Question

MP Ltd acquired 80% of TB Ltd for $160 million on 20/09/15. At this time Fair Value of consideration was: Share Capital: 75,000,000 Retained Earnings 22,200,000 General Reserves 72,800,000 On 31/3/16, MP Ltd acquired a further 7.5% for $13,000,000. Required: a) Prepare journal entries to recognise the acquisition on 20/09/15 b) Determine the total Non-controlling interest on 20/09/15. c) Journalise the event that occurred on 31/03/16 and the Non-controlling interest journal for 31/03/16. (3 + 2 marks)  

Answer 1

a). Journal entry to recognise the acquisition on 20/09/2015.

Account Titles	Debit	Credit
Investment in TB Ltd.	$160,000,000
Cash		$160,000,000

b). Non controlling Interest on 20/09/2015:
Share Capital = $75,000,000
Retained earnings = $22,200,000
General Reserves = $72,800,000
Total = $170,000,000
Investment by MP Ltd. 80%.
Non Controlling Interest = 20% * $170,000,000 = $34,000,000

c). Journal Entry for the event on 31/03/2016:
MP Ltd. acquired 7.5% stake further in TB Ltd.:

Account Titles	Debit	Credit
Investment in TB Ltd.	$13,000,000
Cash		$13,000,000

d). Calculation of Non controlling Interest on 31/03/2016:
Non controlling Interest = $170,000,000 * 12.5% = $21,250,000