Part A

On $1$ January $2020,$ Jacobs company acquired $90\%$ of Gamma company$$s share capital for a total value of $500$m$.$ Additional information:

The fair value of the subsidiary$$s net assets on acquisition total $400$ million.

Assuming the fair value of the non$-$controlling interest $($NCI$)$ share at acquisition was $50$ million.

Required:

Calculate the NCI and goodwill of the group on $1$ January $2020$ using the following two NCI methods:

Traditional method: NCI$$s proportionate share of net assets of the acquiree.

Full $($gross$)$ goodwill method.

Make appropriate references to IFRS.

Part B

The balance sheets of Krizner$$s Inc. and Markson$$s Ltd$.$ at $31$ December $2020,$ the accounting date for both companies, were as follows:

$4.-$ACR$\_$MG$1.$png

On $31$ December $2020,$ Krizner$$s Inc. purchased $100\%$ shares of Markson$$s Ltd$.$ The purchase consideration was satisfied by the issuance of $6$ new equity shares of Krizner$$s Inc. for every $5$ equity shares purchased in Markson$$s Ltd$.$

At $31$ December $2020,$ the market value of a Krizner$$s Inc. share was $2\mathrm{.}30$ and the market value of a Markson$$s Ltd$.$ share was $2\mathrm{.}40.$

Further relevant details regarding Markson$$s Ltd$.$s accounts at $31$ December $2020$ were as follows:

The fixed assets had a fair value of $43\mathrm{.}5$m$.$

The inventories had a fair value of $9\mathrm{.}5$m$.$

The debentures had a market value of $12$m$.$

Other net assets had a fair value that was the same as their book value.

Note that the effect of the acquisition was not reflected in Krizner$$s Inc.$$s

Required:

Prepare the consolidated balance sheet of Krizner$$s Inc. on the acquisition date. Please explain and justify all steps you have taken to prepare the statement and provide details of any assumptions you have made.

Part C

ABC Ltd$.$ acquired $70\%$ of the shares in XYZ Ltd$.$ on $31$ December $2019$ for a cost of $4,000,000.$ The profit and loss accounts for the year ended $31$ December $2020$ are as follows:

$4.-$ACR$\_$MG$2.$png Additional information:

A goodwill impairment review has been carried out, and it has been determined that goodwill has been impaired by $300,000$ as at $31$ December $2020.$

equired:

Define what is meant by purchased goodwill, how it is calculated, and explain the reasons why it might arise.

Prepare the consolidated profit and loss account for the Group for the year ended $31$ December $2020.$

Outline the goodwill impairment review process and examine the current criticisms of its practical implementation.