Green Ltd Purchased 90 Per Cent of the Issued Capital

Green Ltd purchased 90 per cent of the issued capital and in the process gained control over Maroon Ltd on 1 July 2015.The fair value of the net assets of Maroon Ltd at purchase was represented by: $$\begin{array} { | l | r | } \text { Share capital } & \$ 3220000 \\\hline \text { Retained earnings } & 740000 \\\hline & \$ 3960000 \\\hline\end{array}$$ Green Ltd paid cash consideration of $3 700 000 for Maroon Ltd.During the period ended 30 June 2017,Maroon Ltd paid management fees of $100 000 to Green Ltd and Maroon had an operating profit of $405 000.Maroon Ltd declared a dividend of $98 000 during the period.Green purchased inventory from Maroon during the period ended 30 June 2017 for $100 000.The inventory cost Maroon Ltd $85 000 and at the end of the period Green had 35 per cent of that inventory still on hand.Maroon's opening retained earnings for the period ended 30 June 2017 was $810 000.Goodwill has been determined to have been impaired by $13 600.Companies in the group use perpetual inventory systems and accrue dividends when they are declared by subsidiaries.There were no other inter-company transactions.Ignore tax implications. For the period ended 30 June 2017,what consolidation journal entries are required and what is the outside equity interest?

A) $\text { Consolidation journal entries: }$
$\begin{array}{|l|l|r|l|}\hline \mathrm{Dr} & \text { Share capital } & 2898000 & \\\hline \mathrm{Dr} & \text { Retained earnings } & 666000 & \\\hline \mathrm{Dr} & \text { Goodwill } & 136000 & \\\hline \mathrm{Cr} & \text { Investment in Maroon Ltd } && 3700000 \\\hline\\\hline \mathrm{Dr} & \text { Impairment loss } & 13600 & \\\hline \mathrm{Cr} & \text { Accumulated impairment loss } & & 13600 \\\hline & & & \\\hline \mathrm{Dr} & \text { Management fee revenue } & 90000 & \\\hline \mathrm{Cr} & \text { Management fee expense } & & 90000\\\hline\\\hline \mathrm{Dr} & \text { Dividend revenue } & 88200 & \\\hline \mathrm{Cr} & \text { Dividend paid } & & 88200 \\\hline & & & \\\hline \mathrm{Dr} & \text { Sales revenue } & 90000 & \\\hline \mathrm{Cr} & \text { Cost of goods sold } & & 90000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Cost of goods sold } & 4725 & \\\hline \mathrm{Cr} & \text { Inventory } & & 4725 \\\hline\end{array}$

$\text { Non-controlling interest }$
$\begin{array}{|l|r|r|}\hline \text { Operating profit } & 40500&\quad\quad\quad \\\hline \text { Opening retained earnings } & 81000 \\\hline \text { Dividends } & (9800) \\\hline \text { Share capital } & \underline{322000} \\\hline \text { Total } & \underline{433700} \\\hline\end{array}$
B) $\text { Consolidation journal entries: }$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Share capital } & 2898000 & \\\hline \mathrm{Dr} & \text { Retained earnings } & 666000 & \\\hline \mathrm{Dr} & \text { Goodwill } & 136000 & \\\hline \mathrm{Cr} & \text { Investment in Maroon Ltd } & & 3700000 \\\hline & & 13600 & \\\hline \mathrm{Dr} & \text { Impairment loss } & & 13600 \\\hline \mathrm{Cr} & \text { Accumulated impairment loss } & & \\\hline & & 100000 & \\\hline \mathrm{Dr} & \text { Management fee revenue } & & 100000\\\hline\\\hline \mathrm{Dr} & \text { Dividend payable } & 88200 & \\\hline \mathrm{Cr} & \text { Dividend declared } & & 88200 \\\hline & & 88200 & \\\hline \mathrm{Dr} & \text { Dividend revenue } & & 88200 \\\hline \mathrm{Cr} & \text { Dividend receivable } & & \\\hline & & 100000 & \\\hline \mathrm{Dr} & \text { Sales revenue } & & 100000 \\\hline \mathrm{Cr} & \text { Cost of goods sold } & & \\\hline & & & \\\hline \mathrm{Dr} & \text { Cost of goods sold } & 5250 \\\hline \mathrm{Cr} & \text { Inventory } & & 5250 \\\hline\end{array}$

$\text { Non-controlling interest: }$
$\begin{array}{|l|r|r|}\hline \text { Operating profit } & 39975 &\quad\quad\quad\\\hline \text { Opening retained earnings } & 81000 \\\hline \text { Dividends } & (9800) \\\hline \text { Share capital } & \underline{322000} \\\hline \text { Total } & 433175 \\\hline\end{array}$

C) $\text { Consolidation journal entries: }$
$\begin{array}{l}\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 2898000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 666000 & \\\hline \mathrm { Cr } & \text { Investment in Maroon Ltd } & & 3564000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Management fee expense } & 10000 & \\\hline \mathrm { Cr } & \text { Management fee revenue } & & 10000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Dividend payable } & 88200 & \\\hline \mathrm { Cr } & \text { Dividend declared } & & 88200 \\\hline \mathrm { Dr } & \text { Dividend revenue } &88200 & \\\hline \mathrm { Cr } & \text { Dividend receivable } & &88200 \\\hline & & & \\\hline \mathrm { Dr } & \text { Sales revenue } & 90000& \\\hline \mathrm { Cr } & \text { Cost of goods sold } & &90000 \\\hline \end{array}\\\\\text { Non-controlling interest: }\\\begin{array} { | l | r | l | } \hline \text { Operating profit } & 40500 &\quad\quad\quad \\\hline \text { Opening retained earnings } & 74000 & \\\hline \text { Dividends } & ( 9800 ) & \\\hline \text { Share capital } & 322000 & \\\hline \text { Total } & 426700 & \\\hline\end{array}\end{array}$
D) $\begin{array}{|c|l|r|r|}\hline \text { Consolidation journal entries: } & & \\\hline \mathrm{Dr} & \text { Share capital } & 3220000 & \\\hline \mathrm{Dr} & \text { Retained earnings } & & 740000 \\\hline \mathrm{Cr} & \text { Non-controlling interest } & & 260000 \\\hline \mathrm{Cr} & \text { Investment in Maroon Ltd } & & \\\hline & & 100000 & \\\hline \mathrm{Dr} & \text { Management fee revenue } & & 100000 \\\hline \mathrm{Cr} & \text { Management fee expense } & & \\\hline\\\hline \mathrm{Dr} & \text { Dividend payable } & 88200 & \\\hline \mathrm{Cr} & \text { Dividend declared } & & 88200 \\\hline & & & \\\hline \mathrm{Dr} & \text { Dividend revenue } & 88200 & \\\hline \mathrm{Cr} & \text { Dividend receivable } & & 88200 \\\hline\\\hline \mathrm{Dr} & \text { Sales revenue } & 90000 & \\\hline \mathrm{Cr} & \text { Cost of goods sold } & & 90000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Cost of goods sold } & 5250 & \\\hline \mathrm{Cr} & \text { Inventory } & & 5250 \\\hline\\\hline\text { Non-controlling interest: }\\\hline \text { Operating profit } && 50500 \\\hline \text { Opening retained earnings } && 74000 \\\hline \text { Dividends } && (9800) \\\hline \text { Share capital } && \underline{322000} \\\hline \text { Total } && 436700 \\\hline\end{array}$