Consolidated Financial Statements and Goodwill Calculation for Acquirer

Corporate Finance
Group Name
Date of Submission
[End note if necessary]

Table of Contents
Part A...........................................................................................................................................................3
Overview on how to prepare consolidated Financial Statements – For Acquirer.................................3
Calculation of Goodwill............................................................................................................................3
Non-Controlling Interest.........................................................................................................................4
Part B...........................................................................................................................................................4
Case Two: Accounting by Acquirer..........................................................................................................4
Part C...........................................................................................................................................................5
AASB3/IFRS3 Business combination........................................................................................................5
Acquisition Methods................................................................................................................................6
CASE STUDY: Bright Pharmaceutical SE:..................................................................................................6
How AASB 3/IFRS 3 Business Combinations affect the acquisition analysis:............................................7
References..................................................................................................................................................8
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Part A
Overview on how to prepare consolidated Financial Statements – For Acquirer
Share capital-only share Capital and other shareholders' equity of $280,000 Erik Ltd, the
acquirer are recorded.
Dividend payable-The amount of dividend payable is the summation of the dividend payable of
two companies that is $25,000 plus $12,600 total to $37,600.
Accounts payable is the total accounts payable of the two companies, that is, $75000 plus
$25,000 totaling to $10,000
When recordings are being done in the corporate financial statements, the summation of two
companies is taken unless there are intra companies’ receivables or payables which are
deducted from the total receivables. Intra-group balances need to be ignored because the
consolidated accounts should show identity as a single reporting economic entity, thus the
group accounts should only show receivables or payables owed or owed by the group outsiders.
(Buschhuter & Street, 2013 pp. 163 - 204)
Calculation of Goodwill
Goodwill is treated as non-tangible assets in the financial position of consolidated accounts. It
arises when the cost of purchase of share is not equal to their par value. According to (Baker,
Biondi and Zhang, 2010), there are two methods of computing the Goodwill upon the
acquisition of the firm by another.
The Goodwill upon acquisition is computed as:
The fair value of the consideration transferred XXX
Plus fair value of non-controlling interest at acquisition XXX
Less share capital of subsidiary at the date of acquisition (XXX)
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