Parent Ltd acquired equity in Subsidiary Ltd on 1 April 2011. At that date, the identifiable net assets were considered to be fairly valued and the equity of Subsidiary Ltd comprised:

Share capital	$500 000
Retained earnings	94 000
Asset revaluation surplus	21 000
	$615 000

Parent Ltd has requested your help in the preparation of their consolidated financial statements for the financial year ended 31 March 2019 and has provided you with the following information:

• At 31 March 2019, Sub Ltd declared a final dividend of $35 000, and Parent Ltd declared a final dividend of $90 000. Both these dividends were paid during April 2019.
• Subsidiary Ltd rents a small part of its warehouse to Parent Ltd at a cost of $9 000 per annum. At 31 March 2019, Parent Ltd still owed Subsidiary Ltd $1 200 of rental for the year ended 31 March 2019.
• During March 2018, Subsidiary Ltd made sales to Parent Ltd of $7 600 and recognised a profit of $3 800. Parent Ltd sold this purchase of inventory to Me Ltd on 29 April 2018.
• During March 2019, Subsidiary Ltd made sales to Parent Ltd of $9 460. The inventory sold has cost Subsidiary Ltd $5 460. At 31 March 2019, the inventory Parent Ltd had on hand included this purchase from Subsidiary Ltd.
• In 2013 the total goodwill of Subsidiary Ltd was considered by the directors to be impaired by $4 100 and impaired again in 2016 by $2 500. The directors of Parent Ltd believe that the total goodwill has been further impaired by $1 200 during this financial year ended 31 March 2019.
• During March 2018, Parent Ltd made sales to Subsidiary Ltd of $6 000 and recognised a profit of $2 860. Subsidiary Ltd sold this inventory to Yu Ltd on 28 March 2018.
• During March 2019, Parent Ltd made sales to Subsidiary Ltd of $6 850. The inventory sold has cost Parent Ltd $3 750. The inventory of Subsidiary Ltd at 31 March 2019 included this purchase.

Required:

(a) Assume Parent Ltd only acquired 42% of the equity in Subsidiary Ltd for $294 000 on

1 April 2011.

The following equity account balances have been extracted from the financial statements of Subsidiary Ltd on 31 March 2019:

Share capital		$500 000
Asset revaluation surplus		23 000
Retained earnings
Retained earnings-opening balance	300 000
Profit after tax	234 520
Less dividends declared	60 000	474 520
		$ 997 520

Prepare the notional journal entry, at 31 March 2019, to account for Parent Ltds investment in Subsidiary Ltd using the equity method as required by NZ IAS 28 Investments in Associates. The directors do not believe the investment has ever been impaired. The tax rate is 28%.

Note: Your workings must be included on each line of your notional journal entry. Complete a quick estimate in the space provided.

(b) Refer back to your answer for (a) and determine the amount at which the investment asset will be measured at, after being equity accounted for, in the financial statements as at 31 March 2019. Show your workings.

(a) Notional journal entry, for equity accounting, on 31 March 2019 Your workings must be shown on each line of the notional journal entry below:
	$	$

Workings to be shown of the quick estimate:

(b) The investment asset, after being equity accounted for, will be measured at	$
Workings: