a)

When a parent company acquires a subsidiary, the purchase consideration can be in cash,

loan stock, ordinary shares, some form of convertible security or any combination of

these. What are the implications to the parent company and its shareholders if the

purchase consideration is paid in the form of convertible loan stock? (Max word count:

150 words) (10 marks)

b)

Goodwill is considered an intangible asset and is tested annually for impairment.

Discuss why goodwill is not amortised like other intangible assets and why the

accounting standards does not allow the write-off of purchased goodwill to reserves.

(Max word count: 200 words)

(10 marks)

c)

Identify the accounting concepts underlying the preparation of group accounts if the

acquisition method is used and what useful information do they provide to the users of

published financial statements. (Max word count: 250 words) (10 marks)

.

d)

Fair value is a concept underlying the preparation of group accounts for external

financial reporting. Discuss if and under what circumstances deferred tax should be

provided on the revaluations of fixed assets to their fair value. (Max word count: 200

words). (10 marks)