Page 250 - SBR Integrated Workbook STUDENT S18-J19

Chapter 18

Example 1 – continued

The following information is also relevant:

(i) The fair value of Sinatra’s identifiable net assets at the acquisition date
was $18 million. The excess of the fair value over the carrying amounts
relates to an item of property, plant and equipment with a remaining life
of 10 years at 1 April 20X6.

(ii) Piaf uses the ‘full goodwill’ method. At the date of acquisition the non-
controlling interest in Sinatra had a fair value of $12 million.

(iii) Towards the end of the year, Piaf sold goods to Sinatra for $1 million,
making a gross profit margin of 60%. One third of these goods remained
in Sinatra’s inventory at the year end. The outstanding invoice has not
yet been settled.

(iv) Impairment reviews show that the goodwill arising on the acquisition of
Sinatra needs writing down by $3 million.

(v) On 1 April 20X6, Piaf purchased a 25% holding in Armstrong for $3
million. In the year ended 31 March 20X7, Armstrong made a profit after
tax of $1.6 million.

Prepare the consolidated statement of financial position for the Piaf
group as at 31 March 20X7.

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