Reference no: EM132927202

Question - On 1 July 2018 Pie Ltd acquired 60% on the issued shares of Edd Ltd for $180 000 when the shareholders equity of Edd ltd was:

Share capital 180 000

General reserve 40 000

Retained earnings 60 000

At the date of acquisition, all identifiable net assets of Edd Ltd were recorded at fair value.

During the period ended 30 Jun 2021, the following transactions occurred:

During the current financial year, Elf Ltd sold inventory to Pixie Ltd at a price of $20 000. The inventory had cost Edd Ltd $17 000. Fifty per cent of this inventory is still on hand with Pie Ltd at the end of the financial year.

During the current financial year Edd Ltd pays management fees of $17,000 to Pie Ltd

The operating profit of Edd Ltd is $55 000

The directors have applied the impairment test for goodwill and determined that a write-down of $1 200 is required for consolidation purposes at 30 June

Edd Ltd declared a dividend of $5 600 during the year

Retained earnings of Edd Ltd at 1 July 2020 was $70 000

Required -

1. Prepare the consolidation journal entries for the above transactions.

2. Calculate the non-controlling interests in profits for the year ended 30 June 2021.