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Chapter 18 Consolidated Statement of Financial Position

1.
1.1 1.2 1." 1.%

Objectives
Define a parent, a subsidiary, a group, non-controlling interest, group accounts and consolidated financial statements. Discuss the legal requirements of group accounts and the relevant requirements of HKA 2!. #$plain the disclosure requirements of group accounts under HKA 2!. #$plain the consolidation procedures and relevant conceptual issues, in particular, &ith regard to' (i) good&ill* (ii) non-controlling interest. ,repare the consolidated statement of financial position for a group of companies &ith a simple structure.
D e fi n i ti o n s

1.+

A c c o u n ti n g fo r u b s i d i a r i e s i n th e , a r e n ts o & n - i n a n c i a l ta te m e n ts

te p s o f s ta te m e n t o f fi n a n c i a l p o s i ti o n c o n s o lid a tio n

D isc lo s ure

. o o d & ill

/ o n - c o n tr o l l i n g 0n te r e s t

2.
2.1

Definitions
Definitions (a) ubsidiary 1 An entity that is controlled by another entity (2no&n as the parent). 0n accordance &ith ection 2(%) of the 3ompanies 4rdinance, a subsidiary shall be deemed to be a subsidiary of another company if that another company' (i) controls the composition of the board of directors of the investee company* or (ii) controls more than +56 of the voting po&er of the investee company* or (iii) o&ns more than +56 of the issued equity share capital of the investee
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company. HKA 2! &idens the definition of a subsidiary based on the concept of control. 0t defines a subsidiary as an enterprise that is controlled by another enterprise (2no&n as the parent). -or this purpose, control is defined as the power to govern the financial and operating policies of another enterprise so as to obtain benefits from its activities. Adopting the &ide definition of a subsidiary in HKA 2! could result in an enterprise being classified as a subsidiary &hen the enterprise does not meet the legal definition of a subsidiary under the 3ompanies 4rdinance. ,arent 1 is an entity that has one or more subsidiaries. .roup companies 1 consist of a holding company and its subsidiaries. .roup accounts 1 are the financial statements of a group of companies. 3onsolidated financial statements 1 is one particular form of group accounts that represent the financial information as if they &ere the financial statement of a single entity. /on-controlling interest (8inority interests) 1 is the entity in a subsidiary not attributable, directly or indirectly, to a parent. ,re-acquisition profits 1 are the reserves &hich e$ist in a subsidiary company at the date &hen it is acquired. 9hey are capitali:ed at the date of acquisition by including them in the good&ill calculation. ,ost-acquisition profits 1 are profits made and included in the retained earnings of the subsidiary company follo&ing acquisition. 9hey are included in group retained earnings.

(b) (c) (d) (e)

(f) (g)

(h)

3.

Control and Special Purpose ntit!

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A c c o u n t in g f o r u b s id ia r ie s 8 e a n in g o f 3 o n tro l 0 n c lu s io n s # $ c lu s io n s D if f e r e n t A c c o u n t in g . e q u ir e m e n t s /17-" . o lic ie s D is c lo s u r e .

555 class A ordinary shares. ".555 class A ordinary shares." !olution (a) A=3 >td has purchased ?. Required Describe the appropriate group accounting for amson if' (a) (b) A=3 >td purchases ?.2 3ontrol is presumed to e$ist &hen the parent o&ns.555 class A voting ordinary shares and 15. ". Example 1 A=3 >td is considering an investment in amson. =oth classes of shares have the same dividend rights. amson should therefore be /17-% . Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.555 class = and %.(A) ".555 class A voting shares. the capital structure of &hich is as follo&s' 15.1 Concept of control Definition HKA 2! establishes a parent-subsidiary relationship on the concept of control.555 class = non-voting ordinary shares.555 of the 15. 3ontrol also e$ists even &hen the parent o&ns one half or less of the voting po&er of an enterprise &hen there is' (i) po&er over more than one half of the voting rights by virtue of an agreement &ith other investors* (ii) po&er to govern the financial and operating policies of the enterprise under a statute or an agreement* (iii) po&er to appoint or remove the ma<ority of the members of the board of directors or equivalent governing body* or (iv) po&er to cast the ma<ority of votes at meetings of the board of directors or its equivalent. A=3 >td purchases 15. directly or indirectly through subsidiaries. more than one half of the voting po&er of an enterprise. @ith ?56 of the voting shares A=3 should control amson.

