Chapter 3: Basic group structures

Chapter 3, Example 4 - Group SPLOCI (revision).

The following information is relevant in the preparation of the group financial statements:

• On 1 July 2015, Varden acquired 80% of the equity shares of Mallow, a public limited company, for a cash consideration of $90 million. The fair value of the identifiable net assets acquired was $85 million and the fair value of the non-controlling interest was $25 million. The fair value of the net assets at acquisition was not materially different to their book value.
• On 1 January 2015 Varden acquired 25% of the equity shares of Sitara and exerted significant influence through its representation on the board of directors. Sitara's profits for the year were $100 million.
• It is the group policy to measure the non-controlling interest at acquisition at fair value.
• Goodwill has been impairment tested at year-end and found to have fallen in value by 20%. Goodwill impairments are recorded in administrative expenses.
• Varden sold goods to Mallow for $20 million at fair value following the acquisition.
• Mallow revalued its land and buildings at the year-end and recorded a revaluation surplus of $50 million through other comprehensive income.
• No dividends were declared by any company during the year. Assume that profits accrue evenly during the year.

All figures are in $m.