Question

Consolidation: non-controlling interest (NCI)
Partial goodwill method
**Prepare the consolidation worksheet entries at 30 June 2019. Assume a profit for Carl Ltd for the year ended 30 June 2019 of $61,400

Laura Ltd purchased 97% of the issued shares of Chris Ltd for $1,759,000 on 1 July 2018 when the equity of Chris Ltd was as follows;

Share capital $703,600 Asset Revaluation surplus $527,700 Retained earnings $263,850

At this date, Chris Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the followings;

Account Cost Carrying Amount Fair value Further Life (Years) Inventories $52,800 $58,100 Land $132,000 $145,000 Equipment $205,000 $164,000 $197,000 8 Chris Ltd identified at acquisition date a contingent liability related to a lawsuit where Chris Ltd was sued by a former supplier $21,000 Chris Ltd had unrecorded and internally generated Patent with the fair value of : $53,000 Chris Ltd had unrecorded and internally generated in-process research and development with the fair value of : $40,000

60% of inventory on hand at 1 July 2018 were sold by 20 June 2019. Further life of the assets is listed on the above table. Partial goodwill method is under use and the tax rate is 30%

Answer 1

In Partial goodwill method, goodwill is measured only to the extent of the acquirers share. In this case we will record 97% of the
goodwill i.e the difference between the purchase consideration and the fair value of the net identifiable assets

Computation of Goodwill
Purchase Consideration (A)	1,759,000
Less
Assets
Inventory	58,100
Land	145,000
Equipment	197,000
internally generate patent	53,000
internally generated research	40,000
Total Assets	493,100
Less
Contngent Liabilities	21,000
Fair value of net identifiable assets	472,100
97% controlling interest (B)	457,937
Goodwill	1,301,063
Consolidation entries
Nature of Account	Debit	Credit
Inventory	58,100
Land	145,000
Equipment	197,000
internally generate patent	53,000
internally generated research	40,000
Goodwill	1,301,063
Contngent Liabilities		21,000
Cash		1,759,000
Non Controlling stake interest		14,163
	1,794,163	1,794,163