? ".#* (iii) in substance. 0t &ill borro& the money needed to buy the asset from a Acapital providerB.555 class A voting shares and 15. A=3 >td has purchased %.# normally has no assets or capital of its o&n. amson &ill not be a subsidiary. 9his has the effect of improving the return on capital employed and gearing of the sponsor. (A) #clusion and #emption of Subsidiaries from Consolidation Exclusion of subsidiaries /17-+ . the activities of the .# if it controls that . the enterprise has rights to obtain the ma<ority of the benefits of the .(b) treated as a subsidiary.555 class = non-voting shares. 9he purpose of . HKA -0nt 12 A3onsolidation 1 pecial .# or its assets in order to obtain benefits from its activities.#s) (also 2no&n as vehicles and quasi-subsidiaries) are legally independent entities that are used to ta2e on the loans or liabilities of another enterprise.#.+ ".555 of the 15. (") ".#s is to remove assets and liabilities from the balance sheet of the sponsor. the enterprise has the decision-ma2ing po&ers to obtain the ma<ority of the benefits of the activities of the . ".% !pecial purpose entit# pecial purpose entities ( . As A=3 has less than +56 of the voting share this time.# if' (i) in substance. the enterprise retains the ma<ority of the residual or o&nership ris2s related to the .urpose #ntitiesB states that an enterprise should consolidate an . but retain the right to use the asset and gain from any future increase in its value. An enterprise (often referred to as the sponsor) &ill sell assets to the .#. A reporting enterprise probably has control over an .# and therefore may be e$posed to ris2s incident to the activities of the . it probably &ill not be able to control amson. 9he .#Cs operation* (ii) in substance.# are being conducted on behalf of the enterprise according to its specific business needs so that the enterprise obtains benefits from the .#* or (iv) in substance.

0t is important to note that e$clusion of subsidiaries from consolidation under the reasoning of dissimilar activities is not permitted under HKA 2!. + A/oncurrent Assets Held for ale and Discontinued 4perationsB. 0f a subsidiary &hich carries a large amount of debt can be e$cluded.1 9he rules on e$clusion of subsidiaries from consolidation are necessarily strict. %. it notes that loss of control could occur &hen the subsidiary becomes sub<ect to the control of a government.+ %. or as a result of a contractual agreement. 0n other &ords. ummary' Reason &$A! '( )reatment /on-current asset investment per HKA "D 3onsolidate per HK-. 9herefore an immaterial subsidiary need not be consolidated. as investments stated at fair value.%. Accounting standards do not apply to immaterial items. then it should not be consolidated. 9hey should be accounted for under HKA "D. 0n particular.% %. administrator or regulator.! 9he previous tandard required a subsidiary to be e$cluded from consolidation &here control is intended to be temporar# ' the subsidiary &as acquired and is held e$clusively &ith a vie& to its subsequent disposal &ithin t&elve months from acquisition and management is actively see2ing a buyer. this is a &ay of ta2ing debt off the balance sheet. %.2 $e# %oint HKA 2! prescribes only one circumstance &hen a subsidiary should be e$cluded from consolidation.? %.repare HKA evere long-term restrictions 8andatory e$clusion meaning loss of control 9emporary investment Different activities 8andatory inclusion 8andatory inclusion /17-? . even though there is no indication in share o&nership. court. 9his e$clusion has no& been removed* subsidiaries held for sale must be consolidated. then the gearing of the group as a &hole &ill be improved. . because this is a common method used by enterprises to manipulate their results. + 3onsolidate." %. ubsidiaries held for sale are accounted for in accordance &ith HK-. 9his happen &hen there is evidence that if there are severe restrictions on the abilit# of the subsidiar# to act independentl# that are so great that control is lost.

7 Example ' (a) E.1% segment information 0mmaterial %. 9he current free:e on remittances does not in itself prove that A does not control . Different %eportin& Dates and Different 'ccountin& Policies /17-! . &hich is an insurance company. and do not re<ect to. including those not other&ise entitled to vote.D Exemption from preparing group accounts A parent need not present consolidated financial statements if and only if' (i) it is a wholl#*owned subsidiar# or it is a partiall# owned subsidiar# of another entity and its other o&ners.. has a subsidiary underta2ing. an international manufacturing group. F.. $. (b) 0t depends on &hether A controls . . the parent not presenting consolidated financial statements* (ii) its securities are not publicl# traded* (iii) it is not in the process of issuing securities in public securities mar2ets* and (iv) the ultimate or intermediate parent publishes consolidated financial statements that comply &ith Hong Kong -inancial . have been informed about. 3an the group be e$empted from consolidating F on the grounds of different activitiesG A o&ns a subsidiary underta2ing. o .. should be included. 3ontrol is defined as the po&er to govern the financial and operating policies so as to obtain benefit. in its consolidated accountsG !olution (a) F must be included under HKA 2!.eporting tandards. /ot applicable 4ptional (b) Does A need to include . must be investigated to decide &hether control e$ists. 9he actual relationship bet&een A and .overnment has for a number of years fro:en all remittances out of the country by private individuals and companies. (") %. &hich is located in an African state &here the .

