Page 429 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

Example 14.4 cont'd

(W3) Goodwill

Kamara Merse
$000 $000
S’s investment in sub-sub 140
IHA (25% × 140) (35)
––––– –––––
Fair value of P's investment 210 105
NCI share of net assets at acquisition (W2)
25% × 244 61
40% × 130 52
Less: S's net assets at acquisition (W2) (244) (130)
–––––– –––––
Goodwill at reporting date 27 27

(W4) Non-controlling interest
Kamara Merse
$000 $000
Value of NCI at acquisition (W3) 61 52
NCI% × post acquisition reserves
25% × 36 9
40% × 10 4
IHA (35)
––– –––– –––––
35 56 91

(W5) Reserves
Retained earnings
$000
100% Parent's reserves 175
P% of S’s post-acquisition profit
75% × 36 (W2) 27
60% × 10 (W2) 6
––––
208

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