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%
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|
|Fair Value of Net Identifiable Assets acquired|
|Goodwill on acquisition date|
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