GOODWILL ON ACQUISITION $m $m

Fair value of consideration transferred:

Cash 90
Contingent consideration 7,5
97,5
Non controlling interest 34,5
132
Less net assets at acquisition 86,25
Goodwill at acquisition 45,75

The Goodwill at acquisition is $86,75m.

The movements in fair value of contingent consideration will
be remeasured at each reporting date and changes taken to profit/
loss.In this case ,for the year ended 30 June 20X6 to profit /loss we will
take $0,5m ($8-$7,5).And for the year ended 30 June 20X7 we will take $1,5m
($9,5-$7,5)
The $600000 paid to professional advisors and lawyers will be expensed to
profit/loss.

b)i) The disposal of the 20% equity interest in Billy

In Zippo Consolidated financial statements $m
Sale proceeds 44
FV of retained interest 90
134
Net assets at disposal 133
Goodwill at disposal 45,75
less:NCI at disposal 33,5
loss on disposa -11,25

On the year end, the remaining ivestment will be recognised at fair value of
From that date it will be accounted for using the equity method in the
Consolidated financial statements
The loss on disosal should be recognised in the consolidated
statement of profit or loss.
I n the separate individual financial statements
Thwe profit of $11,5m need to be reported as an exceptional item .
It must be disclosed separately on the face of the parent's statement
of profit or loss for the year.

c)When Zippo buys the 5% shareholding in Chipper, this will be accounted for in accordandace to IFRS 9
If a further 20% is bought, it should be accounted for as an associate and an equity method will be used.
IF the company increase this further by 50% it will now have more than 50%
and it will be a control in chipper company,There Zippo should now prepare the consolidated finacial
statements in its books.
d) IFRS 10 says that the fact that the reasons such as consolidation is costly and time consuming are
invalid reasons for excludind the subsidiary therefore it must be consolidate
and the new member's suggestion should not be taken.