Q3: A Parent Company acquired 60% equity interest in a subsidiary company for 440 million. The Market value of the net assets of the Subsidiary on acquisition date was 400 million. The Parent Company estimates that the full 100% interest in the subsidiary company would have cost 640 million

You are required to:

A) The statements of financial position of Tower Plc and Holborn Plc as at December 31, 2015 were as follows:

Tower PLC Million Holborn PLC Million

Property Plant & Equipment 9,000 5,000

Investment in Tower Plc 5,000 0

Other Assets 2,000 1,500

16,000 6,500

Share Capital 500 500

Retained Earnings 14,500 5,000

Other Liabilities 1000 1,000

16,000 6,500

Tower Plc acquired 80% equity interest in Holborn Plc two (2) years ago. At the date of acquisition Towers retained earnings stood at 3million and the fair value of its net assets was 5million. This was 1.5million above the carrying amount of the net assets at this date. The fair value adjustment related to an asset that had a remaining useful economic life of 10 years as at the date of acquisition. The goodwill arising on consolidation has not suffered any impairment.

You are required to:

A) Calculate the goodwill at acquisition

B) Calculate the Goodwill at acquisition with fair value of NCI

C) Prepare consolidated statements of financial position of Tower Plc Group as at December 31, 2015, on the assumption that non - controlling interest is valued at the fair value.