question archive Cacik acquired 80% of the 1 million issued £1 ordinary shares capital of Chaas on 1 April 20X1 for £1,750,000
Cacik acquired 80% of the 1 million issued £1 ordinary shares capital of Chaas on 1 April 20X1 for £1,750,000
Subject:AccountingPrice:9.82 Bought3
Cacik acquired 80% of the 1 million issued £1 ordinary shares capital of Chaas on 1 April 20X1 for £1,750,000. Chaas' retained earnings were £920,000 at acquisition and £1,100,000 at year end 31 December 20X1
The carrying amount (N BV) of Chaas' net assets at that date was the same as the fair value, with the exception of a building which had a carrying amount of £680,000 and a fair value of £745,000.
The Group measures non—controlling interest (NCI) at share of net assets.
There was no impairment in the period after acquisition.
Calculate the amount of goodwill that would be recognised in the consolidated Statement of financial position at 31 December 20x1.
0 a. None of these options are correct
0 b. £214,000
0 c. £ni|
0 d. -£526,000
0 e. —£382,000
0 f. £162,000
0 g. £18,000
0 h. £559,000
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Answer: Letter F 162,000
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Step-by-step explanation
Acquisition Cost of 1,750,000
Book value of Net Identifiable Assets is 1,920,000 (1,000,000 Share capital + 920,000 Retained Earnings at Acquisition)
Fair Value of Net Identifiable Asset is 1,985,000 (1,920,000 + 65,000 Increase in fair value (745,000-680,000)
80% of the 1,985,000 Fair value of Net Identifiable Asset is 1,588,000
Goodwill of 162,000 (1,750,000 - 1,588,000)
Non Controlling Interest is measures at the share of Net Assets,
