# Group Accounts The Consolidated Statement of Financial Position (2b)

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1. says

Hello Sir,I know this is not very relevant,but which computer software are you using to deliver the content? I can see it allows for writing with different colours and even has an eraser. I would be so grateful…Regards…

• says

Thank you very much…much appreciated!

2. says

P acquired 400,000 ordinary \$1 shares in S on I January 20X5 for \$850,000. At that date the share capital of S was 500,000 \$1 ordinary shares and accumulated profits of \$400,000. The net assets of S at 1 January 20X5 were generally at fair value with the exception of a property which had a fair value of \$100,000 in excess of its book value. The fair value of the non-controlling interests at the date of acquisition by P is \$200,000. The company estimates the life of goodwill to be 10 years.
What is the amount of goodwill attributable to the equity owners of P that should appear in the consolidated statement of financial position as at 31 December 20X7?
A \$40,000
B \$50,000
C \$130,000
D \$110,000

• says

The balance sheet value of the net assets at the date of acquisition is equal to the total capital plus reserves at the date of acquisition – 500,000 + 400,000 = 900,000. However, property has a fair value of 100,000 more, so the total value of the assets is 1,000,000.

The total value placed on the business at the date of acquisition is the amount P paid for their share (850,000) plus the value of the non-controlling interest at that date(200,000). So a total of 1,050,000.

The goodwill is the difference – 1,050,000 – 1,000,000 = 50,000.

The fact that the question says that it has an estimated life of 10 years implies that the 50,000 is amortised (depreciated) by 5,000 a year. If this were the case, then there would be 3 years depreciation which would give 35,000 (which is not an answer!!!)
In fact, these days we do not depreciate the goodwill – it should be revalued each year and reduced if its value has fallen. That is outside of F3, and so for F3 you would leave the value at 50,000.

(I don’t know where you got the question from, but these days the examiner will not (should not) confuse you by giving any mention of an estimated life of goodwill)

• says

Thank you for replying. I did get 50000 but was not sure of the depreciation part. As you mentioned in earlier lectures that depreciation is not part of the f3 so I was shock to see it there. I got this question for 2013 Emile Woolf revision kit.

Thanks again for you help.

3. says

this is the best material I have worked with, the lecture is well explained and relevant. WELL DONE TO YOUR TEAM.

4. says

As mentioned, Goodwill is \$44,000 considering to Non-Controlling Interest (the other 40% of the S). I have a question, whether Goodwill will reflect in the Balance Sheet of the other company whih is holding 40%. Or will the goodwill only reflect in the Balance sheet which is holding more than 50% of share of S.

• says

@atherakhlaq, Goodwill must be shown in the Consolidated statement of Financial position not in the others. And there have been said that the Parent is made the consolidated statement, therefore the Non controlling interests are not making the consolidated statement and not showing the Goodwill.