Pudding Ltd acquired a 90 per cent interest in Peaches Ltd on 1 July 2013 for a cash consideration of €2 300 000.On the same date,Peaches Ltd acquired a 70 per cent interest in Cream Ltd for a cash consideration of €1 100 000.The fair value of the net assets of each of the companies at acquisition is as follows: $\begin{array}{|l|r|r|} \hline & \text { Peaches Ltd } & \text { Cream Ltd } \\ \hline \text { Share capital } & 1340000 & 100000 \\ \hline \text { Retained earnings } & \underline{950000} & {500000} \\ \hline & 2290000 & 1500000 \\ \hline \end{array}$ Goodwill has been determined not to have been impaired.What would the analysis of direct and indirect interests in the subsidiaries and the elimination entries be for the consolidation for the period ended 30 June 2014?

A) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Peaches Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Cream Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Pudding Ltd's interest: } & & \\ \hline \text { Direct } & 90 & \\ \hline \text { Indirect } & &63 \\ \hline & & \\ \hline \text { Outside equity interest: } & & \\ \hline \text { Direct } & 10 & 27 \\ \hline \text { Indirect } & & 10 \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1206000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 855000 & \\ \hline \text { Dr } & \text { Goodwill } & 239000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 630000 & \\ \hline \text { Dr } & \text { Retained earnings } & 315000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 155000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] B) $\begin{array}{|l|r|r|} \hline \text { Analysis of equity interests: } & \begin{array}{r} \text { Peaches Ltd } \\ (\% \text { interest) } \end{array} & \begin{array}{r} \text { Cream Ltd } \\ (\% \text { interest }) \end{array} \\ \hline \text { Pudding Ltd's interest: } & \\ \hline \text { Direct }&90 & 70 \\ \hline \text { Indirect } & &7 \\ \hline & & \\ \hline \text { Outside equity interest: } & & \\ \hline \text { Direct } &10 &21 \\ \hline \text { Indirect } & &2 \\ \hline \end{array}$ \[\begin{array} { | r | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1206000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 855000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 239000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 770000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 385000 & \\ \hline \mathrm { Cr } & \text { Outside equity interest } & & 55000 \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] C) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Peaches Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Cream Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Pudding Ltd's interest: } & & \\ \hline \text { Direct } & 90 & \\ \hline \text { Indirect } & & 70\\ \hline & & \\ \hline \text { Outside equity interest: } & & \\ \hline \text { Direct } & 10 & 23 \\ \hline \text { Indirect } & & 70 \\ \hline \end{array}\] \[\begin{array} { | r | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1340000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 950000 & \\ \hline \text { Dr } & \text { Goodwill } & 100000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 1000000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 500000 & \\ \hline \mathrm { Dr } & \text { Outside equity interests } & & 400000 \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] D) $\begin{array}{|l|r|r|} \hline \text { Analysis of equity interests: } & \begin{array}{r} \text { Peaches Ltd } \\ (\% \text { interest) } \end{array} & \begin{array}{r} \text { Cream Ltd } \\ (\% \text { interest }) \end{array} \\ \hline \text { Pudding Ltd's interest: } & & \\ \hline \text { Direct } &90 & \\ \hline \text { Indirect } & &63 \\ \hline \text { Outside equity interest: } & \\ \hline \text { Direct } & 10 & 30 \\ \hline \text { Indirect } & &7 \\ \hline \end{array}$ \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1206000 & \\ \hline \text { Dr } & \text { Retained earnings } & 855000 & \\ \hline \text { Dr } & \text { Goodwill } & 239000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 700000 & \\ \hline \text { Dr } & \text { Retained earnings } & 350000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 50000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] A) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Peaches Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Cream Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Pudding Ltd's interest: } & & \\ \hline \text { Direct } & 90 & \\ \hline \text { Indirect } & &63 \\ \hline & & \\ \hline \text { Outside equity interest: } & & \\ \hline \text { Direct } & 10 & 27 \\ \hline \text { Indirect } & & 10 \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1206000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 855000 & \\ \hline \text { Dr } & \text { Goodwill } & 239000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 630000 & \\ \hline \text { Dr } & \text { Retained earnings } & 315000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 155000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] B) $\begin{array}{|l|r|r|} \hline \text { Analysis of equity interests: } & \begin{array}{r} \text { Peaches Ltd } \\ (\% \text { interest) } \end{array} & \begin{array}{r} \text { Cream Ltd } \\ (\% \text { interest }) \end{array} \\ \hline \text { Pudding Ltd's interest: } & \\ \hline \text { Direct }&90 & 70 \\ \hline \text { Indirect } & &7 \\ \hline & & \\ \hline \text { Outside equity interest: } & & \\ \hline \text { Direct } &10 &21 \\ \hline \text { Indirect } & &2 \\ \hline \end{array}$ \[\begin{array} { | r | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1206000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 855000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 239000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 770000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 385000 & \\ \hline \mathrm { Cr } & \text { Outside equity interest } & & 55000 \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] C) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Peaches Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Cream Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Pudding Ltd's interest: } & & \\ \hline \text { Direct } & 90 & \\ \hline \text { Indirect } & & 70\\ \hline & & \\ \hline \text { Outside equity interest: } & & \\ \hline \text { Direct } & 10 & 23 \\ \hline \text { Indirect } & & 70 \\ \hline \end{array}\] \[\begin{array} { | r | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1340000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 950000 & \\ \hline \text { Dr } & \text { Goodwill } & 100000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 1000000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 500000 & \\ \hline \mathrm { Dr } & \text { Outside equity interests } & & 400000 \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] D) $\begin{array}{|l|r|r|} \hline \text { Analysis of equity interests: } & \begin{array}{r} \text { Peaches Ltd } \\ (\% \text { interest) } \end{array} & \begin{array}{r} \text { Cream Ltd } \\ (\% \text { interest }) \end{array} \\ \hline \text { Pudding Ltd's interest: } & & \\ \hline \text { Direct } &90 & \\ \hline \text { Indirect } & &63 \\ \hline \text { Outside equity interest: } & \\ \hline \text { Direct } & 10 & 30 \\ \hline \text { Indirect } & &7 \\ \hline \end{array}$ \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 1206000 & \\ \hline \text { Dr } & \text { Retained earnings } & 855000 & \\ \hline \text { Dr } & \text { Goodwill } & 239000 & \\ \hline \mathrm { Cr } & \text { Investment in Peaches Ltd } & & 2300000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 700000 & \\ \hline \text { Dr } & \text { Retained earnings } & 350000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 50000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Cream Ltd } & & 1100000 \\ \hline \end{array}\] D

