Page 499 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

Solution
(a) Proportion of net assets method

(W3) Goodwill
$000
Fair value of investment 1,540
Value of NCI at acquisition (20% × 1030) (W2) 206
Fair value of net assets (NAs) acquired (100% × 1,030) (W2)
(1,030)
Impairment (120)
–––––
Goodwill at acquisition 596
–––––

(W4) Non-controlling interests
$000
Value of NCI at acquisition (as per W3) 206
NCI × post-acquisition reserves 20% × (1,110 – 1,030) (W2) 16
NCI × impairment (W3) (fair value method only) –
––––
NCI at reporting date 222
––––

(W5) Retained earnings
$000
Parent 3,000
Subsidiary (% × post acquisition profits)
80% × (1,110 – 1,030) (W2) 64
Impairment (W3) (120)
–––––
2,944
–––––

489