The following are the statement of financial position of P PLC and its subsidiary S LTD as
Question:
The following are the statement of financial position of P PLC and its subsidiary S LTD as at 30th September 2013.
P PLC S LTD
$000 $000
Assets
Non-Current Assets
Property, plant and equipment 16,560 13,240
Investment in S LTD 8,300
Current assets 4,970 3,950
Total Assets 29,830 17,190
Equity and Liabilities
Equity
Ordinary share capital ($0.50) 10,000 6,000
Retained earnings 15,840 8,030
Total equity 25,840 14,030
Current liabilities 3,990 3,160
Total Equity and Liabilities 29,830 17,190
Notes to the Statement of Financial Position:
P PLC acquired 9,000,000 ordinary shares (75%) in S LTD on October 1, 2012 when the retained earnings of S LTD were $4,800,000.
The non-controlling interest in the net asset of S LTD at the date of acquisition were independently values at $2,800,000.
Goodwill was impaired in the amount of $40,000 for the year ended September 30, 201
Requirement:
Calculate the goodwill on acquisition of S LTD, and show the relevant journal entries.
Account for the impairment of $40,000
Calculate the goodwill on acquisition of S LTD if the non-controlling interest at the date of acquisition was based on their share of the subsidiary’s net assets.
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield