AB acquired 80% of the 1 million equity shares of CD on 1 January 2019 when CDs retained earnings were 1,200,000. The consideration for the acquisition consisted of 500,000 cash paid on the acquisition date and the transfer of 500,000 1 equity shares in AB with a fair value of 5 each at the acquisition date. The non-controlling interest in CD was measured at its fair value of 600,000 at the date of acquisition.

On 1 January 2019, the carrying value of CDs net assets was considered to be the same as their fair value with the following exceptions:

i). Leasehold property with a carrying value of 1,200,000 had a fair value of 1,350,000 and an estimated useful life of 5 years from the date of acquisition. AB depreciates property, plant and equipment on a straight line basis.

ii). A contingent liability, which had a fair value of 200,000 at the date of acquisition, had a fair value of 60,000 at 31 December 2020. This contingent liability is not reflected in the individual financial statements of CD.

The retained earnings reported in the financial statements of AB and CD as at 31 December 2020 were 8,500,000 and 1,600,000 respectively. An impairment of 10% was recorded in ABs group financial statements as at 31 December 2019. An impairment review performed on 31 December 2020 indicated that goodwill on the acquisition of CD had been further impaired by 20% of its carrying value at that date. AB has no other subsidiaries.

You are required to:

1. Calculate the amounts that will be included in the consolidated statement of financial position of the AB group as at 31 December 2020 for:

1. Goodwill (10 marks)
2. Consolidated retained earnings (8 marks)
3. Non-controlling interest (6 marks)

2. Describe the factors that would have been taken in to account when the group carried out its impairment reviews. (6 marks)