There is right to the investors to control the investee when it is exposed or possess rights for generating variable returns through the involvement of investee and affect those returns by exerting power over the investee. As per the AASB 10, it is recommended to the finance director of MC is that the control model includes the three elements such as power of an investor, power over the investee and return to the investor etc.
in case of power over the investee, the investors should have an voting rights in the equity, preferences share etc. It is finding that those fulfilling their responsibilities, governing bodies then they have rights to become the members of particular company (Walton, 2016). Return to the investor is another criterion which has an ability to use the power in order to influences the return of the investors. Besides that, link between power and return helps the company to make an growth in future.
|Consolidated statement of financial position|
|Property Plant and equipment||1600|
|Investment in TakeltEasy Ltd||900|
|Total non-current assets||3370|
|Total shareholders’ equity||3370|
|Reconciliation of opening and closing retained earnings|
|Retained earnings — 30June2018||300||200|
|Retained earnings — 30June2019||500||300|
|Fair value of non controlling interest||720000||1620000|
Goodwill = (Consideration paid + Fair value of non controlling interest) – (Assets acquired – Liabilities assumed)
(900000 + 720000) – (530000 – 300000)
NCI equity = Beginning NCI equity Fair Value + NCI’s interest in subsidiary income – NCI’s share of dividends
700000 + 60000 – 40000
|Deferred Tax worksheet for I Love Corporate Accounting Ltd|
|Statement of profit or loss and other comprehensive income for the year ended 30 June 2019|
|Depreciation expense – plant||64,000|
|Accounting profit before tax||3,26,000|
|Other comprehensive income||Nil|
|Less: Tax considered on credit sales (credit sales = 100000)||30000||67800|
|Profit after taxation||2,96,000|
|Assets and liabilities as disclosed in the statemet of financial positions as at 30 June 2019|
|Plant – cost||4,00,000|
|Less: Accumulated depreciation||64,000||3,34,000|
|Provision for warranty expenses||20,000|
|Warranty expenses were accrued||Paid||20,000|
- According the provided information, it is found that Wiley & Sons Australasia Ltd is going to acquire to 70% share of Wiley Plus. As concerning concern of this, remaining percent will be known as the non controlling interest an d fair value of the net controlling interest will be $428571. As concerning the faire value, the amount of goodwill pursuant will be recorded by $728571 (1000000 + 428571-700000).
- As concerning of the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, the goodwill pursuant recorded by $321000 (1000000+70000*0.3 – 700000).
- In the business environment, there are some implications of allowing the group to concern the goodwill. In this, the company should effective identify the assets acquired, liabilities assumed and other non-controlling interest in the acquisition.
|Consolidated worksheet for FinalHeadache Ltd|
|FinalHeadache Ltd||Solutions Ltd|
|Costs of goods sold||464||-238|
|Dividends received from Solutions Ltd||93||–|
|Management fee revenue||26.5||–|
|Gain on sale of plant||40||35|
|Management fee expenses||26.5||26.5|
|Profit before tax||107.6||579|
|Profit for the year||75.32||405.3|
|Retained earning — 30 June 2018||319.4||239.2|
|Retained earnings at 30 June 2019||257.32||551.5|
|Statements of financial position|
|FinalHeadache Ltd||Solutions Ltd|
|Share capital Current liabilities Accounts payable||350||200|
|Land & Buildings||224||326|
|Plant – at cost||299.85||355.8|
|Accumulated depreciation – plant||-85.75||-138.8|
|Investment in Solutions Ltd||472||–|
Christensen, H.B., Lee, E., Walker, M. and Zeng, C. (2015) Incentives or standards: What determines accounting quality changes around IFRS adoption?. European Accounting Review, 24(1), pp.31-61.
Mora, A. and Walker, M. (2015) The implications of research on accounting conservatism for accounting standard setting. Accounting and Business Research, 45(5), pp.620-650.
Walton, P. (2016) Aiming for Global Accounting Standards–The International Accounting Standards Board 2001–2011.
Wang, C. (2014) Accounting standards harmonization and financial statement comparability: Evidence from transnational information transfer. Journal of Accounting Research, 52(4), pp.955-992.
Young, J.J. (2014) Separating the Political and Technical: Accounting Standard‐Setting and Purification. Contemporary Accounting Research, 31(3), pp.713-747.