Problem
On 1 July 2019, Parent Entity acquired 75 per cent of the share capital of Subsidiary Ltd for $10,000,000, which represented the fair value of the consideration paid, when the share capital and reserves of Subsidiary Ltd were:
Share capital $8,000,000
Revaluation surplus $2,000,000
Retained earnings $1,000,000
All assets of the Subsidiary Ltd were recorded at fair value at acquisition date, except for some plant that had a fair value $175,000 greater than its carrying amount. The cost of the plant was $250,000 and it had accumulated depreciation of $180,000. The tax rate is 30 per cent.
Task
Prepare the consolidation eliminations and adjustments to recognise the pre-acquisition capital and reserves of Subsidiary Ltd, assuming that the non-controlling interest was measured at the proportionate share of the acquiree's identifiable net assets.