Reference no: EM132624630

Questions -

Q1 - Buddy Limited acquired 80% of the Share capital and Reserves of Gear Limited for $20,000. Share capital was $10,000 and Reserves amounted to $5,000. All assets and liabilities were recorded at fair value except plant which was recorded at $1,000 below fair value. The company tax rate was 30%. The partial goodwill method is adopted by the group. The amount of goodwill acquired by Buddy Limited in this business combination was:

A $12,560

B $7,440

C $7,200

D $5,000

Q2 - Ulla Limited acquired 85% of the share capital and reserves of Dulla Limited for $170,000. Share capital was $100,000 and reserves amounted to $62,000. All assets and liabilities were recorded at fair value except equipment which was recorded at $30,000 below fair value. The company tax rate was 30%. The partial goodwill method is adopted by the group. The NCI share of equity at the date of acquisition was:

A $28,800

B $24,300

C $27,450

D $19,200

Q3 - Shapes Ltd holds a 60% interest in Samson Ltd. On 1 July 2016 Samson Ltd sold a depreciable non-current asset to Shapes Ltd at a profit before tax of $10,000. The remaining useful life of the asset at the date of sale was 4 years and the tax rate is 30%. The impact of the above on the NCI share of profit for the year ended 30 June 2018 is:

A DR $2,100.

B DR $700.

C DR $1,400.

D CR $1,400.

Q4 - Bob Limited holds a 80% interest in Bill Limited. Bob Limited sells inventory to Bill Limited during the year for $15,000. The inventory originally cost $8,000. At the end of the year 40% of the inventory is still on hand. The tax rate is 30%. The NCI adjustment required in relation to this transaction is a debit of:

A $392.

B NIL

C $2,800

D $1,960

Q5 - In the preparation of consolidated financial statements, the measurement of a non-controlling interest in the shareholders' equity of a subsidiary at the reporting date may be affected by:

A management fees charged to the subsidiary by the parent entity.

B unrealised profits arising from sales of inventories in the previous period by the subsidiary to another subsidiary in the same group.

C consolidation adjustments made against the retained earnings of the subsidiary at the end of the previous period.

D none of the above.