Finger Ltd purchased 75 per cent of the issued capital and in the process gained control over Nail Ltd on 1 July 2003.The fair value of the net assets of Nail Ltd at purchase was represented by: Finger Ltd paid cash consideration of $4,000,000 for Nail Ltd.During the period ended 30 June 2005,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 2005,what consolidation journal entries are required and what is the minority interest?
E) None of the given answers.

Question

Finger Ltd purchased 75 per cent of the issued capital and in the process gained control over Nail Ltd on 1 July 2003.The fair value of the net assets of Nail Ltd at purchase was represented by:  Finger Ltd paid cash consideration of $4,000,000 for Nail Ltd.During the period ended 30 June 2005,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 2005,what consolidation journal entries are required and what is the minority interest?
E) None of the given answers.

Quizplus · Accepted Answer

The Answer of Finger Ltd purchased 75 per cent of the issued capital and in the process gained control over Nail Ltd on 1 July 2003.The fair value of the net assets of Nail Ltd at purchase was represented by:  Finger Ltd paid cash consideration of $4,000,000 for Nail Ltd.During the period ended 30 June 2005,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 2005,what consolidation journal entries are required and what is the minority interest?
E) None of the given answers.

Finger Ltd Purchased 75 Per Cent of the Issued Capital