Ham pic acquired 100% of the common shares of Burg pic on I January 20X0 and gained control. At that date the statements of financial position of the two companies were as follows:

Notes:
1 The fair value is the same as the book value.
2 €15,000 of the negative goodwill arises because the net assets have been acquired at below their fair value and the remainder covers expected losses of €3,000 in the year ended 3 1/12/20X0 and €2,000 in the following year.
Required:

(a) Prepare a consolidated statement of financial position for Ham pic as at

(b) Explain how the negative goodwill will be treated.
1 January 20X0.

Transcribed Image Text:

ASSETS Ham Burg 000 000 Non-current assets Property, plant and equipment 250 100 Investment in Burg 90 Current assets 100 Total assets 440 lala 70 170 EQUITY AND LIABILITIES Capital and reserves 1 shares 200 100 Retained earnings 160 360 110 Current liabilities 80 60 Total equity and liabilities 440 170