FSLC - CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Zubair123

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.

N4T

Net assets = Share capital + Retained earnings + Fair value adjustment
360 = 240 + 20+ 100

Zubair123

> @N4T said:
> Net assets = Share capital + Retained earnings + Fair value adjustment
> 360 = 240 + 20+ 100

Thank you

Sorry but how do I work out the NCI at acquisition?

N4T

Texas owns 80% of Houston. If Net assets at acquisition is £360 then the part that isn't owned by Texas, 20%, is 20% x £360 = £72

Zubair123

> @N4T said:
> Texas owns 80% of Houston. If Net assets at acquisition is £360 then the part that isn't owned by Texas, 20%, is 20% x £360 = £72

Thank you. Much appreciated