The following is an extract from the non-controlling interest memorandum,used to calculate non-controlling interests.Both subsidiaries became members of the economic entity at the same time at the start of this current period. \[\begin{array} { | l | r | r | r | } \hline & \text { Barbie Ltd } & \text { Ken Ltd } & \text { Total NCl } \\ \hline \text { Non-controlling interest in profit after tax } & & & \\ \text { Profit as shown in respective entity's reports } & 12000 & 16000 & \\ \text { less: Dividend received from entity within group } & ( 2500 ) & & \\ \text { Profit contributed to the economic entity } & 9500 & 16000 & \\ \hline \text { Non-controlling interest } & 3800 & 9920 & 13720 \\ \hline \begin{array} { l } \text { Non-controlling interest in opening retained earings } \\ \text { Opening retained earnings } \end{array} & 15000 & 24000 & \\ \hline \text { Non-controlling interest } & 6000 & 9600 & 15600 \\ \hline \end{array}\] What is the non-controlling indirect equity (percentage)interest in Ken Limited?

A) 0% B) 22% C) 33% D) 40% A) 0% B) 22% C) 33% D) 40% B

Pasta Ltd acquired an 80 per cent interest in Sauce Ltd on 1 July 2014 for a cash consideration of $3 193 000.On the same date,Sauce Ltd acquired a 60 per cent interest in Cheese Ltd for a cash consideration of $1 340 000.The fair value of the net assets of each of the companies at acquisition is as follows: \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Share capital } & 2950000 & 1240000 \\ \hline \text { Retained earnings } & 1010000 & \underline { 970000 } \\ \hline & 3960000 & 2210000 \\ \hline \end{array}\] Goodwill has been determined not to have been impaired.Information for the period ended 30 June 2015 for Sauce Ltd and Cheese Ltd is as follows: $\begin{array}{|l|r|r|} \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit after tax } & 960000 & 380000 \\ \hline \text { Dividends proposed } & 100000 & 90000\\\hline \end{array}$ Neither dividend had been paid at the end of the period.There were no other intragroup transactions during the period.What is the non-controlling interest in Sauce Ltd and Cheese Ltd as at 30 June 2015?

