A) A Parent Company acquired 60% equity interest in a subsidiary company for 440Million.The Market value of the net assets of the Subsidiary on acquisition date was 400Million. The Parent Company estimates that the full 100% interest in the subsidiary company would have cost 640 million

Required:

a) Calculate the goodwill at acquisition date where non controlling interest is measured (i) As a proportionate share of the net assets of the subsidiary company.

(5 Marks) (ii)

At fair value (The Full good will method). (5 Marks)

B) The statements of Financial position of Tower Plc and Holborn Plc as at December 31, 2015 were as follows:

Tower PLC Holborn PLC

Million Million

Property Plant & Equipment 9,000 5,000

Investment in Tower Plc 5,000

Other Assets 2,000 1,500

16,000 6,500

Share Capital 500 500

Retained Earnings 14,500 5,000

Other Liabilities 1,000 1,000

16,000 6,500

Tower Plc acquired 80% equity interest in Holborn Plc two (2) years ago.

At the date of acquisition Towers retained earnings stood at 3m and the fair value of its net assets was 5Million. This was 1.5Million above the carrying amount of the net assets at this date. The fair value adjustment related to an asset that had a remaining useful economic life of 10 years as at the date of acquisition.

The goodwill arising on consolidation has not suffered any impairment.

Required:

Prepare consolidated statements of Financial position of Tower Plc Group as at

December 31, 2015 on the assumption that non - controlling interest is valued at the

fair value (the full goodwill method). (15 Marks)

N.B. Show all workings