On 1 July 2018, Red River Ltd acquired 70% of the share capital of Mekong Ltd for $1,200,000. The equity of Mekong Ltd was:
Share Capital $1,050,000
General Reserve $ 300,000
Retained Earnings $ 150,000
All assets of Mekong Ltd were recorded at Fair Value (FV) on acquisition, except for a piece of equipment that had a higher FV ($50,000) than its carrying amount. The cost of the equipment was $300,000, and accumulated depreciation is $196,000. The tax rate is 30%
Required:
Complete the worksheet below using the “Gross Method”.
| Elimination of investment is subsidiary (Mekong Ltd) | Mekong Ltd $ | Red River Ltd 70% interest | 30% NCI $ |
| FV of consideration transferred | 1,200,000 | 1,200,000 | |
| *Plus NCI measured at FV | |||
| less FV of assets acquired, liabilities assumed | |||
| Share capital on acquisition date | 1,050,000 | ||
| General Reserve on acquisition | 300,000 | ||
| Retained earnings on acquisition | 150,000 | ||
| FV adjustment | |||
| Fair Value of Net Identifiable Assets acquired | |||
| Goodwill on acquisition date | |||
| Non-controlling interest |
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