A) \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 192000 & 152000 \\ \hline \text { Retained earnings } & 374000 & 504000 \\ \hline \text { Dividends } & ( 20000 ) & ( 46800 ) \\ \hline \text { Share capital } & 590000 & 49600 \\ \hline \end{array}\] B) \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 181200 & 197600 \\ \hline \text { Retained earnings } & 202000 & 388000 \\ \hline \text { Dividends } & ( 20000 ) & ( 36000 ) \\ \hline \text { Share capital } & 590000 & 49600 \\ \hline \end{array}\] C) $\begin{array}{|l|r|r|} \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 181200 & 197600 \\ \hline \text { Retained earnings } & 202000 & 388000 \\ \hline \text { Dividends } & (20000) & (36000) \\ \hline \text { Share capital } & 590000 & 496000 \\ \hline \end{array}$ D) \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 172000 & 150800 \\ \hline \text { Retained earnings } & 202000 & 504400 \\ \hline \text { Share capital } & 590000 & 496000 \\ \hline \end{array}\] A) \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 192000 & 152000 \\ \hline \text { Retained earnings } & 374000 & 504000 \\ \hline \text { Dividends } & ( 20000 ) & ( 46800 ) \\ \hline \text { Share capital } & 590000 & 49600 \\ \hline \end{array}\] B) \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 181200 & 197600 \\ \hline \text { Retained earnings } & 202000 & 388000 \\ \hline \text { Dividends } & ( 20000 ) & ( 36000 ) \\ \hline \text { Share capital } & 590000 & 49600 \\ \hline \end{array}\] C) $\begin{array}{|l|r|r|} \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 181200 & 197600 \\ \hline \text { Retained earnings } & 202000 & 388000 \\ \hline \text { Dividends } & (20000) & (36000) \\ \hline \text { Share capital } & 590000 & 496000 \\ \hline \end{array}$ D) \[\begin{array} { | l | r | r | } \hline & \text { Sauce Ltd } & \text { Cheese Ltd } \\ \hline \text { Operating profit } & 172000 & 150800 \\ \hline \text { Retained earnings } & 202000 & 504400 \\ \hline \text { Share capital } & 590000 & 496000 \\ \hline \end{array}\] B

Vader Ltd acquired a 75 per cent interest in Luke Ltd on 30 June 2012 for a cash consideration of €900 000.On the same date,Luke Ltd acquired a 60 per cent interest in Leia Ltd for a cash consideration of €600 000.The fair value of the net assets of each of the companies at acquisition is as follows: $\begin{array}{|l|r|r|} \hline & \text { Luke Ltd } & \text { Leia Ltd } \\ \hline \text { Share capital } & 900000 & 800000 \\ \hline \text { Retained earnings } & \underline{200000} & 100000 \\ \hline & 1100000 & \underline{900000} \\ \hline \end{array}$ Goodwill has been determined not to have been impaired.Using the multiple entity consolidation approach,what would the analysis of direct and indirect interests in the subsidiaries and the elimination entries be for the consolidation for 30 June 2012?

A) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 & 60\\ \hline \text { Indirect } & & \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 & 40\\ \hline \text { Indirect } & & \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 75000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 900000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 480000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 60000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 60000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Leia } & & 600000 \\ \hline \end{array}\] B) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 &60 \\ \hline \text { Indirect } & & \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 &40 \\ \hline \text { Indirect } & & \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 275000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 1100000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 480000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 60000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 360000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Leia } & & 900000 \\ \hline \end{array}\] C) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 & \\ \hline \text { Indirect } & &45 \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 & 40 \\ \hline \text { Indirect } & & 15 \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 75000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 900000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 480000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 60000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 60000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Leia } & & 600000 \\ \hline \end{array}\] D) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 & \\ \hline \text { Indirect } & &45 \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 & 40 \\ \hline \text { Indirect } & & 15 \\ \hline \end{array}\] \[\begin{array}{l} \text { Elimination entries: }\\ \begin{array} { | c | l | r | r | } \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \text { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 75000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 900000 \\ \hline & & & \\ \hline \text { Dr } & \text { Share capital } & 360000 & \\ \hline \text { Dr } & \text { Retained earnings } & 45000 & \\ \hline \mathrm { Dr } & \text { Non-controlling interest } & 135000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 60000 & \\ \hline \mathrm { Cr } & \text { Investment in Leia } & & 600000 \\ \hline \end{array} \end{array}\] A) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 & 60\\ \hline \text { Indirect } & & \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 & 40\\ \hline \text { Indirect } & & \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 75000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 900000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 480000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 60000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 60000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Leia } & & 600000 \\ \hline \end{array}\] B) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 &60 \\ \hline \text { Indirect } & & \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 &40 \\ \hline \text { Indirect } & & \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 275000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 1100000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 480000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 60000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 360000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Leia } & & 900000 \\ \hline \end{array}\] C) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 & \\ \hline \text { Indirect } & &45 \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 & 40 \\ \hline \text { Indirect } & & 15 \\ \hline \end{array}\] \[\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\ \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 75000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 900000 \\ \hline & & & \\ \hline \mathrm { Dr } & \text { Share capital } & 480000 & \\ \hline \mathrm { Dr } & \text { Retained earnings } & 60000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 60000 & \\ \hline \mathrm { Cr } & \text { lnvestment in Leia } & & 600000 \\ \hline \end{array}\] D) \[\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Luke Ltd } \\ \text { (\% interest) } \end{array} & \begin{array} { r } \text { Leia Ltd } \\ \text { (\% interest) } \end{array} \\ \hline \text { Vader Ltd's interest: } & & \\ \hline \text { Direct } & 75 & \\ \hline \text { Indirect } & &45 \\ \hline & & \\ \hline \text { Non-controlling interest: } & & \\ \hline \text { Direct } & 25 & 40 \\ \hline \text { Indirect } & & 15 \\ \hline \end{array}\] \[\begin{array}{l} \text { Elimination entries: }\\ \begin{array} { | c | l | r | r | } \hline \text { Dr } & \text { Share capital } & 675000 & \\ \hline \text { Dr } & \text { Retained earnings } & 150000 & \\ \hline \text { Dr } & \text { Goodwill } & 75000 & \\ \hline \mathrm { Cr } & \text { Investment in Luke } & & 900000 \\ \hline & & & \\ \hline \text { Dr } & \text { Share capital } & 360000 & \\ \hline \text { Dr } & \text { Retained earnings } & 45000 & \\ \hline \mathrm { Dr } & \text { Non-controlling interest } & 135000 & \\ \hline \mathrm { Dr } & \text { Goodwill } & 60000 & \\ \hline \mathrm { Cr } & \text { Investment in Leia } & & 600000 \\ \hline \end{array} \end{array}\]

Jabba Ltd acquired a 70 per cent interest in Han Ltd on 30 June 2012 for €2 000 000.On the same date,Han Ltd acquired a 60 per cent interest in Leia Ltd for a cash consideration of €1 600 000.The purchase price represents the fair value of consideration transferred for both investments.The following information is available: \[\begin{array} { | l | r | r | } \hline \text { Balances at the date of acquisition: } & \text { Han Ltd } & \text { Leia Ltd } \\ \hline \text { Share capital } & 2000000 & 1600000 \\ \hline \text { Retained earnings } & \underline { 600000 } & \underline { 800000 } \\ \hline & \underline { 2600000 } & \underline { 2400000 } \\ \hline \text { Profit for year ended 30 June 2013: } & \\ \hline \text { Net profit after tax } & \underline { 200000 } & \underline { 300000 } \\ \hline \end{array}\] No dividends have been declared since acquisition and there were no intragroup transactions during the year. What is the non-controlling interest in Han Ltd and Leai Ltd as at 30 June 2013,respectively using the partial goodwill method (round to the nearest dollar)?