HKA 2! requires the reason be disclosed together &ith the proportions of the items in the consolidated financial statements to &hich the different accounting policies have been applied. 0f it is not practicable to do so.1 +. 0f the subsidiary does not prepare conterminous financial statements to the same reporting date as the parent. +. HKA 2! includes a further restriction that the difference bet&een reporting dates should not exceed three months.2 Reporting dates =oth ection 12!(1) of the 3ompanies 4rdinance and HKA 2! requires that the financial year-ends of all group companies must coincide." (") +.% +.+ /17-7 . the financial statements of that subsidiary should be ad<usted for the effects of significant transactions or other events that occur bet&een the t&o different dates.(A) +. Accounting policies 3onsolidated financial statements should be prepared using uniform accounting policies for li2e transactions and other events in similar circumstances.

revenues and profit or loss. and not consolidating its subsidiaries. including the amount of total assets. (iv) 0f the group elected only to present the parentCs financial statements. those separate financial statements shall disclose the method of accounting for investments in subsidiaries. <ointly controlled entities and associates. (ii) 9he reasons for consolidating the subsidiaries &hich the parent does not have ma<ority voting control.1 Disclosure %e)uirements 9he disclosures required by HKA 2! are as follo&s' (i) 9he reasons for not consolidating the subsidiaries. either individually or in groups. ?. their summari:ed financial information. <ointly controlled entities and associates.(. resulting from borro&ing arrangements or regulatory requirements) on the ability of subsidiaries to transfer funds to the parent in the form of cash dividends or to repay loans or advances.g. total liabilities. /17-D . (iii) 9he nature and e$tent of any significant restrictions (e.

e s e rv e s 3 a lc u la tio n . / e t A s s e ts H a lu e o f u b s id ia ry % .1 !teps for %reparing the Consolidated !tatement of +inancial %osition (@1) hareholding in the subsidiary (@2) 3onsolidation ad<ustments.eserves' hare premium . 3 o n s o lid a tio n A d <u s tm e n ts " . o o d & ill 3 o s t o f 0n v e s tm e n t 3 o m p u ta tio n !. (@") /et assets of subsidiary At date of acquisition I E E E E At the reporting date I E E E E hare capital . o o d & ill . ro p o rtio n o f / e t A s s e ts 8 e th o d .etained earnings (@%) .*.ood&ill I E E E . +he . / o n -c o n tro llin g 0n te re s t 3 a lc u la tio n ? .asic Consolidation of Statement of Financial Position te p s in 3 o n s o lid a tio n 1 . o o d & ill 3 a lc u la tio n + . . ro u p . .a ir H a lu e 8 e th o d / e g a tiv e . o s itiv e .a ir H a lu e 3 o n s id e ra tio n . h a re h o ld in g s in u b s id ia ry 2 .arent holding (investment) at fair value /30 value at acquisition (J) >ess' /17-15 .

C.arent share of impairment (@") (A) !.C.Cs 6 of subCs post-acquisition retained earnings >ess' .ood&ill on acquisition 0mpairment of good&ill 3arrying good&ill (E) E (E) E (J) 0f fair value method adopted. /30 value K fair value of /30Cs holding at acquisition (number of shares . (J) 0f proportion of net assets method adopted. subsidiar# share price). 1oodwill arising on consolidation is the difference bet&een the cost of an /17-11 . fair value of net assets at acquisition (from @2).-air value of net assets at acquisition (@2) .value / . (@+) /on controlling interest I E E (E) E /30 value at acquisition (as in @") /30 share of post-acquisition reserves (@2) /30 share of impairment (fair value method only) (@?) .Cs retained earnings (1556) .C.2 1oodwill 1oodwill .ood&ill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recogni:ed. .0 .roup retained earnings I E E (E) E .own .

