Company A$,$ a publicly traded entity, acquired an $80\%$ interest in Company B$,$ a private

company, on January $1,2005,$ for R$1,000,000.$ Company B$\text{'}$s equity at that date consisted of

the following:

$$ Share capital: R$500,000$

$$ Retained earnings: R$200,000$

$$ Other reserves: R$50,000$

Company A applies the fair value method for valuing non$-$controlling interests. The fair value

of the non$-$controlling interests in Company B at the acquisition date was R$150,000.$

During the year $2005,$ Company B reported a profit of R$100,000,$ and it paid dividends of

R$20,000.$

Company A also holds a $35\%$ interest in Company C$,$ an associate, at the end of $2005.$

Company C reported a profit of R$50,000$ for the year.

Required:

$1\mathrm{.}1$ Calculate the goodwill arising on the acquisition of Company B$,$ taking into account the

fair value method. Show all necessary calculations. $(5$ marks$)$

$1\mathrm{.}2$ Prepare the consolidated statement of financial position for Company A and its

subsidiaries $($Company B and its interest in Company C$)$ as of December $31,2005.$

Include the treatment of non$-$controlling interests and the investment in the associate.

$(5$ marks$)$

$1\mathrm{.}3$ Calculate the share of profit attributable to non$-$controlling interests and the share of

profit from the associate for the year ended December $31,2005,$ and include them in the

consolidated statement of comprehensive income. $(5$ marks$)$