Assume the same facts as in P4.7, except that P Co elects to measure non-controlling interests as a proportion of identifiable net assets.

Required:

1. Prepare the consolidation adjusting entries for the year ended 31 December 20x3. Tax rate was 20%. Recognize tax effects on fair value differentials.

2. Perform an analytical check on the balance of non-controlling interests as at 31 December 20x3.

Data from P4.7

P Co acquired a controlling interest in Moonstone as follows:

P Co chose to measure non-controlling interests at fair value on acquisition date. The fair value of non-controlling interests in Moonstone Co as at date of acquisition was $250,000. The financial statements of P Co and Moonstone Co are shown below:

Transcribed Image Text:

Interest acquired.. Date of acquisition. At acquisition date, the shareholder's equity of Moonstone Co were as follows: Share capital.. Retained earnings... Revaluation reserves. 90% 1 January 20x1 $1,200,000 550,000 120,000 $1,870,000