On 1 August 2011 Major Ltd paid £1.50 per share to acquire 40,000 of the £1 ordinary shares of Minor Ltd. At this date, the share capital and reserves of Minor Ltd were:

The statements of financial position for each company at 31 July 2012 were as follows:

Following an impairment review on 31 July 2012, it was found that the goodwill arising on the business combination with Minor Ltd had suffered an impairment loss of 50%.

Required

(a) Calculate the goodwill that will be paid by Major Ltd on the acquisition of Minor Ltd.

(b) Prepare the consolidated statement of financial position for Major Ltd at 31 July 2012.

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1 ordinary share capital 50,000 Retained earnings 16,250 Total 66,250