Q73 Plans BPP

Hi Tutor,

I have some questions regarding Q73 Plans from the BPP Revision Kit.

1. Why don’t we recognize goodwill on the acquisition of Y? It’s said that Company Y incorporated X and has always been a 100% owned subsidiary. Is that the reason why we don’t calculate goodwill for Y and why we calculate goodwill for Z?

2. In the answer, it’s said that: “…a gain or loss on the sale of Z wil arise in the financial statements of X. This does not count as a distribution as the cash price of 75m is not in excess of the fair value of the net assets of Z, 80m.”. What is meant under distribution in this context?

Thank you