ompany A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million (a) What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming tha

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Assume that Company A acquires 70 per cent of Company B for a cash price of $14
million when the share capital and reserves of Company B are:
Share capital $8 million
Retained earnings $2 million
$10 million
(a) What amount of goodwill will be shown in the consolidated statement of financial
position
pursuant to AASB 3 assuming that any non-controlling interest in the acquirer
is measured at fair value? (1 marks)
(b) What amount of goodwill will be shown in the consolidated statement of financial
position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer
is measured at the non-controlling interest’s proportionate share of the acquiree’s
identifiable net assets? (1 marks)
(c) Pass the necessary consolidation journal entries and the journal entries to record the
non-controlling interest if the non-controlling interest in the acquirer is measured at
the non-controlling interest’s proportionate share of the acquiree’s identifiable net
assets. (4 marks)
(d) What are some of the implications of allowing the group to have two options in
accounting for goodwill on consolidation? (1 marks)

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