Reference no: EM132966781

Barren Ltd acquired 75% of the shares of Goose Ltd for $191 000 on 1 July 2016. At this date the equity of Goose Ltd consisted of:

Share capital $ 80 000
General reserve 48 000
Retained earnings 32 000

At this date all the identifiable assets and liabilities of Goose Ltd were recorded at amounts equal to their fair values except for:

                                    Carrying amount              Fair value

Plant (cost $156 000)   $130000                         $140000
Inventory                    100000                           130000
Brands                           40000                         120000

The plant was considered to have a further useful life of 10 years. The brands have an indefinite life. The inventory was all sold by 30 June 2017. The tax rate is 30%. On 30 June 2017 General Reserve of Goose Ltd was $64,00, Retained Earnings was $60,000 and the Profit was $26,400 Barren Ltd uses the partial goodwill method.

Required:

Problem a) Acquisition analysis and worksheet journal entries on 30 June 2017.

Problem b) Discuss the differences that would arise in the consolidated financial statements if the non- controlling interests were classified as debt rather than equity, and the reasons the standard setters have chosen the equity classification in AASB 10.