Q3

Humpty Doo Ltd obtained 100% control over Noonamah Ltd by acquiring all of the issued ordinary shares on the 1st July 2021 at a cost of $137,500. The equity of Noonamah Ltd at that time consisted of:

Share capital                 $ 68,750

Retained earnings         20,625

The identifiable net assets of Noonamah Ltd were shown in the financial statements at their fair value. The tax rate is 30%.

In the year to the 30th June 2022 the following transactions took place:

i) Noonamah Ltd purchased inventory from Humpty Doo Ltd at a cost of $79,500. Of these purchases by Noonamah Ltd there remained in inventory a balance of $33, 125 at the end of the financial year on which Humpty Doo Ltd had made a profit before tax of $6,625.

ii) Humpty Doo Ltd sold new plant, with an expected 5 year life, to Noonamah Ltd on 1st January 2022 making a gain on the transaction of $13,250.

iii) An interim dividend was paid by Noonamah Ltd on 14th February, 2022 to Humpty Doo Ltd of $6,625.

iv) To aid with the administration costs of the group Humpty Doo Ltd provided Noonamah Ltd with office space for which it charged $3,320.

v) The CFO of Humpty Doo Ltd conducted and impairment test at the end of the financial year and identified that Goodwill was impaired by $21,200.

vi) As the non-current assets are measured on a fair value measurement basis, at the same time as the impairment test the CFO also revalued land which resulted in an increase to the revaluation surplus of a $5,300 gain with a total surplus balance of $37,100.

At the 30th June 2022 the companies had the following financial information:

Required

Prepare the consolidation journal entries for consolidated financial statements prepared by Humpty Doo Ltd at 30 June 2022.

Acquisition analysis, BCVR entries, Pre-acquisition entries, Intragroup entries.