A) €780 000; €960 000 B) €857 143; €1 066 667 C) €900 000; €1 134 000 D) €977 143; €1 240 667 A) €780 000; €960 000 B) €857 143; €1 066 667 C) €900 000; €1 134 000 D) €977 143; €1 240 667

The following is an extract from the non-controlling interest memorandum,used to calculate non-controlling interests.Both subsidiaries became members of the economic entity at the same time at the start of this current period. \[\begin{array} { | l | r | r | r | } \hline & \text { Barbie Ltd } & \text { Ken Ltd } & \text { Total NCl } \\ \hline \text { Non-controlling interest in profit after tax } & & & \\ \text { Profit as shown in respective entity's reports } & 12000 & 16000 & \\ \text { less: Dividend received from entity within group } & ( 2500 ) & & \\ \text { Profit contributed to the economic entity } & 9500 & 16000 & \\ \hline \text { Non-controlling interest } & 3800 & 9920 & 13720 \\ \hline \begin{array} { l } \text { Non-controlling interest in opening retained earings } \\ \text { Opening retained earnings } \end{array} & 15000 & 24000 & \\ \hline \text { Non-controlling interest } & 6000 & 9600 & 15600 \\ \hline \end{array}\] What is the parent's direct equity (percentage)interest in Barbie Limited?

A) 0% B) 10% C) 25% D) 40% A) 0% B) 10% C) 25% D) 40%

The following is an extract from the non-controlling interest memorandum,used to calculate non-controlling interests.Both subsidiaries became members of the economic entity at the same time at the start of this current period. \[\begin{array} { | l | r | r | r | } \hline & \text { Barbie Ltd } & \text { Ken Ltd } & \text { Total NCl } \\ \hline \text { Non-controlling interest in profit after tax } & & & \\ \text { Profit as shown in respective entity's reports } & 12000 & 16000 & \\ \text { less: Dividend received from entity within group } & ( 2500 ) & & \\ \text { Profit contributed to the economic entity } & 9500 & 16000 & \\ \hline \text { Non-controlling interest } & 3800 & 9920 & 13720 \\ \hline \begin{array} { l } \text { Non-controlling interest in opening retained earings } \\ \text { Opening retained earnings } \end{array} & 15000 & 24000 & \\ \hline \text { Non-controlling interest } & 6000 & 9600 & 15600 \\ \hline \end{array}\] The line item 'Dividend received from entity within the group' is an adjustment made:

A) to prevent double-counting as the indirect non-controlling interest of Barbie Ltd is in fact the same interest as the direct non-controlling interest in Ken Ltd and would have already received a share of the dividend as part of the share of profit in Ken Ltd. B) to recognise, and eliminate, the dividend paid by Barbie Ltd directly to the parent entity. C) to prevent double-counting as the indirect non-controlling interest of Ken Ltd is in fact the same interest as the direct non-controlling interest in Barbie Ltd and would have already received a share of the dividend as part of the share of profit in Ken Ltd D) to recognise, and eliminate, the dividend paid by Ken Ltd directly to the parent entity. A) to prevent double-counting as the indirect non-controlling interest of Barbie Ltd is in fact the same interest as the direct non-controlling interest in Ken Ltd and would have already received a share of the dividend as part of the share of profit in Ken Ltd. B) to recognise, and eliminate, the dividend paid by Barbie Ltd directly to the parent entity. C) to prevent double-counting as the indirect non-controlling interest of Ken Ltd is in fact the same interest as the direct non-controlling interest in Barbie Ltd and would have already received a share of the dividend as part of the share of profit in Ken Ltd D) to recognise, and eliminate, the dividend paid by Ken Ltd directly to the parent entity.

Exam 23: Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Pudding Ltd acquired a 90 per cent interest in Peaches Ltd on 1 July 2013 for a cash consideration of €2 300 000.On the same date,Peaches Ltd acquired a 70 per cent interest in Cream Ltd for a cash consideration of €1 100 000.The fair value of the net assets of each of the companies at acquisition is as follows: Peaches Ltd Cream Ltd Share capital 1340000 100000 Retained earnings 500000 2290000 1500000 Goodwill has been determined not to have been impaired.What would the analysis of direct and indirect interests in the subsidiaries and the elimination entries be for the consolidation for the period ended 30 June 2014?

