General question

Hi!

Can I ask you guys for a calculation question like goodwill, do we need to give very specific answers? Or just a simple explanation plus the calculation will do?

For example this one:

1 Kutchen Co
Kutchen Co is a listed company which acquired two subsidiaries, House Co and Mach Co, during the year ended 31 December 20X6. Niche Co is a third subsidiary that was both acquired and disposed of during the same period.
The following exhibits provide information that is relevant to the question.
(1) Acquisition of House Co (70%) – provides details of the acquisition on 1 June 20X6
(2) Mach Co initial acquisition (80%) – provides details of the acquisition on 1 January 20X6
(3) Draft consolidated SOFP – Kutchen Co’s draft consolidated statement of financial position at
31 December 20X6
(4) Acquisition & disposal Niche Co (80%) – provides details of the acquisition on 1 January 20X6
and the disposal on 31 December 20X6
(5) Mach Co subsequent acquisition (20%) – provides details of the contingent payments associated with the share options exercised by Kutchen Co on 31 January 20X7
This information should be used to answer the question requirements within your chosen response option(s).
Required
(a) () Using exhibits 1 and 2, Cxplain to the directors of Kutchen Co, with suitable workings, how goodwill should have been calculated on the acquisition of House Co and the initial acquisition of Mach Co.
(7 marks)
(i) Using the pre-populated spreadsheet response option along with the information in exhibits 1 and 2 and your answer to a(i), adjust the spreadsheet prepared by the directors of Kutchen Co in order to prepare a corrected draft consolidated statement of financial position at 31 December 20X6. The spreadsheet should take into account the corrections required to the consolidated statement of financial position as a result of your answer to (a)(i).
(10 marks)
(b) Using exhibit 4, (explain) with suitable calculations, how the gain or loss on the sale of Niche Co should have been recorded in the group financial statements.
Note. You do not need to adjust the spreadsheet to take account of the gain or loss on the sale of Niche Co.
(5 marks)
(c) Using exhibit 5, advise Kutchen Co on the difference between equity and liabilities, and on the proposed accounting treatment of the contingent payments on the subsequent acquisition of 20% of Mach Co.
(8 marks)
(Total = 30 marks)
Exhibit 1: Acquisition of House (70%)
On 31 December 20X6, Kutchen Co acquired 70% of the equity interests of House Co. The purchase consideration comprised 20 million shares of $1 of Kutchen Co at the acquisition date and a further 5 million shares on 31 December 20X7 if House Co’s profit for the year was at least-S4 million.
Contingent
Consideration.
The market price of Kutchen Co’s shares on 31 December 20X6 was $2 per share and that of House Co’s shares was $4.20 per share. It is felt that there is a 20% chance of the profit target being met.
In accounting for the acquisition of House Co, the finance director did not take into account the non-controlling interest (NCI) in the goodwill calculation. He determined that a gain on a bargain purchase of $8 million arose on the acquisition of House Co, being the purchase consideration of
1538000

Thank you,