Bamburg Ltds retained earnings at the date of acquisition was $ 135,000. No

ordinary shares were issued/ redeemed by the subsidiary since acquisition. The

group used the proportion of the net assets of the subsidiary company to

measure non-controlling interest.

Bamburg Ltd holds a patent which has not been recognized in its financial

statements. The directors of Trifles Ltd are of the opinion that the patent should

be accounted. The patent had a fair value of $ 125,000 and a remaining term

four years to go as from the date of acquisition. With regards to Bamburg Ltds

Property and Plant, it is noted that the asset had a lifetime of five years at the

acquisition date and the carrying value of Property and Plant was greater than

the fair value by $ 40,000 on the acquisition date. Included within the intangible

assets of Bamburg Ltd is goodwill of $ 5,000 which arose on the purchase of

the trade and assets of a sole-trader business.

Extract of statement of financial position for the year ended 30 June 2020 Equity and liabilities

Trifles Bamburg

Trifles Bamburg

Share capital ($ 0.5 Each) 325 175

Share premium 200 100

Retained earnings 200 225

Non current liabilities 125 50

Current liabilities 100 10

b) (i) Calculate the net assets of the subsidiary at the acquisition date and

reporting date (30 June 2020). [11 Marks]

(ii) Calculate the goodwill at acquisition date. [2 Marks]

(iii) Calculate the group retained earnings as at 30 June 2020. [3 Marks]

c) Assume that Trifles Ltd has only recorded the cash transaction of $

565,000. Prepare the consolidated Statement of Financial Position (Equity

and Liabilities section only) to show how the deferred consideration and

the share exchange should be accounted for the year ended 30 June 2020.

[10 Marks]