BPP Page 121 Prodigal Co

I am really sorry for the messy copy paste but I think you already know the question but I copy pasted in case any reference is needed. I have a doubt on the depreciation adjustment .I time apportioned the depreciation based on the Carrying Value. But then the NCI was adjusted differently and the BPP answer is not making much sense. This was the adjustment in the text: Transfer of plant $'000 1.10.20X0 Profit on transfer (5,000 – 4,000) 1,000(I got this one) Proportion depreciated (½ / 2½) (200) (didnt understand this formula) Adjustment to plant 800 Required adjustment: Dr Cost of sales (and retained earnings) 850 Cr Plant 800 Cr NCI (200 * 25%) 50 Non-controlling interests Profit for year Total comprehensive income $'000 $'000 Per question (66,000 * 6/12) ((66,000 – 400) ? 6/12 + 1,000)) 33,000 33,800 Non-current asset PURP (W3) excess depreciation 200 200 PUP (W4) (3,000) (3,000) 30,200 31,000 ? 25% 25% 7,550 7,750 Could you please help me with both the workings and the journal entry? I cant get my head around it .Wasn't it just supposed to be 800000 on depreciation in P/L and the profit apportioned on 25% to NCI.? Case scenario On 1 October 20X0 Prodigal Co purchased 75% of the equity shares in Sentinel Co. The acquisition was through a share exchange of two shares in Prodigal Co for every three shares in Sentinel Co. The market value of Prodigal Co's shares at 1 October 20X0 was $4 per share. The summarised statements of profit or loss and other comprehensive income for the two companies for the year ended 31 March 20X1 are: Prodigal Co Sentinel Co $'000 $'000 Revenue 450,000 240,000 Cost of sales (260,000) (110,000) Gross profit 190,000 130,000 Distribution costs (23,600) (12,000) Administrative expenses (27,000) (23,000) Finance costs (1,500) (1,200) Profit before tax 137,900 93,800 Income tax expense (48,000) (27,800) Profit for the year 89,900 66,000 Other comprehensive income Gain on revaluation of land (note(i)) 2,500 1,000 Loss on fair value of investment in equity instrument (700) (400) 1,800 600 Total comprehensive income for the year 91,700 66,600 The equity of Sentinel Co at 1 April 20X0 was: $'000 Equity shares of $1 each 160,000 Other components of equity (re investment in equity instrument) 2,200 Retained earnings 125,000 The following information is relevant: (i) Prodigal Co's policy is to revalue the group's land to market value at the end of each accounting period. Prior to its acquisition, Sentinel Co's land had been valued at historical cost. During the post-acquisition period Sentinel Co's land had increased in value over its value at the date of acquisition by $1 million. Sentinel Co has recognised the revaluation within its own financial statements. (ii) Immediately after the acquisition of Sentinel Co on 1 October 20X0, Prodigal Co transferred an item of plant with a carrying amount of $4 million to Sentinel Co at an agreed value of $5 million. At this date the plant had a remaining life of two and a half years. Prodigal Co had included the profit on this transfer as a reduction in its depreciation costs. All depreciation is charged to cost of sales. (iii) After the acquisition Sentinel Co sold goods to Prodigal Co for $40 million. These goods had cost Sentinel Co $30 million. $12 million of the goods sold remained in Prodigal Co's closing inventory. (iv) Prodigal Co's policy is to value the non-controlling interest of Sentinel Co at the date of acquisition at its fair value which the directors determined to be $100 million. (v) The goodwill of Sentinel Co has not suffered any impairment. (vi) All items in the above statements of profit or loss and other comprehensive income are deemed to accrue evenly over the year unless otherwise indicated.