a) Calculate the goodwill that was paid by Major Ltd on the acquisition of Minor Ltd.

[10 marks]

b) Prepare the consolidated statement of financial position for Major Ltd at 31 July 20X8.

[30 marks]

c) Explain the difference between the terms control and joint control in accordance with IFRS 10, Consolidated Financial Statements.

[10 marks]

Transcribed Image Text:

Statements of Financial position at 31 July 20X8 Major Ltd ASSETS Non-current assets Property, plant and equipment Investment in Minor Ltd Goodwill Current assets Total assets EQUITY AND LIABILITIES Equity Ordinary share capital Retained earnings pre-acquisition Retained earnings post acquisition Revaluation reserve Current liabilities Total equity and liabilities £ 150,000 60,000 210,000 195,000 405,000 250,000 32,000 282,000 123,000 405.000 Minor Ltd £ 82,000 82,000 92,250 174,250 50,000 16,250 20,000 10,000 96,250 78,000 174.250 Following an impairment review on 31 July 20X8, it was found that goodwill had suffered an impairment loss of 50% since the acquisition of Minor Ltd. Statements of Financial position at 31 July 20X8 Major Ltd ASSETS Non-current assets Property, plant and equipment Investment in Minor Ltd Goodwill Current assets Total assets EQUITY AND LIABILITIES Equity Ordinary share capital Retained earnings pre-acquisition Retained earnings post acquisition Revaluation reserve Current liabilities Total equity and liabilities £ 150,000 60,000 210,000 195,000 405,000 250,000 32,000 282,000 123,000 405.000 Minor Ltd £ 82,000 82,000 92,250 174,250 50,000 16,250 20,000 10,000 96,250 78,000 174.250 Following an impairment review on 31 July 20X8, it was found that goodwill had suffered an impairment loss of 50% since the acquisition of Minor Ltd.

Answer rating: 100% (QA)

a Calculation of goodwill Goodwill Super Profits x 100 Normal Rate of Return Super Profit Average pr... View the full answer