William Company acquires 70 per cent of Bill Company for a cash price of $10,000,000 when the share capital and reserves of Bill Company are:

Share capital $8,000,000

Retained earnings $2,000,000

TOTAL $10,000,000

1. What amount will be shown in the consolidated statement of financial position for goodwill pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at fair value?

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2. What amount will be shown in the consolidated statement of financial position for goodwill pursuant to AASB 3, assuming that any non-controlling interest in the acquirer is measured at the non-controlling interests proportionate share of the acquirees identifiable net assets?

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3. What are some of the implications of allowing the group to have two options in accounting for goodwill on consolidation?

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