Calculate balances to recognise on consolidated statement

Reference no: EM132762716

Question: Holder acquired 60% of the 1 million $2 voting shares of Retailer on 1 October 2019 for $4.8 million cash, when Retailer's retained earnings were $4 million. Holder measures non-controlling interests at fair value, on acquisition. The market value of shares in Retailer was $5 and should be used to calculate the fair value of NCI. Goodwill has not been impaired since acquisition. Holder acquired a further 20% of Retailer's voting shares on 1 June 2020 for $1.6 million.

The retained earnings reported in the financial statements of Holder and Retailer as at 30 September 2020 were $10 million and $4.6 million respectively.

Retailer sold goods to Holder for $1 million in August 2020 and 42% of the goods remain in Holder's inventory at the year-end. Retailer had applied a mark-up of 20% on the goods sold.

Performance occurs evenly throughout the year for both entities.

Required: Calculate the balances to recognise on the consolidated statement of financial position for the Holder group as at 30 September 2020, for:

I. Goodwill

II. Non-controlling interest

III. Consolidated retained earnings

Reference no: EM132762716

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