A) Proportion of Net Assets method B) Fair Value method

W1 - Group structure W1 - Group structure

80% 80%
P S P S

W2 - Net Assets of Subsidiary W2 - Net Assets of Subsidiary

@ acquisition @Reporting @ acquisition @Reporting

Net Assets 85,000 Net Assets 85,000

W3 - goodwill W3 - goodwill

Cost of Investment £78,000 Cost of Investment £78,000

NCI value at acquisition £17,000 (85,000 x 20%) NCI value at acquisition £19,000
£95,000 £97,000
Less: Net assets -85,000 Less: Net assets -85,000
Goodwill on acquisition £10,000 Goodwill on acquisition £12,000
Goodwill Impairment 0 Goodwill Impairment 0
Goodwill @ reporting date £10,000 Goodwill @ reporting date £12,000
 Consolidated SOFP of C plc group as at 31 December 20X7
C (parent) D (sub) Adjustments Total
Tangible non-current assets 200 30 0 230
w3) Goodwill 10
Investment - shares in D Ltd 50 -50 0
Inventory 15 6 0 21
Trade receivables 18 4 0 22
Bank 12 5 0 17
Total assets 300

Equity and liabilities

Ordinary £1 shares 100 P ONLY P ONLY 100
W5) Retained earnings 170
w4) NCI 0
Current liabilities 25 5 0 30
Total equity and liabilities 300

w1) Group structure

C (parent)
100% acq 31/12/X1
D (subsidiary)

W2) Net assets (equity) of subsidiary

@ acq @ y/e Change
Ordinary £1 shares 25 25 0
Retained earnings 15 15 0
40 40 0

W3) Goodwill
deration (purchase price to acquire sub) 50
on Controlling Interest @ acquisition 0
Less net assets @ acquisition (w2) -40
10

W4) NCI
but memorise the layouts from the Moodle handout

W5) Group RE
Parent's RE 170
hange in RE (w2) [100% P x 0 no change] 0
170
W1 Group Structure
Little

100%

Large

W2 Net assets of subsidiary

Acqu'n report change

Share capital 100 100
Retained Earnings 15 15 0
115 115 0

W3 Goodwill

Parent holding (investment) at Fair Value 150

NCI value at acquisition 0
150
Less: Net assets (W2) 115
goodwill 35

W4 NCI (100% owned by parent - therefore no NCI)

at acquisition (W3) 0
NCI share of post acquisition profits (W2) 0
0

W5 Group retained earnings

parents retained earnings 100
Parents share of post acqu'n profits (W2) 0
100

Consolidated SFP
£m
Goodwill (W3) 35
Tangible NCAs 150

Current assets
Inventory (20 + 10) 30
Trade Receivables (30+5) 35
Cash (10+15) 25 90
275

ordinary share capital 150

retained profit (W5) 100
NCI (W4) 0
250
NCL 0
CL 25
275
W1 Group Structure
C

80%

W2 Net assets of subsidiary

Acqu'n report change

Share capital 25 25
Retained Earnings 5 15 10
30 40 10

W3 Goodwill

Parent holding (investment) at Fair Value 50

NCI value at acquisition 8 (25m x 20%) x 1.60
58
Less: Net assets (W2) 30
goodwill 28

W4 NCI
at acquisition (W3) 8
NCI share of post acquisition profits (W2) 2
10

W5 Group retained earnings

parents retained earnings 170
Parents share of post acqu'n profits (W2) 8
178

Consolidated SFP
£m
Goodwill (W3) 28
Tangible NCAs 230
Current assets 60
318

ordinary share capital 100

retained profit (W5) 178
NCI (W4) 10
288
NCL 0
CL 30
318
W1 Group Structure
Little

75%

Large

W2 Net assets of subsidiary

Acqu'n report change

Share capital 100 100
Retained Earnings 20 60 40
120 160 40

W3 Goodwill

Parent holding (investment) at Fair Value 150

NCI value at acquisition 40
190
Less: Net assets (W2) 120
goodwill 70

W4 NCI
at acquisition (W3) 40
NCI share of post acquisition profits (W2) 10
50

W5 Group retained earnings

parents retained earnings 100
Parents share of post acqu'n profits (W2) 30
130

Consolidated SFP
£m
Goodwill (W3) 70
Tangible NCAs 200
Current assets 90
360

ordinary share capital 150

retained profit (W5) 130
NCI (W4) 50
330
NCL 0
CL 30
360
W1 Group Structure
Cannon

70% 70m / 100m

Ball

W2 Net assets of subsidiary

Acqu'n report change

Share capital 100 100
Retained Earnings 50 300 250
150 400 250

W3 Goodwill

Parent holding (investment) at Fair Value 280

NCI value at acquisition 120
400
Less: Net assets (W2) 150
goodwill 250

W4 NCI
at acquisition (W3) 120
NCI share of post acquisition profits (W2) 75
195

W5 Group retained earnings

parents retained earnings 510
Parents share of post acqu'n profits (W2) 175
685

Consolidated SFP
£m
Goodwill (W3) 250
Tangible NCAs 860
Current assets 215
1,325

ordinary share capital 300

retained profit (W5) 685
NCI (W4) 195
1180
NCL 0
CL 145
1,325
W1 Group Structure
Chester

60% 60m / 100m

Vesta

W2 Net assets of subsidiary

Acqu'n report change

Share capital 100 100
Retained Earnings 300 400 100
400 500 100

W3 Goodwill

Parent holding (investment) at Fair Value 300

NCI value at acquisition 200 (100m x 40%) x £5
500
Less: Net assets (W2) 400
goodwill 100
Impairment of goodwill -10
Goodwill at reporting date 90

