Page 551 - F2 Integrated Workbook STUDENT 2019

Answers to supplementary objective test questions

CHAPTER 12 – BASIC GROUP ACCOUNTS: GOODWILL AND JOINT
ARRANGEMENTS

12.1 $1,756,000

NH has acquired 400,000 of the 500,000 ordinary shares of MK. NH owns 80%
of MK. MK should be treated as a subsidiary. The acquisition occurred on 1
th
January 20X5 meaning NH controlled MK for 6ms of the year ended 30 June
20X5.

Goodwill of MK as at 30th June 20X5
$
Cost of investment 5,000,000
NCI at acquisition (20% × 4,055,000) 811,000

Less
FV of subs’ NA’s at acquisition (W1) (4,055,000)
(500,000 + 3,500,000 + 55,000)
–––––––––
1,756,000

12.2 C

Non-controlling interest as at 30th June 20X5

$
NCI at acquisition (20% × 4,055,000) 811,000
NCI’s % of S’s post-acq movement in net assets 199,450
(20% × 997,250 (W1))
–––––––––
1,010,450

12.3 D
Retained earnings as at 30th June 20X5
$

P’s retained earnings 10,500,000
P % of S’s post-acq movement in net assets 797,800
(80% × 997,250 (W1))
–––––––––
11,297,800

543