Question

On 1 July 2019 Prometheus Ltd acquired 90% of the shares of Unbound Ltd for $326 430. At this date the equity of Unbound Ltd consisted of share capital of $225 000 and retained earnings of $90 000. All the identifiable asset and liabilities of Unbound Ltd were recorded at amounts equal to fair value except for:

Carrying amount Fair value

Land $ 60 000 $ 67 500

Plant (cost $285 000) 225 000 247 500

Inventory 11 250 13 500

The plant was considered to have a further 10-year life. All the inventory was sold by 30 June 2020. The tax rate is 30%. Prometheus Ltd uses the partial goodwill method.

During the 2019–20 period Unbound Ltd recorded a profit of $22 500.

Required

Prepare the consolidation worksheet journal entries for the preparation of the consolidated financial statements of Prometheus Ltd at 30 June 2020. (round to the nearest dollar, worksheets are not required)

Answer 1

Date	General Ledger	Debit	Credit
30/6/20	Land A/c--Dr	7,500
	Plant A/c---Dr	22,500
	Inventory A/c---Dr	2,250
	Goodwill A/c---Dr	13,905
	Share capital in Unbound A/c--Dr	225,000
	Retained earnings in Unbound A/c--Dr	90,000
	To Investment A/c		326,430
	To NCI A/c		34,725
	(Being acquisition accounted)
30/6/20	Cost of goods sold A/c---Dr	2,250
	To Inventory A/c		2,250
	(Being sell of inventory accounted in consol)
30/6/20	NCI A/c---Dr	225
	To Profit and Loss A/c		225
	(Being NCI share on inventory accounted)
30/6/20	Depreciation A/c---Dr	2,250
	To Plant A/c		2,250
	(Being fair value portion of plant amortized)
30/6/20	NCI A/c---Dr	225
	To Profit and Loss A/c		225
	(Being NCI share on plant depreciation accounted)
30/6/20	Profit & Loss A/c---Dr	2,250
	To NCI A/c		2,250
	(Being NCI share in current PL recorded)

Purchase consideration	326,430
Less: Pre-acquisition
Share capital	(202,500)
Retained earnings	(81,000)
Fair value in consol
Land	(6,750)
Plant	(20,250)
Inventory	(2,025)
Goodwill	13,905