University Nanyang Polytechnic (NYP)
Subject Contemporary Financial Accounting

Assignment Overview:

Case Scenario 1:

Apple Ltd purchased 60% of the shares totaling $65,000 in Banana Ltd and Banana Ltd wholly owns Cherry Ltd which was purchased for $52,000. Both investments were acquired on 1 July 2018. On this date, shareholders’ equity was valued at:

Banana LtdCherry Ltd
Share capital75,00020,000
General reserve10,0001,000
Retained earnings16,0004,500

The financial statements of the entities within the group at 30 June 2020 are as follows:’

Apple Ltd:

Total assets295,000
Total liabilities126,000
Share capital100,000
General reserve30,000
Retained earnings39,000

Banana Ltd:

Debentures in Cherry Ltd20,000
Total assets147,000
Total liabilities17,750
Share capital75,000
General reserve16,250
Retained earnings38,000

Cherry Ltd:

Total assets66,500
Total liabilities30,250
Share capital20,000
General reserve2,250
Retained earnings14,000

The tax rate is 30%. All non-controlling interests are valued at the proportionate share of the acquiree’s identifiable net assets. Inventory on hand at 30 June 2020 included goods obtained from within the group as follows:

  • Apple Ltd purchased from Banana Ltd, the sale price was $10,000 and cost $7,500.
  • Apple Ltd purchased from Cherry Ltd, the sale price was $20,000 and cost $18,500.
  • Banana Ltd purchased from Cherry Ltd, the sale price was $15,000 and cost $13,800.

The directors had applied the impairment test for goodwill annually and determined that a write-down of $3,090 is required for consolidation purposes at 30 June 2020 (write-down of goodwill in Banana Ltd is $440 and write-down of goodwill in Cherry Ltd is $2,650) with the same amounts deemed to be attributable for the prior period. All debentures (including the debenture from Cherry Ltd to Banana Ltd) are due 30 June 2030.


In the space provided – show goodwill entries, intragroup transactions, and calculate direct and indirect non-controlling interest.

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Case Scenario 2:

On 1 July 2019, ABC Ltd acquired a portion of XYZ Ltd and they use the partial method to account for the 10% share of the NCI. ABC Ltd acquired their portion of the equity at a cost of $500,000 when share capital had a balance of $350,000 and retained earnings was $100,000. The property was required to be revalued on the acquisition date. On the books of XYZ Ltd, the property was recorded as $950,000. ABC Ltd had an independent valuation completed which confirmed the asset could be sold for $1,000,000. On 1 July 2019, XYZ Ltd sold the plant to ABC Ltd that cost $50,000 and had accumulated depreciation $20,000. The selling price of the plant was $40,000. At the date of sale, the plant could be depreciated straight line, 25% per year.

Pre-tax profit for 30 June 2020 is $100,000. During this year there was intragroup sales totaling $60,000 that had a cost price of $30,000. A quarter of this inventory was still on hand at the end of this year. The tax rate relating to all transactions to both entities is 30%. A consultancy fee of $10,000 was paid by the subsidiary to the parent.


Calculate any non-controlling interest and write it in the space provided below. Show all intragroup entries and full workings.

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