[Lily]

Hi Mike, I understand this but does this affect any other workings? I’m struggling with this question in particular.
————————————————–H================= M
Assets
Non current assets
Property, plant and equipment——–592,000===========470,000
Investment in Murray ltd—————-250,000
Other Investment————————-17,500
————————————————859,500
Current assets
Inventory————————————–56,500===========27,800
Trade receivables————————–49,600===========23,700
Cash——————————————-23,700===========11,200
————————————————129,800===========62,700
————————————————989,300==========532,700

Ordinary shares of £1 each————100,000==========100,000
10% preference shares———————0==============50,000
Retained profits—————————811,500==========351,000
Debentures———————————-50,000===========20,000
Current liabilities—————————-27,800==========11,700
Total Equity and Liabilities————–989,300=========532,700

The following information is relevant:

1. Henman bought 75% of the equity shares and 40% of the preference shares of Murray Ltd at par on 1st July 2001 for £250,000 when the latter’s retained profits stood at £150,000.

2. On the date of acquisition, the fair value of Murray’s buildings was £50,000 greater than the book value. At that date the buildings had a remaining life of 40 years.

3. The non-controlling interest is to be valued at the fair value of £106,000 as at 1st July 2001

4. Trading between the two companies was rife, and during 2003 Henman had purchased goods from Murray ltd for £60,000. Of this, half was in stock at the balance sheet date. Murray had generated a 150% mark up on cost on these goods. Included in Henman’s trade payables is a balance of £3,000 due to Murray. However there is cash in transit at the year-end of £500, and Murray’s trade receivables includes £3,500 in relation to this debt.

5. Goodwill has been reviewed and is not considered to be impaired.

Required: Prepare the statement of financial position of Henman ltd at 30 June 2003.

This is my working so far but I cannot get the correct answer.

Net Assets @ acquisition ===== @ reporting
Ord shares——-100000======= 100000
Retained profit—150000=======351000
Adjustment———50000========50000
Depreciation==================(2500)
Unrealised profit==============18000
Preference Shares-50000=======50000
Total——————350000======566500

Difference = 216500

Goodwill (THIS IS CORRECT)
FV invested by parent 250000
NCI @ acq 106000
Less net assets @ acq (350000)
Goodwill @ reporting 6000

NCI @ reporting (INCORRECT)
NCI@ acq 106000
Share of difference 54125
(.25*216500)
NCI @ reporting 160125

Please can someone explain where I went wrong, this is the only method I know. Apologies for the formatting it looks normal till I press submit!

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