art C

ABC Ltd acquired $75\%$ of XYZ Ltd shares on $31$ December $2022$ for a cost of $3,500,000.$ The balance sheets of the two companies on $31$ December $2023$ and the profit and loss accounts for the year ending $31$ December $2023$ are as follows:

$5$

Additional Information:

$-$A goodwill impairment review has been carried out, and it has been determined that goodwill has been impaired by $350,000$ as of $31$ December $2022.$

$-$On $31$ December $2023,$ ABC Ltd paid XYTZ Ltd $250,000$ for intercompany liabilities, but XYZ has not yet recognised this in its accounts.

Required:

$1.$ Define what is meant by purchased goodwill, how it is calculated, and explain the

reasons why it might arise. $($LO$1)$

$2.$ Prepare the consolidated profit and loss account for the group for the year ending $31$ December $2023.($LO$3)$

$3.$ Prepare the consolidated balance sheet for the group as of $31$ December $2023.($LO$3)$

$4.$ Show all of your workings, explain the steps you have taken $($with reference to IFRS standards$),$ and note any assumptions that you have made. $($LO$4,$ LO$5)$

$5.$ Outline the goodwill impairment review process and examine the current criticisms of its practical implementation. $($LO$2)$

$(40$ marks$)$

Part D

Royal Dutch Shell $($RDS$)$ is a multinational British$-$Dutch oil and gas company that isheadquartered in the Netherlands. Accordingly, it prepares its final accounts in accordance with IFRS. Obtain the annual report of RDS for the year ending $2023($available online at www$.$shell.com$)$ and review the information about its acquisitions.This information may be provided in different parts of the annual report, including financial statements.

List the acquisition$($s$)$ made during the year. Prepare a report which shows:

$1.$ Your research into the reasons for success or failure of acquisitions in general.

$2.$ Potential advantages of each of RDS$$s acquisition$($s$)$ in $2023.$

$3.$ The impact of the acquisition$($s$)$ on the group$$s consolidated financial statements,

including the adjustments to the subsidiary$$s book values.

$4.$ Express your opinion about the goodwill of the group and the goodwill impairment charges, if any.

Your answer should be supported with references to specific IFRS standards the company followed. $($LO$2,$ LO$3,$ LO$4,$ LO$5)$

$(35$ marks$)$