Page 526 - F2 Integrated Workbook STUDENT 2019
P. 526
F2: Advanced Financial Reporting
17.4 Holmes acquired 80% of the €1 ordinary shares of Lestrange, based in France,
on 1st July 2014. On this date Lestrange’s net assets had a book value of
€3,400,000. This was equal to their fair value.
Holmes paid $5,000,000 for the shares and the fair value of a 20% holding on
1st July 2014 was €300,000. Holmes uses the fair value method to calculate
goodwill.
Goodwill has been impaired by 20% in the year since acquisition.
The relevant exchange rates are as follows:
1st July 2014 €1.25 : $1
30th June 2015 €1.10 : $1
Average rate for year ending 30th June 2015 €1.20 : $1
What is the annual exchange difference on goodwill to be recorded in the
Holmes group consolidated financial statements for the year ending
30th June 2015? Give your answer to the nearest $000. (Show a gain as a
positive figure and a loss as a negative figure).
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