Ham plc acquired 100% of the common shares of Burg plc on 1 January 20X0 and gained control. At that date the statements of financial position of the two companies were as follows:

Notes:
1 The fair value is the same as the book value.
2 £15,000 of the negative goodwill arises because the net assets have been acquired at below their fair value and the remainder covers expected losses of £3,000 in the year ended 31/12/20X0 and £2,000 in the following year.

Required:
(a) Prepare a consolidated statement of financial position for Ham plc as at 1 January 20X0.
(b) Explain how the negative goodwill will betreated.

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Ham Burg £000 ASSETS Non-current assets Property, plant and equipment Investment in Burg Current assets Total assets 100 250 90 100 440 70 170 EQUITY AND LIABILITIES Capital and reserves El shares Retained earnings 200 160 360 80 440 100 10 110 60 170 Current liabilities Total equity and liabilities