Finger Ltd Purchased 75 Per Cent of the Issued Capital

Finger Ltd purchased 75 per cent of the issued capital and in the process gained control over Nail Ltd on 1 July 2013.The fair value of the net assets of Nail Ltd at purchase was represented by: $$\begin{array} { | l | r | } \text { Share capital } & \$ 3760000 \\\hline \text { Retained earnings } & 1320000 \\\hline & \$ 5080000 \\\hline\end{array}$$ Finger Ltd paid cash consideration of $4 000 000 for Nail Ltd.During the period ended 30 June 2015,Nail Ltd paid management fees of $540 000 to Finger Ltd and Nails had an operating profit of $980 000.Nails' opening retained earnings at the beginning of the period were $1 460 000.At the end of the period Nail Ltd declared a dividend of $90 000.There were no other inter-company transactions.Goodwill was determined to have been impaired by $19 000 during the period.Companies in the group accrue dividends when they are declared by subsidiaries. For the period ended 30 June 2015,what consolidation journal entries are required and what is the non-controlling interest?

A) $$\begin{array}{l}\begin{array} { | c | l | r | r | } \hline { \text { Consolidation journal entries: } } & & \\\hline \mathrm { Dr } & \text { Share capital } & 2820000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 990000 & \\\hline \mathrm { Cr } & \text { Investment in Wills Ltd } & & 3810000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Management fee revenue } & 540000 & \\\hline \mathrm { Cr } & \text { Management fee expense } & & 540000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Dividend payable } & 90000 & \\\hline \mathrm { Cr } & \text { Dividend receivable } & & 90000 \\\hline & & & \\\hline\end{array}\\\text { Non-controlling interest: }\\\begin{array} { | l | r | l | } \hline \text { Operating profit } & 245000 &\quad\quad\quad \\\hline \text { Opening retained earnings } & 365000 & \\\hline \text { Share capital } & 940000 & \\\hline \text { Total } & 1550000 & \\\hline\end{array}\end{array}$$
B) $\text { Consolidation journal entries: }$
$\begin{array}{|l|l|r|l|}\hline \mathrm{Dr} & \text { Share capital } & 3760000 & \\\hline \mathrm{Dr} & \text { Retained earnings } & 1320000 & \\\hline \mathrm{Cr} & \text { Non-controlling interest } & & 1080000 \\\hline \mathrm{Cr} & \text { Investment in Wills Ltd } & & 4000000\\\hline\\\hline \mathrm{Dr} & \text { Impairment loss } & 19000 & \\\hline \mathrm{Cr} & \text { Accumulated impairment loss } & & 19000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Management fee revenue } & 540000 & \\\hline \mathrm{Cr} & \text { Management fee expense } & & 540000\\\hline\\\hline \mathrm{Dr} & \text { Dividend payable } & 67500 & \\\hline \mathrm{Cr} & \text { Dividend receivable } & & 67500 \\\hline\end{array}$

$\text { Non-controlling interest }$
$\begin{array}{|l|r|r|}\hline\text { Operating profit } & 245000&\quad\quad\quad \\\hline \text { Dividend } & \underline{22500} \\\hline \text { Total } & 267500\\\hline\end{array}$
C) $\text { Consolidation journal entries: }$
$\begin{array}{|l|l|r|l|}\hline\mathrm{Dr} & \text { Share capital } & 2820000 & \\\hline \mathrm{Dr} & \text { Retained earnings } & 990000 & \\\hline \mathrm{Dr} & \text { Goodwill } & 190000 & \\\hline \mathrm{Cr} & \text { Investment in Wills Ltd } & & 4000000\\\hline\\\hline \mathrm{Dr} & \text { Impairment loss } & 19000 & \\\hline \mathrm{Cr} & \text { Accumulated impairment loss } & & 19000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Management fee revenue } & 540000 & \\\hline \mathrm{Cr} & \text { Management fee expense } & & 540000\\\hline\\\hline \mathrm{Dr} & \text { Dividend payable } & 67500 & \\\hline \mathrm{Cr} & \text { Dividend declared } & & 67500 \\\hline & & & \\\hline \mathrm{Dr} & \text { Dividend revenue } & 67500 & \\\hline \mathrm{Cr} & \text { Dividend receivable } & & 67500 \\\hline\end{array}$

$\text { Non-controlling interest: }$
$\begin{array}{|l|r|r|}\hline \text { Operating profit } & 245000 &\quad\quad\quad\\\hline \text { Opening retained earnings } & 365000 \\\hline \text { Dividend } & (22500) \\\hline \text { Share capital } & \underline{940} 000 \\\hline \text { Total } & 1527500 \\\hline\end{array}$

D) $\text { Consolidation journal entries: }$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Share capital } & 2820000 & \\\hline \mathrm{Dr} & \text { Retained earnings } & 1320000 & \\\hline \mathrm{Cr} & \text { Non-controlling interest } & & 140000 \\\hline \mathrm{Cr} & \text { Investment in Wills Ltd } & & 4000000 \\\hline\\\hline \mathrm{Dr} & \text { Impairment loss } & 14000 & \\\hline \mathrm{Cr} & \text { Non-controlling interest } & & 14000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Management fee revenue } & 540000 & \\\hline \mathrm{Cr} & \text { Management fee expense } & & 540000 \\\hline\\\hline \mathrm{Dr} & \text { Dividend payable } & 67500 & \\\hline \mathrm{Cr} & \text { Dividend receivable } & & 67500 \\\hline & & & \\\hline \mathrm{Dr} & \text { Dividend revenue } & 67500 & \\\hline \mathrm{Cr} & \text { Dividend declared } & & 67500 \\\hline\end{array}$

$\text { Non-controlling interest }$
$\begin{array}{|l|r|l|}\hline \text { Operating profit } & 357500 &\quad\quad\quad \\\hline \text { Opening retained earnings } & 342500 & \\\hline \text { Share capital } & 940000 & \\\hline \text { Total } & 1640000 &\\\hline\end{array}$