The statements of financial position of two companies, Blues Limited and Soul Limited, at 31 December 2017 are shown below:

Blues Limited acquired 80% of the ordinary shares of Soul Limited on 1 January 2017, when the retained earnings of Soul Limited were €10,000. No impairment of goodwill has occurred to date. On the date of acquisition, the fair value of the non-controlling interests in Soul Limited was €25,000. Blues Limited has a cost of capital of 10%.
Requirement

(a) Prepare a consolidated statement of financial position as at 31 December 2017 assuming that Blues Limited values non-controlling interests using the proportionate share method (i.e. ‘old’ method).

(b) Calculate the goodwill and the non-controlling interest assuming that Blues Limited measures the non-controlling interest at fair value (i.e. ‘new’ method).

(c) Blues Limited financed the acquisition of Soul Limited by offering a share for share exchange of two shares for every four acquired in Soul Limited and a cash payment of €1 per share payable three years later. The market value of shares in Blues Limited was €2.
Calculate the cost of investment and show the journals to record it in the financial statements of Blues Limited.

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Property, plant and equipment Investment in Soul Limited at cost Current assets Equity and liabilities Ordinary share capital 1 Retained earnings Current liabilities Blues Limited Soul Limited 000 000 90 110 110 50 20 250 130 100 100 120 15 220 115 30 15 250 130