Page 423 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

Example 13.2 cont'd

(W2) Net assets of subsidiary

Acquisition Reporting Post-
date acquisition
$000 $000 $000
Share capital 1,750 1,750
Retained earnings 1,400 2,188 788

Fair Value adjustment 350 350
Depreciation adjustment (350 ×2/10) (70) (70)
––––––– ––––––– –––––––
3,500 4,218 718
––––––– ––––––– –––––––

(W3) Goodwill

$000
Cost of P's investment 5,075
Value of NCI at acquisition (30% × 3,500 (W2)) 1,050
Fair value of S's net assets at acquisition (W2) (3,500)
––––––

Goodwill at acquisition 2,625
Impairment (613)
––––––
Goodwill at reporting date 2,012

––––––

(W4) Non-controlling interest

$000

Value of NCI at acquisition (W3) 1,050
NCI% × post acquisition reserves (30% × 718 (W2)) 215
–––––
1,265

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