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Supplementary objective test questions
CHAPTER 12 – BASIC GROUP ACCOUNTS: GOODWILL AND JOINT
ARRANGEMENTS
The following information relates to the next 3 questions.
NH acquired 400,000 ordinary shares in MK on 1st Jan 20X5 for $5,000,000. MK has
500,000 ordinary shares in issue. Retained earnings at this date were $3,500,000. At
the acquisition date, the fair values of MK’s net assets were equal to their book
values with the exception of an item of plant and machinery with a FV that was
$55,000 in excess of its book value. Plant and machinery is depreciated by MK on a
straight line basis and had a remaining economic lifetime of 10 years from the date of
acquisition.
NH calculates non-controlling interest using the proportionate method.
Retained earnings on the 30th June 20X5 for NH and MK respectively were
$10,500,000 and $4,500,000.
12.1 Calculate the goodwill shown in NH’s consolidated statement of financial
position as at the year ended 30th June 20X5.
12.2 The NCI shown on the consolidated statement of financial positon as at
30th June 20X5 is:
A $811,000
B $1,000,000
C $1,010,450
D $1,011,000
12.3 The group retained earnings on the consolidated statement of financial
position as at 30th June 20X5 is:
A $11,344,000
B $11,341,800
C $11,300,000
D $11,297,800
505