W4 NCI
at acquisition (W3) 200
NCI share of post acquisition profits (W2) 40
NCI share of Impairment (40% x £10m) -4
236

W5 Group retained earnings

parents retained earnings 560
Parents share of post acqu'n profits (W2) 60
Parents share of impairment (60% x £10m) -6
614

Consolidated SFP
£m
Goodwill (W3) 90
Tangible NCAs 920
Current assets 145
1,155

ordinary share capital 200

retained profit (W5) 614
NCI (W4) 236
1050
NCL 0
CL 105
1,155
W1 Group Structure
Aston

80% 160m / 200m

Villa

W2 Net assets of subsidiary

Acqu'n report change

Share capital 200 200
Share Premium 0 0
Retained Earnings 50 100 50
FV adjustment 40 40 0
FV depreciation -8 -8
290 332 42

W3 Goodwill

Parent holding (investment) at Fair Value 300

NCI value at acquisition 70
370
Less: Net assets (W2) 290
goodwill 80
Impairment of goodwill -50
Goodwill at reporting date 30

W4 NCI
at acquisition (W3) 70
NCI share of post acquisition profits (W2) 8.4
NCI share of Impairment -10
68.4

W5 Group retained earnings

parents retained earnings 370
Parents share of post acqu'n profits (W2) 33.6
Parents share of impairment -40
363.6

Consolidated SFP
£m
Goodwill (W3) 30
Tangible NCAs (500 + 250 + 40 - 8) 782
Current assets 175
 987

ordinary share capital 500

retained profit (W5) 363.6
NCI (W4) 68.4
932
NCL 0
CL 55
987
W1 Group Structure
Arthur

75%

Brain

W2 Net assets of subsidiary

Acqu'n report change

Share capital 1,200 1,200
Share Premium 0 0
Retained Earnings 540 828 288
FV adjustment 100 100 0
FV depreciation 0
1840 2128 288

W3 Goodwill

Parent holding (investment) at Fair Value 2280

NCI value at acquisition 460
2740
Less: Net assets (W2) 1840
goodwill 900
Impairment of goodwill -180
Goodwill at reporting date 720

W4 NCI
at acquisition (W3) 460
NCI share of post acquisition profits (W2) 72
NCI share of Impairment -45
487

W5 Group retained earnings

parents retained earnings 780
Parents share of post acqu'n profits (W2) 216
Parents share of impairment -135
861

Consolidated SFP
£m
Goodwill (W3) 720
Tangible NCAs (1320 + 1440 + 100) 2860
3580
Current assets
Inventory (90+192) 282
Trade Receivables (198+288) 486
Bank (192+360) 552

4,900

ordinary share capital 2400

Share Premium 720
retained profit (W5) 861
NCI (W4) 487
4468
NCL 0
CL (180 + 252) 432
4,900
W1 - Group Structure
150 / 200 = 75% 2

W2 - Net Assets of Subsidiary

@ Acquisition @ Reporting
Share Capital 200 200 1
Share Premium 150 150 1
retained Earnings 175 285 2
FV adjustment 50 50 1
FV Depreciation -10 2
575 675 100

W3 - Goodwill
Cost of Investment 650 1
FV of NCI 75 2
725
less: net assets (w2) 575 1 OF
150
less: Impairment -50 1
Goodwill 100 1 OF

W4 - NCI
FV of NCI 75 1
NCI % of PAR 25 1 OF
NCI % of Impairment -12.5 1
87.5

W5 - Group Retained Earnings

Parent RE 610 1
P % of PAR 75 1 OF
P % of Impairment -37.5 1
647.5

Sonic Group
Consolidated Statement of Financial Position as at 31 December 2018

NCA
Goodwill 100 1 OF
PPE (1,475 + 700 + 50 - 10) 2215 3

CA
Inventory 160 1
Trade Receivables 345 1
Cash 130 1
 2950

Equity
Share capital 1,000 1
Share Premium 455 1
Group RE 647.5 1 OF
NCI 87.5 1 OF
2,190
NCL
Debentures 350 1

CL
Trade Payables 410 1

Total Equity and Liabilities 2,950 34

1 presentation
35 maximum
W1 - Group Structure
80 / 100 = 80% 2

W2 - Net Assets of Subsidiary

@ Acquisition @ Reporting
Share Capital 100 100 1
Share Premium 0 0 1
retained Earnings 105 195 2
FV adjustment 80 80 2
FV Depreciation -20 2
285 355 70

W3 - Goodwill
Cost of Investment 300 1
FV of NCI 40 2
340
less: net assets (w2) 285 1 OF
55
less: Impairment 0
Goodwill 55

W4 - NCI
FV of NCI 40 1
NCI % of PAR 14 1 OF
NCI % of Impairment
54

W5 - Group Retained Earnings

Parent RE 260 1
P % of PAR 56 1 OF
P % of Impairment
316

Sonic Group
Consolidated Statement of Financial Position as at 31 December 2018

NCA
Goodwill 55 1 OF
PPE (455 + 300 + 80 - 20) 815 4

CA
Inventory 260 1
Trade Receivables 235 1
Cash 40 1
 1405

Equity
Share capital 300 1
Share Premium 200 1
Group RE 316 1 OF
NCI 54 1 OF
870
NCL
Debentures 385 1

CL
Trade Payables 130 1
Bank Overdraft 20 1

Total Equity and Liabilities 1,405 1 presentation

35 maximum