Help Needed - FSLC - Consolidated Statement of Financial Position

VickyR89

Can anyone help me figure out the below please as my answer is not matching with the actual answer, I cant work out where I am going wrong

1 - On 1 Jan 20X1 Texas Plc acquired 80% of the issued share capital and voting rights of Houston Ltd for £420,000. At that date Houston Ltd had issued share capital of £240,000 and retained earnings of £20,000. The fair value of the non current assets of Houston Ltd on that date was £100,000 more than the carrying amount. This revaluation has not been recorded in the books. (ignore any effect on the depreciation for the year)

2 - The directors of Texas Plc have concluded that goodwill arising on the acquisition of Houston Ltd has been impaired by £25,000 during the year.

3 - Included in the trade receivables of Texas plc and in the trade payables of Houston Ltd at 31 Dec 20X1 is an inter-company balance of £6000.

4 - Texas plc has decided non controlling interests will be valued at their proportionate share of net assets.

I'm struggling to work out goodwill and have got the following:

Consideration - £420
NCI at acquisition - £72
Net Assets Acquired -
Impairment of goodwill = -£25

The answer to net assets acquired is showing as -360, the only thing I can see that may be relevant is the retained earnings of Houston Ltd in the sofp are 60.

Adele69

where is this question from?

I think Goodwill is 107
(420 investment - 288 - 25)
where 288 is share capital, revaluation and retained earnings x ownership 0.8; and 25 is the impairment.

VickyR89

Hi Adele, thanks for your reply, the question came from one of the mock exams on the AAT website and they have -360 as retained earnings answer, I am baffled!

Adele69

I'm guessing this must be on AQ2016 as I did PA1 earlier and just had a quick browse of PA2 and there is no mention of Texas (at least not in AQ2013)

Zubair123

Hi, have you figured out how to get Net Assets Acquired?