QUESTION 4

ZZZ acquired 100% of SUBs ordinary shares on 1 January 2011 for R1,136,000 when SUBs retained earnings were R260,000. At 1 January 2011 the fair value of the net assets of SUB exceeded their carrying value by R110,000. The remaining useful life of these assets was 11 years from acquisition. SUB has not issued any new shares since acquisition by ZZZ. SUB is ZZZs only subsidiary. ZZZ calculated that goodwill in its subsidiary was impaired by 20% at 31 December 2013. The equity of SUB as at 31 December 2013: R000 Ordinary share capital 430 Share premium 86 Retained earnings 324 840 The retained earnings of ZZZ were R2,100,000 at 31 December 2013. Required: Calculate the amount that ZZZ should include in its consolidated statement of financial position as at 31 December 2013 for: (i) Goodwill (ii) Group retained earnings (10 marks)