Page 487 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

(W3) Goodwill
$000
Fair value of the investment 900
Fair value of net assets (NAs) acquired (100% × 700) (W2) (700)
––––
Goodwill at reporting date 200
––––

The fair value of the investment is taken directly from the parent's statement of
financial position in this case. The amount paid by the parent may alternatively
be given to you as a separate figure.

(W4) Non-controlling interests
Not applicable because the parent owns 100% of the subsidiary's shares.

(W5) Retained earnings
$000
Parent 800
Subsidiary (100% × post acq profits) –
Impairment –
–––––
800
–––––

Working 5 includes the parent's share of the subsidiary's post acquisition
profits. Because S was acquired on the reporting date there are no post
acquisition profits to include.

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