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:
Complete the worksheet below using the NET method. (5 marks)
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 |