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Use the method of figure 2 to carry out the calculation. How to calculate the depreciation in the first year?

Question 1 (25 marks) Parent Ltd acquired 60% of the shares of Subsidiary Ltd on January 1, 2019 for $600,000 when the equity of Subsidiary Ltd consisted of $700,000 share capital and $200,000 retained earnings. All identifiable assets and liabilities of Subsidiary Ltd are recorded at fair value at this date except for inventory which was overvalued by $10,000 (all sold by Dec. 31, 2019) and plant which was undervalued by $20,000 with a further 4-year life. The income tax rate is 30% and both firms' financial reporting date is December 31 . Additional information: 1. During the year Subsidiary Ltd sold inventory to Parent Ltd with a before-tax profit of $30,000. Parent Ltd has since resold 60% of these items. 2. During the year Parent Ltd sold inventory to Subsidiary Ltd with a before-tax profit of $12,000. Parent Ltd still has these items on hand. 3. On July 1, 2019, Subsidiary Ltd sold equipment to Parent Ltd recording a before-tax profit of $20,000. The equipment had a further 5-year life. 4. Subsidiary Ltd earned a net profit of $100,000 and declared $10,000 dividends for 2019 . Required: 1) Calculate NCI share of profit for 2019. (10 marks) 2) Calculate NCI share of equity at 31 December 2019. (10 marks) * The plant only had been depreciated for 2 years =15K20%2 yrs =6,000. After-tax unrealized profit =(15,0006,000)0.7=6,300. All this amount, NCI=6,30040%=2,520

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