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

D

The following is an extract from the non-controlling interest memorandum,used to calculate non-controlling interests.Both subsidiaries became members of the economic entity at the same time at the start of this current period. Barbie Ltd Ken Ltd Total NCl Non-controlling interest in profit after tax Profit as shown in respective entity's reports 12000 16000 less: Dividend received from entity within group (2500) Profit contributed to the economic entity 9500 16000 Non-controlling interest 3800 9920 13720 Non-controlling interest in opening retained earings Opening retained earnings 15000 24000 Non-controlling interest 6000 9600 15600 What is the non-controlling indirect equity (percentage)interest in Ken Limited?

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

B

Pasta Ltd acquired an 80 per cent interest in Sauce Ltd on 1 July 2014 for a cash consideration of $3 193 000.On the same date,Sauce Ltd acquired a 60 per cent interest in Cheese Ltd for a cash consideration of $1 340 000.The fair value of the net assets of each of the companies at acquisition is as follows: Sauce Ltd Cheese Ltd Share capital 2950000 1240000 Retained earnings 1010000 3960000 2210000 Goodwill has been determined not to have been impaired.Information for the period ended 30 June 2015 for Sauce Ltd and Cheese Ltd is as follows: Sauce Ltd Cheese Ltd Operating profit after tax 960000 380000 Dividends proposed 100000 90000 Neither dividend had been paid at the end of the period.There were no other intragroup transactions during the period.What is the non-controlling interest in Sauce Ltd and Cheese Ltd as at 30 June 2015?

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

B

Vader Ltd acquired a 75 per cent interest in Luke Ltd on 30 June 2012 for a cash consideration of €900 000.On the same date,Luke Ltd acquired a 60 per cent interest in Leia Ltd for a cash consideration of €600 000.The fair value of the net assets of each of the companies at acquisition is as follows: Luke Ltd Leia Ltd Share capital 900000 800000 Retained earnings 100000 1100000 Goodwill has been determined not to have been impaired.Using the multiple entity consolidation approach,what would the analysis of direct and indirect interests in the subsidiaries and the elimination entries be for the consolidation for 30 June 2012?

(Multiple Choice)

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Question 4

Jabba Ltd acquired a 70 per cent interest in Han Ltd on 30 June 2012 for €2 000 000.On the same date,Han Ltd acquired a 60 per cent interest in Leia Ltd for a cash consideration of €1 600 000.The purchase price represents the fair value of consideration transferred for both investments.The following information is available: Balances at the date of acquisition: Han Ltd Leia Ltd Share capital 2000000 1600000 Retained earnings Profit for year ended 30 June 2013: Net profit after tax No dividends have been declared since acquisition and there were no intragroup transactions during the year. What is the non-controlling interest in Han Ltd and Leai Ltd as at 30 June 2013,respectively using the partial goodwill method (round to the nearest dollar)?

(Multiple Choice)

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Question 5

A Plc owns 60 per cent of the issued capital of B Plc,B Plc owns 80 per cent of the issued capital of C Plc,and B Plc owns 70 per cent of the issued capital of D Plc.The ultimate parent entity is B Plc.

(True/False)

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Question 6

A Plc owns 60% of the issued capital of B Plc and B Plc owns 55% of the issued capital of C Plc.What is A's interest in C Plc?

(Multiple Choice)

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Question 7

The order of acquisition of subsidiaries (i.e.sequential or non-sequential)is of no consequence when it comes to calculating non-controlling interests; they are calculated the same way regardless of the order.

(True/False)

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Question 8

In calculating indirect non-controlling interests,intragroup transactions need not be eliminated.

(True/False)

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Question 9

The following diagram represents the ownership of issued share capital of the companies in a group.What is the total outside equity interest in D Ltd?

