Split Reserves and Stated Capital of Comfort into pre, post-acquisition and balance sheet periods. Item
Pre-Acquisition
Post-Acquisition Balance Sheet
GH¢
GH¢
GH¢
Stated capital 25,000 0
25,000
Income surplus 4,300 5,600 9,900 TOTAL
29,300 5,600 34,900 Comment on Step 5: a.
The total of the pre for the subsidiary is required for Goodwill Calculation instep. b. The total of the
post for the subsidiary is required for consolidated reserves calculation instep. c. Concerning NCI: i. The total of the
post for the subsidiary is required for NCI’s
calculation, if NCI is valued at fair value on the date of acquisition. ii. The total of the
balance sheet for the subsidiary is required for NCI’s calculation, if NCI is valued at its proportionate share on the date of acquisition. d. The
post for the associate is required for the calculation of Investment in Associate under the equity method of accounting. JAY
How is Goodwill arising on consolidation calculated KO:
STEP 6: CALCULATION OF GOODWILL Goodwill can be computed using one of two methods. Refer to Part One of the series
for detailed explanations Extract 6 i. On 1 January, 2012, Victory Ltd acquired 32,000 of Happy Ltd’s shares at a total cost of GH¢29,000. At the date of acquisition, Happy Ltd’s retained earnings had a balance of GH¢3,500. The fair values of the assets and liabilities approximated their carrying amounts except fora piece of land with a carrying amount of GH¢2,000 which had a fair value of GH¢2,500. This fair valuation adjustment has not yet been reflected in the separate financial statement of Happy Ltd. ii. Victory Ltd undertakes annual impairment reviews of goodwill. An impairment loss of
GH¢1,500 has been identified in respect of Happy Ltd for the year ended 31
December 2012. iii. The group has a policy of measuring non-controlling interest as proportionate share of net assets of subsidiary.
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