Reference no: EM132893706
Exercise 1
Full and partial goodwill method
On 1 July 2019, Rainbow Ltd acquired 80% of the issued shares of Lorikeet Ltd for $165 000. At this date, the equity of Lorikeet Ltd was as follows.
At acquisition date, all the identifiable assets and liabilities of Lorikeet Ltd were recorded at amounts equal to fair value. At 30 June 2021, the equity of Lorikeet Ltd consisted of:
A transfer from pre-acquisition retained earnings to general reserve of $10 000 was made dur- ing the year ended 30 June 2020. During the year ended 30 June 2021, Lorikeet Ltd recorded a profit of $15 000.
Required
Prepare the consolidated worksheet entries at 30 June 2021 for Rainbow Ltd assuming:
1. At 1 July 2019, the fair value of the non-controlling interest was $40 000 and Rainbow Ltd adopts the full goodwill method.
2. Rainbow Ltd adopts the partial goodwill method.
Exercise 2
Partial goodwill method
Swamp Ltd acquired 90% of the issued shares (cum div.) of Tortoise Ltd on 1 July 2018 for $237 000. At this date, the equity of Tortoise Ltd consisted of:
At acquisition date, all the identifiable assets and liabilities of Tortoise Ltd were recorded at amounts equal to fair value. Tortoise Ltd had recorded a dividend payable of $10 000, which was paid in August 2018, and goodwill of $5000.
At 30 June 2020, the equity of Tortoise Ltd consisted of:
During the year ended 30 June 2020, Tortoise Ltd recorded a profit of $20 000. Required
Prepare the consolidated worksheet entries at 30 June 2020 for Swamp Ltd assuming: Swamp Ltd adopts the partial goodwill method.