b) On 1 January 2019, Rudisha Ltd acquired 80% of the 10,000,000 Sh.1 Ordinary shares of Tawala Ltd for Ksh.1.50 per share in cash and so gained control. The fair value of Tawala Ltds net assets at that date was the same as their book value. The retained earnings as at that date amounted to KShs. 4,000,000.

Required:

(i) Using the partial goodwill method, compute the goodwill acquired on acquisition and the non-controlling interest as at that date where non-controlling interest is measured at the proportionate share of the fair value of the net assets of the acquired. (6 Marks)

(ii) The fair value of the non-controlling interest as at 1 January 2019 was Ksh.2, 900,000. Using the full goodwill method, compute the amount of goodwill to be presented on the Consolidated Statement of Financial Position and the non-controlling interest as at that date. (7 Marks)