Company A,a publicly traded entity, acquired an80%interest in Company B,a private company, on January1,2005,for R1,000,000.Company B's equity

Fantastic news! We've Found the answer you've been seeking!

Question:

Company A, a publicly traded entity, acquired an 80% interest in Company B, a private company, on January 1, 2005, for R1,000,000. Company B's equity at that date consisted of the following:

•

Share capital: R500,000

•

Retained earnings: R200,000

•

Other reserves: R50,000

Company A applies the fair value method for valuing non-controlling interests. The fair value of the non-controlling interests in Company B at the acquisition date was R150,000.

During the year 2005, Company B reported a profit of R100,000, and it paid dividends of R20,000.

Company A also holds a 35% interest in Company C, an associate, at the end of 2005. Company C reported a profit of R50,000 for the year.

Calculate the goodwill arising on the acquisition of Company B, taking into account the fair value method. Show all necessary calculations.

Prepare the consolidated statement of financial position for Company A and its subsidiaries (Company B and its interest in Company C) as of December 31, 2005. Include the treatment of non-controlling interests and the investment in the associate.

Calculate the share of profit attributable to non-controlling interests and the share of profit from the associate for the year ended December 31, 2005, and include them in the consolidated statement of comprehensive income.