Question: Exercise 29.1 Full and partial goodwill method On 1 July 2022, Rainbow Ltd acquired 80% of the issued shares of Lorikeet Ltd for $330 000.
Exercise 29.1 Full and partial goodwill method
On 1 July 2022, Rainbow Ltd acquired 80% of the issued shares of Lorikeet Ltd for $330 000. At this date, the equity of Lorikeet Ltd was as follows.
| Share capital $200 000 |
| General reserve 80 000 |
| Retained earnings 100 000 |
At acquisition date, all the identifiable assets and liabilities of Lorikeet Ltd were recorded at amounts equal to fair value. At 30 June 2024, the equity of Lorikeet Ltd consisted of:
| Share capital $200 000 |
| General reserve 100 000 |
| Retained earnings 160 000 |
A transfer from pre-acquisition retained earnings to general reserve of $20 000 was made during the year ended 30 June 2023. During the year ended 30 June 2024, Lorikeet Ltd recorded a profit of $30 000.
Required Prepare the consolidated worksheet entries at 30 June 2024 for Rainbow Ltd assuming:
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At 1 July 2022, the fair value of the non-controlling interest was $80 000 and Rainbow
Ltd adopts the full goodwill method.
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Rainbow Ltd adopts the partial goodwill method.
(LO4)
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