1. On 1 June 20X1 Olae Co acquired 60% of the equity share capital of Stanley Co. At the date of acquisition the fair values of Stanley Co's net assets were equal to their carrying amounts with the exception of its property. This had a fair value of $1.2 million BELOW its carrying amount. The property had a remaining useful life of eight years.
What effect will any adjustment required in respect of the property have on group retained earnings at 30 September 20X1?
2. Craddy Co acquired 80% of Bella Co's 115,000 $1 ordinary shares for $800,000 when the retained earnings of Bella Co were $480,000
Bella Co also has an internally developed customer list which has been independently valued at $90,000. The non-controlling interest in Bella Co was judged to have a fair value of $360,000 at the date of acquisition.
What was the goodwill arising on acquisition?
3. On 1 August 20X7 Pastol Co purchased 18 million of the 24 million $1 equity shares of Sardonic Co. The acquisition was through a share exchange of two shares in Pastol Co for every three shares in Sardonic Co. The market price of a share in Pastol Co at 1 August 20X7 was $4.85. Pastol Co will also pay in cash on 31 July 20X9 (two years after acquisition) $1.98 per acquired share of Sardonic Co. Pastol Co's cost of capital is 10% per annum.
What is the amount of the consideration attributable to Pastol Co for the acquisition of Sardonic Co?
4. On 1 July 20X5, Prill Co acquired 80% of the equity of Saturn Co. At the date of acquisition, goodwill was calculated as $12,500 and the non-controlling interest was measured at fair value. In conducting the fair value exercise on Saturn Co's net assets at acquisition, Prill Co concluded that property, plant and equipment with a remaining life of ten years had a fair value of $450,000 in excess of its carrying amount. Saturn Co had not incorporated this fair value adjustment into its individual financial statements.
At the reporting date of 31 December 20X5, the goodwill was fully impaired. For the year ended 31 December 20X5, Saturn Co reported a profit for the year of $400,000.
What is the Prill Group profit for the year ended 31 December 20X5 that is attributable to non-controlling interests?
5. Travor Co, a parent company, acquired landley Co, an unincorporated entity, for $2.8 million. A fair value exercise performed on landley Co's net assets at the date of purchase showed:
| ||$'000 |
|Property, plant and equipment || 3,000 |
|Identifiable intangible asset || 500 |
|Inventories || 300 |
|Trade receivables less payables || 200 |
| || 4,000 |
How should the purchase of landley be reflected in Travor Co's consolidated statement of financial position?
6. On 31 August, 2014 when Flue PLC acquired 70% of the $2,000,000 50c equity shares of Preya PLC, the retained earnings of Flue PLC and Preys PLC were $540,000 and $640,000 respectively and the market value of the Preys PLC shares was $2,60
The carrying amount of the Preys PLC net assets were equal to their fair values with the exception of a building that had a fair value $2,400,000 in greater than its carrying value. At the date of acquisition of building had an estimated remaining useful life of 8 years.
The terms of acquisition were that Flue PLC would issue 1 new share in Flue PLC for every 4 shares acquired in Preys PLC and would pay $1.20 immediately for each share acquired plus a further $1.20 on 1 September, 2016 for every 10 shares acquired.
The Flue PLC shares had a market value as at date of acquisition of $2.80. Flue PLC has decided to measure the NCI at fair value with the Preys PLC share price being a reasonable indication of fair value.
At 31 December, 2014 the retained earnings of Flue PLC and preys PLC were $690,000 and $720,000 respectively. Flue PLC’s Cost of Capital is 7% and goodwill is not impaired.
At what amount should the NCI be shown in the consolidated statement of financial position for the Flue PLC group as at 31 December, 2014? (Answer to the nearest $000)
7. Which of the following definitions is not included within the definition of control per IFRS 10 Consolidated Financial Statements?