Identifiable Net Asset

Part A

Parent Ltd acquired equity in Sub Ltd on 1 April 2003. At that date the identifiable net assets were considered to be fairly valued and the equity of Sub Ltd comprised:

Screenshot from 2018-11-30 10-21-47

Additional information:

  1. Prior years’ impairment of total goodwill amounted to $26,000. For the current year ended 31 March 2016 the directors of Parent Ltd believe that the total goodwill has been further impaired by $4,000.
  2. During the financial year ended 31 March 2015 Sub Ltd made sales to Parent Ltd of $30,000 and recognised a profit of $5,000. Parent Ltd had not sold this purchase of inventory as at 31 March 2015.
  3. During the financial year ended 31 March 2016 Parent Ltd made sales to Sub Ltd of $7,000 and recognised a profit of $3,200. This purchase remained in the inventory of Sub Ltd as at 31 March 2016.
  4. Sub Ltd billed Parent Ltd $2,100 for consulting advice provided on 25 March 2016. This transaction had been recorded by both entities; it remained unpaid as at 31 March 2016.

Question 2 Part A continued:

  1. The equity of Sub Ltd as at 31 March 2016 comprised:
Screenshot from 2018-11-30 10-22-54

Required:

Assume Parent Ltd acquired 100% of the equity in Subsidiary Ltd for $200,000 on

1 April 2003. Complete the consolidation worksheet in the examination answer book for Parent Ltd for the financial year ended 31 March 2016 in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations.

Part B

Instead of Parent Ltd acquiring the 100% in Part A above assume Parent Ltd acquired 80% of the equity in Sub Ltd for $160,000 on 1 April 2003.

Required:

Prepare the notional journal entry as at 31 March 2016 to identify the non controlling interest (NCI), in Subsidiary Ltd, to be reported in the group accounts. The directors of Parent Ltd require the NCI to be measured at fair value.

Part C

There is one distinctive equity account that can appear in the consolidated balance sheet of a group but will not appearin the parent entity’s or subsidiary entity’s separate financial statements. There is also one asset account that will appear in the balance sheet of the parent entity but will not appear in the subsidiary entity’s separate financial statements or in the consolidated balance sheet of the group.

Required:

Name the equity account and the asset account, respectively.

QUESTION 3

Review the 2017 annual reports of Auckland Airport and Air New Zealand to answer the questions in the Answer Booklet.

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