FRKaplan Fixed Test 2 - Goodwill

Yes! The figure of 700 in the SoFP is retained earnings since Salter was created. What we need is retained earnings 6 months ago.

So, how much were the retained earnings brought forward from last yea? that would be 700 now, less 200 retained profits for the last 12 months - ie, profit for the year in the SoIncome.

Right, that's 500 ret ears as at 1 April a year ago. Now add the profits for 6 months up to date of acquisition - that would be this year's 200 x 6/12 ie 100.

So 500 brought forward + 100 for the first 6 months of this year = 600 retained earnings as at date of acquisition.

600 + share capital of 150 + fair value adjustment of 125 gives fair value of net assets of 875.

Compare that with cost of acquisition 900 + nci valuation of 230 ie 1,130

and that gives a goodwill figure of 255

This is, according to the question note 5, impaired by 40.

So goodwill in the SoFP is 215

Is that ok?

Everything is clear now.
Thank you so much Mike!!!!!

welcome