Question

In: Accounting

When calculating the NCI share of equity the step approach is used. Demonstrate the step approach,...

When calculating the NCI share of equity the step approach is used. Demonstrate the step approach, explaining in detail each journal entry, using the following information:

Time Ltd acquired 90% of Out Ltd for $252,000 cash on 1 July 2018. At that date the equity of Out included the following:

       Share Capital          $200 000

       Retained Earnings              80 000

                                   280 000

On 30 June 2020, Out Ltd provided the following information:

Profit after tax               $ 40 000

Retained earnings (1/7/19)       100 000

Dividend paid                    10 000

Solutions

Expert Solution

All Entry are in the books of Time Ltd

On the date of acqusition 30th june 2018

Assets A/c Dr. $ 2 80 000

To Cash 2 52 000

To NCI 28 000

(Being 90% share holding acquired)

On 30th June 2018 (After 1st Year End) Profit Earned (100 000-80 000)=20 000

1st Year Profit is calculated from Retained earning of 30june 2018 and 1 july 2019

Entry on 30 june 2019

Profit = 20 000 Total

NCI Intrest = 2000 (10 % NCI )

Profit for Time Limited 18000

Income on investment in Subsidiery Dr,. 20000

TO NCI 2000

To Consolidated P/l 18000

( Being profit for the Year Recognised)

On 30th June 2020 (At the end of 2nd YEar)

Profit= $40000

NCI Share in Profit = 40 000 *10%== 4 000

Remaing Profit is for Time Limited = $36000

Dividend Distributed Share

total 10,000

NCI Share = 10000*10%= 1000 Remaing 9000 For Time limited

NCI= 28000 +2000(Profit Share for 2019) +4000 (Profit share for 2020)-1000(Dividend Paid)

Income on investment in Subsidiery Dr,. 40000

TO NCI 4000

To Consolidated P/l 36000

( Being profit for the Year Recognised)

Entry For Dividend paid:

NCI Dr. 1000

Consolidated P/l Dr 9000

to Divend Payables 10000

(Being Dividend PAid)


Related Solutions

When identifying the NCI share of equity explain how intragroup transactions can influence the calculation.
When identifying the NCI share of equity explain how intragroup transactions can influence the calculation.
When identifying the NCI share of equity explain how intragroup transactions can influence the calculation.
When identifying the NCI share of equity explain how intragroup transactions can influence the calculation.
1. When identifying the NCI share of equity explain how intragroup transactions can influence the calculation....
1. When identifying the NCI share of equity explain how intragroup transactions can influence the calculation. 2. Why are intragroup transactions adjusted for on the consolidation worksheet? 250 each
1.  Which of the following is NOT counted when calculating the U.S. GDP using the income approach...
1.  Which of the following is NOT counted when calculating the U.S. GDP using the income approach A. after-tax profits (dividends) paid to the Japanese owners resulting from the activity of the Toyota Motor Manufacturing plant that operates in Kentucky, US. B. the wage compensation paid to a Japanese plant manager who has been helping run (on-site) the Kentucky factory for this past year. C. interest paid to domestic lenders by the state of Kentucky for a loan made to cover...
1. AASB 127 requires that NCI be reported as a separate item of owners’ equity. Discuss...
1. AASB 127 requires that NCI be reported as a separate item of owners’ equity. Discuss the effect of this requirement on the consolidation process. 2. Discuss whether there are differences in principle or detail in the way current- and prior-year intra-group transactions influence the calculation of NCI.
Select the appropriate elements of the SFP from the given accounts. SINGLE-STEP APPROACH OR MULTI-STEP APPROACH...
Select the appropriate elements of the SFP from the given accounts. SINGLE-STEP APPROACH OR MULTI-STEP APPROACH 1. Net Sales 2. Net Purchases 3. Depreciation and Amortization 4. General and Administrative Expense 5. Rent Expense 6. Cost of Sales 7. Bad Debts Expense 8. Selling Expense 9. Advertising Expense 10. Utilities Expense 11. Salaries Expense 12. Interest Income 13. Merchandise Inventory 14. Gain from the Sale of PPE 15. Service Revenue
What is a step by step approach of finding the sweet spot for a company?
What is a step by step approach of finding the sweet spot for a company?
Discuss the differences calculating GDP using the expenditure approach and income approach. Be specific, do not...
Discuss the differences calculating GDP using the expenditure approach and income approach. Be specific, do not just write the formula.
Discuss the differences calculating GDP using the expenditure approach and income approach. Be specific, do not...
Discuss the differences calculating GDP using the expenditure approach and income approach. Be specific, do not just write the formula.
Discuss the difference in calculating GDP using the expenditure approach and income approach. Be specific; do...
Discuss the difference in calculating GDP using the expenditure approach and income approach. Be specific; do not just write the formula
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT