On 1 July 2016 Amcore acquired 960,000 equity shares of Cutcos total equity shares on the following terms:

a share exchange of two shares in Amcore for every four shares acquired in Cutco; and

a cash payment due on 30 June 2017 of MUR 160 per share acquired (Ignore cost of capital).

At the date of acquisition, shares in Amcore and Cutco had a stock market value of MUR 400 and MUR 300 each respectively.

Statements of profit or loss for the year ended 31 March 2017:

(i) At the date of acquisition, the fair values of Cutcos assets were equal to their carrying amounts with the exception of an item of plant which had a fair value of MUR 72,000 above its carrying amount. The remaining life of the plant at the date of acquisition was 18 months. Depreciation is charged to cost of sales.

(ii) Sales from Amcore to Cutco in the post-acquisition period were MUR 500,000 at a mark-up of 20%. Cutco had MUR 420,000 of these goods in inventory as at 31 March 2017.

(iii) Amcores policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose, Cutcos share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest.

(iv) On 31 March 2017, Amcore carried out an impairment review which identified that the goodwill on the acquisition of Cutco was impaired by MUR 50,000. Impaired goodwill is charged to cost of sales.

Required: a) Calculate goodwill at the date of acquisition of Cutco. [12 marks]

b) Prepare Amcores consolidated statement of profit or loss for the year ended 31 March 2017 [20 marks]

c) On 31 March 2017 the board of directors of Amcores decide to purchase 50,000 ordinary shares in a company called Machine Co. The total amount of shares of Machine Co is 150,000 shares.

Equity in the separate financial statements of Cutco as at 1 April 2016: Equity in the separate financial statements of Cutco as at 1 April 2016