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Polestar OTQ case

On 1 April 20X3, Polestar Co acquired 75% of the 12 million 50 cent equity shares of Southstar Co.Polestar Co made an immediate cash payment of $1.50 per share. The statements of profit or loss for the year ended 30 September 20X3 show revenue for Polestar Co and Southstar Co as $110million and $66 million respectively. Revenue accrued evenly over the year.

Additional information:

1. At the date of acquisition, the fair values of Southstar Co's assets were equal to their carrying amounts with the exception of right-of-use property held under a lease agreement. This had a fair value of $2 million above its carrying amount and a remaining lease term of ten years at that date. All depreciation is included in cost of sales.
2. Contingent consideration was estimated to be $1.8 million at 1 April 20X3, but by 30 September 20X3 due to continuing losses, its value was estimated at only $1.5 million. The contingent consideration has not been recorded by Polestar Co and the directors expect the acquisition to be a bargain purchase
3. Polestar sold materials at their cost of $4 million to Southstar Co in June 20X3. Southstar Co processed all of these materials at an additional cost of $1.4 million and sold them back to Polestar Co in August 20X3 for $9 million. At 30 September 20X3 Polestar Co had $1.5 million of these goods still in inventory. There were no other intragroup sales.
4. Polestar Co's policy is to value the non-controlling interest at fair value at the date of acquisition. Southstar Co's share price of $1.20 per share at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest. The retained earnings of Southstar at the acquisition date were $14.3 million.

1. What was the fair value of Southstar Co's net assets at the acquisition date? Submit your answer to one decimal place.$...............................   million
2. What is consolidated revenue for the year ended 30 September 20X3?
3. Due to lower than expected profits of the acquired company, Southstar Co, the estimated value of the contingent consideration has fallen from $1.8million to $1.5million.
A. Debit
B. Credit
4. What is the amount of the adjustment to profit attributable to the non-controlling interest in respect of unrealised profit?$................................
5. Polestar Co measures the non-controlling interest in Southstar Co at fair value. Which of the following applies when non-controlling interest is measured at fair value?

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