Accounting for goodwill on consolidation

Assignment Help Managerial Accounting

Reference no: EM132968926

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?

(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?

(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.

(d) What are some of the implications of allowing the group to have two options in accounting for goodwill on consolidation?

Reference no: EM132968926

Questions Cloud

What the net cash provided by operating activities would be : What the net cash provided (used) by operating activities would be reported at? Kentucky Company reported net income of $620,000 for the year.

What the increase in additional paid in capital would be : Using the book value method, the increase in additional paid in capital would be? An interest payment date, $150,000 of Sterling Co

What is the adjustment to retained earnings on may : What is the adjustment to retained earnings on May 15, 2022? Utah Company purchased equipment that cost $3,000,000 on January 1, 2018.

What amount the two errors would cause retained earnings : Accrued taxes payable of $150,000 were not recorded, Effect of the two errors would cause retained earnings at December 31, 2021 to be in error by what amount?

Accounting for goodwill on consolidation : What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest

Prepare the journal entry that faulkner will record : Suppose instead that Faulkner previously used straight-line depreciation and changed to sum-of-the-years'- digits in 2021. Prepare the journal entry

How much would be replaced by disability? policy : Julie was involved in an auto accident and was out of work for four months. How much income did she? lose, and how much would be replaced by disability? policy?

Why accrual accounting be adopted by governmental units : Why accrual accounting should be adopted by governmental units globally rather than a cash basis accounting system currently used by many governments.

User Account

All Pages