=+Question 4 Based on ICAI, P3 Summer 1999, Question 3)

SUGAR plc purchased 22.5 million shares in CUBE inc. on 1 January 1995, when the retained profits of CUBE inc. were $10 million. The fair value of net assets at the date of acquisition was the same as their net book value. For the purposes of measuring noncontrolling interests at the date of acquisition, the proportionate share method equated to the fair value method.