Fanta Co acquired 100% of the ordinary share capital of Tiger Co on 1 October 2014.
On 31 December 2014, the share capital and retained earnings of Tiger Co were as follows:
$ | |
Ordinary Share of $1 each | 45,735 |
Retained Earnings at 1 Janaury 2014 | 197,440 |
Profit for the year ended at 31 December 2014 | 14,400 |
Total : | 257,575 |
The profit of Tiger Co have accrued evenly throughout 2014. Goodwill arising on the acquistion of Tiger Co was $22,800.
What was the cost of investment in Tiger Co?
Suggested solutions:
$ | |
Consideration | C |
plus NCI | |
Less Share Capital | 45,735 |
Retained Earnings at acquisition | 208,240 |
Equals Goodwill | 22,800 |
Solve the equation, the answer is $ 276,775.
Working consolidated retained earnings at acquisition
= Retained earnings at 1 January + 9 months' profit for the year
=197,440 + 10,800
=$ 208,240
To do the same topic again in ACCA F3 consolidated cost of investment
To do another topic in ACCA F3
2015 ACCA F3 CONSOLIDATED COST OF INVESTMENT