ACCA paper complex group structures (1)

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Section 7 Advanced Issues; complex group structures
Question 1 Polar Bear
Alpha
Beta

80%

2 years ago

70%

2 years ago

Gamma
Beta's investment in Gamma cost $200,000 at a time when the fair value of the net assets of Gamma
were $120,000.
From the Alpha group perspective the fair value of the NCI in Gamma at the date of acquisition was
$10,000.
It is group policy to measure NCI at acquisition at fair value.
Gamma has post-acquisition profits of $40,000.
The goodwill of Gamma has all been impaired.
The NCI of Beta at the reporting date is $100,000.
Required
a) Calculate the goodwill of Gamma in the group accounts of Alpha at the reporting date.
b) Calculate the NCI in the group statement of financial position of Alpha at the reporting date.

A student's guide to Group Accounts by Tom Clendon, Second Edition, published by Kaplan
Publishing

www.kaplanpublishing.co.uk
Section 7 Advanced Issues; complex group structures
Question 2 Brown Bear
Three years ago A purchased 60% of the share capital of B for $300,000 when the fair value of the
net assets of B were $180,000 and the fair value of its NCI $50,000. The post-acquisition profits of B
$20,000.
On the same date A and B bought 40% and 30% in C for $60,000 and $45,000 respectively when the
fair value of the net assets of C were $40,000 and the fair value of its NCI $10,000. The postacquisition profits of C are $30,000.
It is group policy to measure NCI at acquisition at fair value.
A has share capital of $400,000 and retained earnings of $250,000
Required
a) Calculate the goodwill arising.
b) Prepare the equity section of the A group statement of financial position.

A student's guide to Group Accounts by Tom Clendon, Second Edition, published by Kaplan
Publishing