(Multiple Choice)

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Question 10

The following is an extract from the non-controlling interest memorandum,used to calculate non-controlling interests.Both subsidiaries became members of the economic entity at the same time at the start of this current period. Barbie Ltd Ken Ltd Total NCl Non-controlling interest in profit after tax Profit as shown in respective entity's reports 12000 16000 less: Dividend received from entity within group (2500) Profit contributed to the economic entity 9500 16000 Non-controlling interest 3800 9920 13720 Non-controlling interest in opening retained earings Opening retained earnings 15000 24000 Non-controlling interest 6000 9600 15600 What is the parent's direct equity (percentage)interest in Barbie Limited?

(Multiple Choice)

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Question 11

It is not possible for one entity to control another entity without any direct ownership interest.

(True/False)

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Question 12

An ultimate parent entity may obtain a controlling indirect interest in another entity as a result of holding a controlling interest in the immediate parent entity of that other entity.

(True/False)

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Question 13

The following is an extract from the non-controlling interest memorandum,used to calculate non-controlling interests.Both subsidiaries became members of the economic entity at the same time at the start of this current period. Barbie Ltd Ken Ltd Total NCl Non-controlling interest in profit after tax Profit as shown in respective entity's reports 12000 16000 less: Dividend received from entity within group (2500) Profit contributed to the economic entity 9500 16000 Non-controlling interest 3800 9920 13720 Non-controlling interest in opening retained earings Opening retained earnings 15000 24000 Non-controlling interest 6000 9600 15600 The line item 'Dividend received from entity within the group' is an adjustment made:

(Multiple Choice)

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Question 14

It is possible for aggregated direct and indirect non-controlling interests in an entity to be a greater percentage of ownership than the parent's aggregated direct and indirect ownership interests.

(True/False)

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Question 15

The following diagram represents the ownership of issued share capital of the companies in a group.What is the total outside equity interest in D Ltd?

(Multiple Choice)

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Question 16

X Plc owns 90% of the issued capital of Y Plc and Y Plc owns 70% of the issued capital of Z Plc.What is the total outside equity interest in C Plc?

(Multiple Choice)

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Question 17

Discuss why it is necessary to differentiate between direct and indirect non-controlling interests in a group.

(Essay)

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Question 18

A Plc owns 80% of the issued capital of B Plc and B Plc owns 60% of the issued capital of C Plc.What is A's interest in C Plc?

(Multiple Choice)

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Question 19

A acquires a controlling interest of less than 100% ownership in B,who in turn acquires a controlling interest of less than 100% ownership in C,on the same day.The acquisition by B of C results in the recognition of goodwill on acquisition.Explain why there is a need to adjust for the impairment of goodwill when calculating the non-controlling interest for

(Essay)

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Question 20

A Plc owns 60 per cent of the issued capital of B Plc,B Plc owns 80 per cent of the issued capital of C Plc,and B Plc owns 70 per cent of the issued capital of D Plc.The ultimate parent entity is B Plc.

A Plc owns 60% of the issued capital of B Plc and B Plc owns 55% of the issued capital of C Plc.What is A's interest in C Plc?

The order of acquisition of subsidiaries (i.e.sequential or non-sequential)is of no consequence when it comes to calculating non-controlling interests; they are calculated the same way regardless of the order.

In calculating indirect non-controlling interests,intragroup transactions need not be eliminated.

The following diagram represents the ownership of issued share capital of the companies in a group.What is the total outside equity interest in D Ltd?

It is not possible for one entity to control another entity without any direct ownership interest.

An ultimate parent entity may obtain a controlling indirect interest in another entity as a result of holding a controlling interest in the immediate parent entity of that other entity.

It is possible for aggregated direct and indirect non-controlling interests in an entity to be a greater percentage of ownership than the parent's aggregated direct and indirect ownership interests.

The following diagram represents the ownership of issued share capital of the companies in a group.What is the total outside equity interest in D Ltd?

X Plc owns 90% of the issued capital of Y Plc and Y Plc owns 70% of the issued capital of Z Plc.What is the total outside equity interest in C Plc?

Discuss why it is necessary to differentiate between direct and indirect non-controlling interests in a group.

A Plc owns 80% of the issued capital of B Plc and B Plc owns 60% of the issued capital of C Plc.What is A's interest in C Plc?

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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