Topic 7 Comprehensive lecture example Pitbull Lid acquired a 60% interest in Schnauzer Lid on 1 July 2014 for $60,000 On the same date, the balance of shareholders' equity of Schnauzer Lid comprised: Share capital $40,000 General reserve 2,000 Retained earnings 20,000 62,000 All assets are recorded at their fair values except for an item of plant, which had a fair value of $200,000 and a carrying amount of $180,000 (original cost $250,000). The remaining useful life of the plant at the date of acquisition is 5 years. The fair value of the NCI in Schnauzer Ltd on 1 July 2014 was $38,000. At 30 June 2016 & 2017 the equity balances of Schnauzer Ltd are: 30/6/16 30/6/17 Share capital 40,000 40,000 General reserve 3,000 3,000 Retained earnings 45,000 75,000 88,000 118,000 Additional information: a) Schnauzer Lid recorded a profit after tax of $40,000 for the year ended 30 June 2017 and paid a dividend of $10,000 on 1 January 2017. b) On 1 June 2016, Schnauzer Lid sold inventory to Pitbull Lid for $100,000, at a profit before tax of $20,000. The entire inventory is unsold at 30 June 2016. The inventory is sold to external parties by Pitbull Lid on 15 June 2017. Required: Prepare all consolidation journals required at 30 June 2017 assuming the use of the partial goodwill method