Hododio Ltd acquired 80% of Sayoo Ltd on January 1, 2015 for Gh300m. The retained earnings of Sayoo Ltd at acquisition was Ghc136m and other equity was Gh4m. The fair values of the identifiable net assets of Sayoo on January 1, 2015 were Gh400m and an independent valuer has stated that the fair value of the Non-controlling interest was Gh86m. The increase in the fair value of the identifiable net assets is due to an increase in the value of a depreciable land. Hododio Ltd depreciates depreciable land at a rate of 2% on a straight line basis. Hododio Ltd does not wish to measure the Non-controlling interest in Sayoyo Ltd on the basis of the proportionate interest in the identifiable net assets but wish to use the full goodwill method.

The extract of the Statement of Financial Position as at December 31, 2019 is as follows

Equity Share Capital Retained Earnings Other Equity

Gh1each

Hododio Ltd Ghm 520

240 12

5marks

Sayoo Ltd Ghm

220 150 4

a. i. ii. iii. b.

c.

You are required to calculate

Goodwill on acquisition of Sayoo Ltd Non-controlling interest 2marks The Group Retained Earnings 5marks

What will be the impact on Goodwill, Non-controlling interest and the Group retained earnings if the non-controlling interest was measured as the proportionate of the identifiable net assets of Sayoo Ltd.