Q15.

H in S
No of shares bought in S 1,200,000
No of shares issued in S 1,500,000
% control 1200000 / 1500000 = 80%
Pre-acquisition profits RM300,000 Date 1/1/x5

Fair value of NCI = RM420,000

S in W
No of shares bought in W 750,000
No of shares issued in W 1,000,000
% control 750 / 1000 = 75% Effective interest of H in W
Pre-acquisition profits RM200,000 Date 1/1/x6 80% x 75% = 60%
Hence, NCI = 40%
Fair value of NCI = RM540,000

a) Goodwill is recognised for parent only

This means using the old method
W1 H in S H in W

Consideration transferred 1800 800 80% x 1000

NCI - share of net assets

Fair value of identifiable net assets

Share capital 1500 1000
FV adjustment 100
Pre acquisition profits 300 200
1800 1300
x 80% 1440 x 60% 780
360 20
Impairment of goodwill -85
Total goodwill = 275
Less: impairment of goodwill
295

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W2 NCI
S W
Net assets per question 2000 1500
Add: fair value adjustment 100
Less: investments in W -1000
1000 1600
x 20% x40%
Value 200 640
Total NCI 840

W3 Retained earnings
H S W
Per question 1000 500 500
Pre-acq -300 -200
Post acq 200 300

Goodwill impaired -85

Share of post acq
S: 80% x 200 160
W: 60% x 300 180
1255

Harry
Consolidated Statement of Financial Position as at 31/12/X7
Non current assets 1480 + 1525 + 1600 + 100 4705
Goodwill 295
Current assets 120 + 75 + 100 295
5295

Share capital 2000

Group retained earnings 1255
3255
NCI 840
4095
10% debentures 300

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 Trade and other payables 400 + 300 + 200 900
5295

b) Full goodwill is recognised

W1 H in S NCI H in W NCI
80% 20%
Consideration transferred 1800 800 80% x 1000
FV of NCI 420 540

Fair value of identifiable net assets

Share capital 1500 1000
FV adjustment 100
Pre acquisition profits 300 200
1800 1300
x80%/20% 1440 360 x 60% 780 520
360 60 20 20
Impairment 100 x 80%/20% -80 -20
280 40
Total goodwill = 360

W2 NCI
S W
Net assets per question 2000 1500
Add: fair value adjustment 100
Less: investments in W -1000
1000 1600
x 20% x40%
Value 200 640
Add: goodwill b4 impairment 60 20
Impairment of goodwill -20
240 660
Total NCI 900

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W3 Retained earnings
H S W
Per question 1000 500 500
Pre-acq -300 -200
Post acq 200 300

Goodwill impaired -80

Share of post acq
S: 80% x 200 160
W: 60% x 300 180
1260

Harry
Consolidated Statement of Financial Position as at 31/12/X7
Non current assets 1480 + 1525 + 1600 + 100 4705
Goodwill 360
Current assets 120 + 75 + 100 295
5360

Share capital 2000

Group retained earnings 1260
3260
NCI 900
4160
10% debentures 300
Trade and other payables 400 + 300 + 200 900
5360

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