=+Question 2 (Based on ICAL, P3 Summer 1996, Question 4)

On 1 January 1986 HOME Limited purchased 80% of the shares of AWAY Limited, a company incorporated and operating in Maru, a country whose currency is Maruvian dollars (M$). The reserves of AWAY Limited amounted to M$100,000 on 1 January 1986. For the purposes of measuring non-controlling interests at the date of acquisition, the proportionate share method equated to the fair value method. Goodwill is only reduced by impairment. Impairment of €5,000 occurred during the year under review.