Online Exam (Financial Reporting)

Feedback: Please see question 4 in section 2. Please go over
every calculation for every question so that they are all correct
and non is missing. Many Thanks
Online Exam (Financial
Reporting)

Table of Contents
SECTION A.....................................................................................................................................3
Question 1....................................................................................................................................3
Question 2....................................................................................................................................6
SECTION B.....................................................................................................................................8
Question 4....................................................................................................................................8
Question 5..................................................................................................................................10

SECTION A
Question 1
a.
Solution to Question 1
Step 1
Group structure
Parent 70%
NCI 30%
Step 2
Calculate the consideration transferred
Cash 220,000
Contingent consideration
Deferred consideration (200m x 0.83)
Consideration transferred
Dr Investment 186,000
Cr Deferred consideration
Cr Contingent consideration
Step 3
Calculate
Fair value of
net assets at
the date of
acquisition
and at the
reporting
date.
FV of Net Assets FV of Net Assets
01-04-19 31-03-20
£000 £000
Share capital 100,000 100
,00
0
Retained earnings 24,000 55,
000

Fair value adjustment for land (4000 - 5000) (1,000)
Fair value adjustment-buildings (10,000 -12,000) (2,000)
Reduced depreciation for buildings (-
2000/20)
Fair value adjustment-plant (30000-20000) 10,000
Additional
depreciation
(2,0
00)
131,000 160,100
Calculate the post acquisition profit of Mane
Fair value of Mane assets at the reporting
date
Fair value of Mane assets at the date of acquisition
Post acquisition profit/loss
This will be shared between the group and the NCI as follows:
£000
Group (70%) 20,
370
NCI (30%) 8,730
29,100
Step 4: Calculate the goodwill at the date of acquisition and at the reporting date
£000
Consideration transferred
Fair value of NCI (30% x 200m x 2)
526,000
Fair value of net assets at acquisition date (from step 2)
Goodwill arising on acquisition
Step 5
Calculate the NCI at the reporting date
Fair value of NCI at the date of acquisition
Add NCI' share of the post acquisition profit of Beta
NCI at the reporting date
Step 6