Sbr (int/UK) Strategic Business Reporting

mark) 

Share consideration 

All consideration transferred to achieve control over a subsidiary should be 

measured at fair value at the acquisition date. The share consideration should 

have been included in the goodwill calculation at $4.5 million (3m × $1.50). 

 

  

(1 mark) 

The correcting entry is: 

Dr Goodwill $4.5m 

Cr Share capital $3m 

Cr Share premium/other components of equity $1.5m 

(1 mark) 

---

S BR  (IN T & U K) :  S TRA TE G IC  BU SINES S  RE POR TI N G 

4 

K A P LAN   P UB LI S HI NG 

Net assets 

The identifiable net assets of a subsidiary should be measured at fair value as 

at the acquisition date. 

(1 mark) 

The fair value of Lose’s net assets exceeds the carrying amount by $15 million 

($265m – ($100m share capital + $150m retained earnings)). Property, plant 

and equipment should have been increased by $15 million and goodwill 

reduced by the same amount. 

(1 mark) 

The correcting entry is: 

Dr Property, plant and equipment $15m 

Cr Goodwill $15m 

(1 mark) 

Additional depreciation is required in the consolidated financial statements in 

respect of the fair value adjustment. This amounts to $1.5 million ($15m/10 

years) in the year ended 30 November 20X7.  

(1 mark) 

The correcting entry is: 

Dr Profit or loss $1.5m 

Cr Property, plant and equipment $1.5m 

(1 mark) 

Profit or loss is allocated between the equity owners and the non-controlling 

interest. Of this charge, $1.2 million (80% × $1.5m) is attributable to the equity 

owners of Beth (and reduces retained earnings in the consolidated statement 

of financial position), and $0.3 million (20% × $1.5m) is attributable to the non-

controlling interest (and reduces the NCI reserve in the statement of financial 

position).