7 Phantom acquired 70% of the GHS100,000 equity share capital of Ghost, its only subsidiary, for GHS200,000 on 1 January 20X9 when the retained earnings of Ghost were GHS156,000. At 31 December 20X9 retained earnings are as follows. GHS Phantom 275,000 Ghost 177,000 Phantom considers that goodwill on acquisition is impaired by 50%. Non-controlling interest is measured at fair value, estimated at GHS82,800. What are group retained earnings at 31 December 20X9? I GHS276,300 J GHS289,700 K GHS280,320 L GHS269,200 8 An entity has bought a 25% share in another entity with a view to selling that investment within six months. The investment has been classified as held for sale in accordance with IFRS 5. How should the investment be treated in the final year accounts? (a) It should be equity accounted. (b) The assets and liabilities should be presented separately from other assets in the balance sheet under IFRS 5. (c) The investment should be dealt with under IAS 39. (d) Purchase accounting should be used for this investment. 9. How is goodwill arising on the acquisition of a subsidiary dealt with in the financial statements? (a) It is recognised as an asset and subsequently amortized. (b) It is recognised as an asset and subsequently impairment tested . (c) It is written off against profit or loss. (d) Goodwill is not recognized separately within the carrying amount of the investment. 10 Augustine Plcacquired 160,000 ordinary shares in Veronica Plcon 1 April 2015 at a cost of GH154,000. Veronica Ltds retained earnings at that date were GH100,000 and its issued ordinary share capital was GHS200,000 [consisting of 200,000 ordinary shares issued at GHS1 per share]. Non-controlling interest [NCI] is measured at proportionate share of the net assets of subsidiary. What is the amount of the gain on a bargain purchase arising on the acquisition? A GH70,000 B GH86,000 C GH126,000 D GH146,000