Question FBE Ltd (FBE) owns 80% of the shares of AFA Ltd (AFA) and has control...

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Question FBE Ltd ("FBE") owns 80% of the shares of AFA Ltd ("AFA") and has control over it. The shares were acquired on 1 July 2019 by FBE at a cost of $60,000. At acquisition date, the capital of AFA consisted of 50,000 ordinary shares each fully paid at $1. There were retained earnings of $5,000. All the identifiable assets and liabilities of AFA were recorded at amounts equal to fair value, except for: Plant (cost $50,000) Carrying amount 40,000 Fair value 41,400 At acquisition date, the plant had a remaining useful life of 4 years (depreciate on a straight-line basis). On 1 April 2021, AFA sold inventory to FBE for $5,000. The inventory was originally recorded at a cost of $4,000 in AFA's books. One-quarter of this inventory remained unsold in FBE by end of the current year. The group measures NCI using partial goodwill method. | The companies' trial balances as at 31 December 2021 are shown below. Credits Share Capital General Reserve Retained Earnings (31/12/20) Liabilities Sales Revenue Other Revenues Debits Cost of Sales Other Expenses Assets Income Tax Expense Dividend Declared AFA 50,000 FBE 170,000 41,000 - 16,000 29,500 148,000 55,100 85,000 65,000 23,000 22,000 483,800 273,600 65,000 53,500 22,000 27,000 378,800 136,100 7,200 2,000 10,000 3,000 483,800 273,600 On 1 July 2021, FBE acquired 40% of the shares of B&B Ltd ("B&B") at a cost of $100,000 and exercised significant influence over it. The fair value of the assets and liabilities of B&B at the date of acquisition by FBE were equal to their carrying amounts, with the exception of a machine that had a fair value of $38,500 in excess of its carrying amount. The machine had a remaining useful life of five years on 1 July 2021. On 30 September 2021, FBE purchased goods at a price of $9,000 from B&B. All sales made by B&B to FBE are priced on a cost plus a mark-up of 20% basis. FBE sold out half of these goods to its customers within the year ended 31 December 2021. B&B has reported an after-tax profit of $30,000 and paid a dividend of $10,000 for the year ended 31 December 2021 (assuming the after-tax profit of $30,000 is earned post- acquisition and the dividend $10,000 is paid out of the post-acquisition earnings). Required: Prepare all consolidation adjusting entries and the consolidated financial statements for FBE Group as at 31 December 2021, the current year end. Ignore tax effects on adjustments. Question FBE Ltd ("FBE") owns 80% of the shares of AFA Ltd ("AFA") and has control over it. The shares were acquired on 1 July 2019 by FBE at a cost of $60,000. At acquisition date, the capital of AFA consisted of 50,000 ordinary shares each fully paid at $1. There were retained earnings of $5,000. All the identifiable assets and liabilities of AFA were recorded at amounts equal to fair value, except for: Plant (cost $50,000) Carrying amount 40,000 Fair value 41,400 At acquisition date, the plant had a remaining useful life of 4 years (depreciate on a straight-line basis). On 1 April 2021, AFA sold inventory to FBE for $5,000. The inventory was originally recorded at a cost of $4,000 in AFA's books. One-quarter of this inventory remained unsold in FBE by end of the current year. The group measures NCI using partial goodwill method. | The companies' trial balances as at 31 December 2021 are shown below. Credits Share Capital General Reserve Retained Earnings (31/12/20) Liabilities Sales Revenue Other Revenues Debits Cost of Sales Other Expenses Assets Income Tax Expense Dividend Declared AFA 50,000 FBE 170,000 41,000 - 16,000 29,500 148,000 55,100 85,000 65,000 23,000 22,000 483,800 273,600 65,000 53,500 22,000 27,000 378,800 136,100 7,200 2,000 10,000 3,000 483,800 273,600 On 1 July 2021, FBE acquired 40% of the shares of B&B Ltd ("B&B") at a cost of $100,000 and exercised significant influence over it. The fair value of the assets and liabilities of B&B at the date of acquisition by FBE were equal to their carrying amounts, with the exception of a machine that had a fair value of $38,500 in excess of its carrying amount. The machine had a remaining useful life of five years on 1 July 2021. On 30 September 2021, FBE purchased goods at a price of $9,000 from B&B. All sales made by B&B to FBE are priced on a cost plus a mark-up of 20% basis. FBE sold out half of these goods to its customers within the year ended 31 December 2021. B&B has reported an after-tax profit of $30,000 and paid a dividend of $10,000 for the year ended 31 December 2021 (assuming the after-tax profit of $30,000 is earned post- acquisition and the dividend $10,000 is paid out of the post-acquisition earnings). Required: Prepare all consolidation adjusting entries and the consolidated financial statements for FBE Group as at 31 December 2021, the current year end. Ignore tax effects on adjustments.