Armstrong plc is an international designer and manufacturer of internal walls and ceilings in the UK. On 31st May, 2016, Armstrong plc paid 950m to acquire 80% of the ordinary share capital of Hall plc. Based on the market price of the shares of Spanners plc at the date of gaining control, the directors of Armstrong plc determined the fair value of the 20% non-controlling interest in Hall plc to be 200m. At the acquisition date, Hall plc had net total assets of 800m, valued at fair value.

Upon acquisition, Hall plc was established as a stand-alone Cash Generating Unit and goodwill arising from the acquisition was fully allocated to this Cash Generating Unit. However, over the last year Hall plc did not performed as Armstrong plc had originally expected. The recession hit Hall plc hard and substantially reduced its turnover and earnings. Armstrong plc was becoming increasingly concerned that it had over-paid for its share of equity in Hall plc.

At the 31st December 2017, Armstrong plc began preparing its group financial statements for the 2017 financial year. At this date the carrying value of the net identifiable assets of Hall plc was 600m, after deducting all depreciation expenses. The finance director established that the present value of Hall plcs discounted net cash flows for the next five years would be 530m. In addition, an estimation of the fair market value of Hall plcs factory and other net assets would raise a net total of 450m if placed on the current market at the 31st December 2017.

The finance director of Armstrong plc is concerned that there may be some impairment in the value of goodwill in the consolidated balance sheet arising from the purchase of Hall plc.

Required

Calculate the amount of any goodwill arising on the acquisition of shares of Hall plc, using the full goodwill method, and the associated impairment losses, that should be recognised by Armstrong plc in its financial statements for the year ended 31 December 2017. Allocate the impairment calculated (if any) to the appropriate accounts following IAS36, Impairment of Assets, guidelines. Distinguish between goodwill impairment (if any) allocated to Armstrong plc and Non-controlling interests.

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