On 1 July 2018, Black Ltd acquired 70% of the issued shares (cum div.) of White Ltd for $262,000. At this date the equity of White Ltd consisted of:

Share capital	200,000
General reserve	5,000
Retained earnings	37,000

At the date of the business combination, all the identifiable assets and liabilities of White Ltd had carrying amounts equal to their fair values except for the following:

	Carrying amount	Fair value
Plant (cost $120, 000)	80,000	110,000
Inventory	50,000	62,000
Patent	-	30,000

Additional information:

1. The plant had a further useful life of 5 years. It was sold by White Ltd to external entities on 1 April 2023 for $6,000.
2. By 30 June 2019, all the inventory were sold to entities outside the group.
3. One of the liabilities of White Ltd at 1 July 2018 was dividend payable of $18,000.
4. White Ltd registered the patent on 28 June 2018 but has not yet recognised it as an asset. The patent is legally enforceable for a period of 20 years. On 30 June 2022, White Ltd determined that the patent was impaired by $6,400. On 1 January 2023, White Ltd sold the patent for $17,050.
5. At 30 June 2022, inventory of Black Ltd included assets sold to it by White Ltd for a beforetax profit of $600. These items were sold to external entities during the year ended 30 June 2023.
6. During the year ended 30 June 2023, White Ltd had sold inventory to Black Ltd for $120,000. The mark-up on sales were 25% on cost. At 30 June 2023, Black Ltd still had some of the inventory on hand, amounting to items acquired from White Ltd for $6,000.
7. On 1 January 2023, White Ltd sold plant to Black Ltd for a before-tax profit of $2,400. This plant was carried at $6,000 (original cost $40,000) in the records of White Ltd at time of sale.

Both entities charge depreciation at a rate of 20% per year straight-line. H. The tax rate is 30%.

1. Black Ltd records dividend receivable as revenue when dividends are declared.
2. Financial information provided by White Ltd concerning events affecting it during the year ended 30 June 2023 was as follows:

https://interact2.csu.edu.au/webapps/csu-serviceslink-BB5c1c4db3261aa/link?type=msi&course_id=_54078_1&mode=view 1/2 5/10/2021 S-ACC322_202130_A_D Company Accounting

Profit for the year	46,800
Retained earnings at 1 July 2022	60,000
	106,800
Dividend paid	(24,000)
Dividend declared	(12,000)
Transfer to general reserve*	(3,000)
	(39,000)
Retained earnings at 30 June 2023	67,800

*The transfer to general reserve is from post-acquisition retained earnings.

Required:

1. Determine the gain on bargain purchase or goodwill as at acquisition date using the full goodwill method. Assume the fair value of the Non-Controlling Interest on 1 July 2018 was $100,000.
2. Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method.
3. Prepare the consolidation journal entries using the partial goodwill method at 1 July 2018.
4. Prepare the consolidation journal entries using the partial goodwill method at 30 June 2023.

These consolidation journal entries should be prepared in the following format:

1. Business combination valuation entries at 30 June 2023
2. Pre-acquisition entries at 30 June 2023
3. NCI share of equity at 1 July 2018
4. NCI share of equity changes from 1 July 2018 to 30 June 2022
5. NCI share of equity changes from 1 July 2022 to 30 June 2023

6. Intra-group transaction adjustments required as at 30 June 2023

Answer rating: 100% (QA)

1 gain on bargain purchase or goodwill as at acquisition date using the full goodwill method Goodwill Consideration transferred Amount of noncontrolling interests Fair value of previous equity interes... View the full answer