Reference no: EM132683145

On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000.

At the date of acquisition, the shareholders' equity of Jamuna Ltd is:

Share capital                    $450 000
Retained earnings              $300 000
Total shareholders' equity     750 000

Additional information

1. On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014.
2. For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000. 
3. For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000. 
4. Assume a tax rate of 30% is assumed

Required
Apply equity method of accounting to:

Problem 1: Calculate the amount of goodwill at the date of acquisition

Problem 2: Prepare the journal entries for the year ending 30 June 2015

Problem 3: Prepare the journal entries for the year ending 30 June 2016