Reference no: EM133123310

Question - Green Ltd purchased 90 percent of the issued capital and in the process gained control over Maroon Ltd on 1 July 2018. Green Ltd paid a cash consideration of $3,700,000 for Maroon Ltd at this time. The fair value of the net assets of Maroon 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) Maroon had an operating profit of $405,000.

b) Maroon Ltd declared a dividend of $98,000 during the period.

c) Maroon'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. The tax rate is 30%.

Required -

a) Prepare the acquisition analysis assuming the full goodwill method.

b) Prepare the consolidation adjustments for the year ended 30 June 2020, and based on the information provided above, calculate the non-controlling interests at 30 June 2020. Assume the full goodwill method.

c) The effects of all intragroup transactions must be adjusted for when calculating the non-controlling interest share of a subsidiary's equity. Explain.