Question 5 (11 marks)

On 1st July, 2018 Murray Ltd acquired 70% of the share capital of Darling Ltd for $100,000,000.

Equity of Darling Ltd at acquisition date was:

Share Capital $ 60,000,000

General Reserve $ 20,000,000

Retained Earnings $ 10,000,000

All assets and liabilities of Darling Ltd were recorded at fair value on acquisition. Ignore Tax effects.

Required:

1. Complete the worksheet below using the partial goodwill method with the NCI measured at the proportionate share of the acquirees identifiable net assets. (5 marks)

Elimination of Investment in Darling Ltd	Darling Ltd (S) $,000	Murray Ltd (70% of Darling) (P) $,000	30% NCI $,000
Fair Value of consideration transferred
Less: FV of identifiable assets acquired & liabilities assumed
Share capital on acquisition date	60,000
General reserve-acquisition date	20,000
Retained earnings-acquisition date	10,000
Fair value adjustment
Goodwill on acquisition
Non-controlling interest

2. Prepare the consolidation adjustments and eliminations entries and recognise the NCI in the pre-acquisition equity of Darling Ltd, using the partial goodwill method with the NCI measured at the proportionate share of the acquirees identifiable net assets. (6 marks)