Reference no: EM133128785
Question - Grin Ltd purchased 90 per cent of the issued capital and in the process gained control over Marque Ltd on 1 July 2018. Grin Ltd paid cash consideration of $3,700,000 for Marque Ltd at this time. The fair value of the net assets of Marque Ltd at purchase was represented by:
Share capital $3,220,000
Retained earnings 740,000
Total $3,960,000
During the period ended 30 June 2020, the following transactions were recorded:
a) Marque Ltd paid management fees of $100,000 to Grin Ltd.
b) Marque had an operating profit of $405,000.
c) Marque Ltd declared a dividend of $98,000 during the period.
d) Grin purchased inventory from Marque for $100,000. The inventory cost Marque Ltd $85,000 and at the end of the period Grin had 35 per cent of that inventory still on hand.
e) Marque's opening retained earnings was $810,000.
f) Goodwill has been determined to have been impaired by $13,600.
g) Companies in the group use perpetual inventory systems and accrue dividends when they are declared by subsidiaries.
h) There were no other inter-company transactions. Ignore tax implications.
Required -
1) Prepare the consolidation adjustments for the year ended 30 June 2020, based on the information provided above.
2) Calculate non-controlling interest.
3) Construct the equity section of the consolidated balance sheet.
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