Margaret, a public limited company, is currently planning to acquire and sell interests in other en and has asked for advice on the impac of FRS Revised) Business Combinations' is AS27 evised) "Consolidated and Separate Financial Statements'. The company particularly concerned about the when is asso de mpact on earnings. net assets and that the new Goodwill at the acquisition date and any ongoing earnings impact The company standards may have public limited ompany. The is considering purchasing additional shares in an associate Josey,a shareholders of holding will increase from ake to 70% stake by offering the Josey, cash and shares in Margaret, anticipates that it will pay $5 million in transaction Margaret costs to lawyers and bankers. Josey had previously been the subject of a management buyout order that the current management shareholders may remain in the business, Margaret is going to offer them share options in Josey subject to them remaining in employment for two years after the acquisition dditionally, Margaret will offer the same shareholders, shares in the holding company which are contingent upon a certain level of profitability being achieved by Josey. Each shareholder will receive shares of the holding company up to a value of$50,000, if Josey achieves a pre determined rate of return on capital employed for the next two years. Josey has several marketing-related intangible assets that are used primarily in marketing or promotion of its products. These include trade names, internet domain names and non-competition agreements. These are not currently recognised in Josey's financial statements Margaret does not wish to measure the non-controlling interest in subsidiaries on the basis of the proportionate interest in the identifiable net assets, but wishes to use the full goodwill' method on the transaction Margaret is unsure as to whether this method is mandatory, or what the effects are of recognising full goodwill'. Additionally the company is unsure as to whether the nature of the consideration would affect the calculation of goodwill. To finance the acquisition of Jo Margaret intends to dispose of a partial interest in two subsidiaries. Margaret will retain control of the first subsidiary but will sell the controlling interest in the second subsidiary which will become an associate. Because of its plans to change the overall structure of the busines Margaret wishes to recognise a re-organisation provision at the date of the business combination. -s employ option