Homework answers / question archive / P Ltd paid $350 million to acquire 80% of S Ltd on 31 December 20x8 when S Ltd's net assets were represented by share capital of $300 million and retained profits of $200 million

P Ltd paid $350 million to acquire 80% of S Ltd on 31 December 20x8 when S Ltd's net assets were represented by share capital of $300 million and retained profits of $200 million

Accounting

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P Ltd paid $350 million to acquire 80% of S Ltd on 31 December 20x8 when S Ltd's net assets were represented by share capital of $300 million and retained profits of $200 million. On this date, S Ltd had a contingent liability for which it had a 25% chance of paying damages of $100,000 to another company. The group policy was to measure non-controlling interest based on its share of acquisition-date fair value of identifiable net assets of subsidiary acquired. For 20x8 consolidation, the consolidation journal entry for "Non-controlling interest" should be:



-Dr Share capital $60 million, Dr Beginning retained profit $40 million, Cr Provision for contingent liability $5 million, Cr Non-controlling interest $95 million.
-None of the listed choices.
-Dr Share capital $60 million, Dr Beginning retained profit $40 million, Cr Provision for contingent liability $25 million, Cr Non-controlling interest $75 million.
-Dr Share capital $60 million, Dr Beginning retained profit $40 million, Cr Provision for contingent liability $20 million, Cr Non-controlling interest $80 million.
-Dr Share capital $60 million, Dr Beginning retained profit $40 million, Cr Provision for contingent liability $5 million, Cr Gain from bargain purchase $7.5 million, Cr Non-controlling interest $87.5 million.

Which option is it?