings-acquisition date 4,000 Fair value adjustment Goodwill on acquisition Non-controlling interest