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.