IFRS

Case 7 / Business Combination (8 Points) At 31st December X1 company H buys 65% of the shares of company S and thereby gains control over company S. The statements of financial position for both companies are stated below: 31/12/X1 Assets PPE Intangible assets Investments Financial statements Company H Debit Credit 200 000 95 000 210 000 85 000 financial statements Company s Debit Credit 80 000 50 000 15 000 25 000 Current assets Debit Credit Debit 95 000 220 000 Credit 20 000 70 000 Equity/Liabilites Share Capital Reserves/retained earnings Non-Controlling Interests Liabilities Provision Total Assets 80 000 180 000 95 000 590 000 590 000 170 000 170 000 The consideration paid to buy 100 % of company S shares was TEUR 165,000 and is reported as investments in company H's balance sheet. The due diligence process reveals that the PPE of company S is overvalued by TEUR 7,250. The liabilities are overvalued by TEUR 5,000. The intangible assets do not include the self generated brand value of company S which can be measured reliably at TEUR 25,000. Company S has a strong and solid customer base which's fair value is measured with TEU 75,000. The tax rate is 25% Required: Walk through the single elements of the acquisition method and determine the amount of goodwill recognized. Remark: In this case, Company H choses the partial (proportionate) goodwill method. Take deferred taxes into account! Prepare the consolidated statement of financial positions at 31/12/X1 for H. Prepare an Excel-Sheet and upload it. What's the impact on consolidated equity, if the consideration paid is TEUR 100,000 instead of TEUR 165,000