(6 of impairment attributable to /30) 3r .egative goodwill (i) Arises &here the cost of the investment is less than the value of net assets purchased. Accounting for the impairment differs according to the policy follo&ed to value the noncontrolling interests. (ii) HK-. ho&ever this is the commonly used term.roportion of net assets method' (b) Dr .roup reserves (6 of impairment attributable to the parent) Dr . (i) ." )reatment of 1oodwill (a) %ositive goodwill' (i) Capitalised as an intangible non-current asset. 0n this case the double entry &ill reflect the non-controlling interest proportion based on their shareholding as follo&s' Dr . (iii) 8ost li2ely reason for this to arise is a misstatement of the fair values of assets and liabilities and accordingly the standard requires that the /17-12 . -mpairment of positive good&ill' 0f good&ill is considered to have been impaired during the post-acquisition period it must be reflected in the group financial statements.ood &ill (c) .acquisition and the fair value of the subsidiaryCs net assets acquired.ood&ill (ii) -air value method 1 the good&ill in the statement of financial position includes good&ill attributable to the non-controlling interest.roup reserves 3r . " does not refer to this as negative good&ill (instead it is referred to as a bargain purchase).C. (ii) )ested annuall# for possible impairments. (iii) Amortisation of good&ill is not permitted by the standard. !.

555 Current liabilities )otal equit# and liabilities 1!?.roperty.ood&ill is calculated using the proportion of net asset method.555 %%. /17-1" .555 21%. 9here has been no impairment of good&ill since acquisition.555 "1?.555 1D.555 D.555 "".etained earnings 75. plant and equipment 0nvestments in Current assets )otal assets Equit# and liabilities Equit# hare capital hare premium .555 152. After such a revie&. .555 %%.555 11.555 on the day of acquisition. H >td I !+. any negative goodwill remaining is credited directl# to the income statement.(iv) calculation is revie&ed.repare the consolidated statement of financial position of H >td as at "1 December 2515.555 "1?.555 %5.555 ?.% Example 2 9he follo&ing statements of financial position &ere e$tracted from the boo2s of t&o companies at "1 December 2515.555 1%5.555 .555 >td I 11.555 25.555 2!.555 H acquired all of the share capital of one year ago.555 2+.on*current assets . . !olution @1 hareholdings in >td.555 %. !. 9he retained earnings of stood at I2.

555 L 11.555 12.555 At the reporting date I %.ood&ill (@") . I555 1+ 7? .roup /on-controlling interest 6 155 155 @2 /et asset of >td At date of acquisition I %.555 hare capital .555 3onsolidated statement of financial position as at "1 December 2515 ..555 ?.555 2.555 1D.arent holding (investment) at fair value >ess' -air value of net assets at acquisition (@2) .555 ?.555 (12.555 >td is 1556 o&ned.555 %!.etained earnings @" 3alculation of .roup retained earnings H >td' >td' 1556 $ (1D.555 !.eserves' hare premium . plant and equipment (!+.555) I %5.ood&ill .555) 1+.roperty.on*current assets .555 1 12.ood&ill on acquisition @% /on-controlling interest /ot applicable to this e$ample as @+ .555 D.555) /17-1% I 2!.

555 L "".C. !.+ . subsidiar# share price). fair value of net assets at acquisition* or (b) +air (full) value method 1 /30 value K fair value of . >td on "1 December 2515 .on*controlling interests Computation of .on*current assets .555) )otal equit# and liabilities 2%! "%7 75 25 %! 1%! 251 "%7 (") !.C.C-3s holding at acquisition (number of shares .on*controlling -nterests HK-. plant and equipment 0nvestments in at cost Current assets )otal assets Equit# and liabilities H >td I555 D5 115 255 +5 2+5 >td I555 155 155 "5 1"5 /17-1+ . /on-controlling interest can be valued at' (a) %roportion of net assets method 1 /30 value / .? Example 4 5 %roportion of net assets method 9he draft statements of financial position of H >td and are as follo&s.0 .roperty.Current assets (21%.555) )otal assets Equit# and liabilities Equit# hare capital (H >td only) hare premium (H >td only) . " allo&s t&o alternative &ays of calculating non-controlling interest in the group statement of financial position.roup retained earnings (@+) Current liabilities (1!?.own .555 L 2+.

assuming that the H group values the non-controlling interest using the proportion of net assets method.etained earnings 155 125 225 155 25 125 15 1"5 Current liabilities )otal equit# and liabilities "5 2+5 H >td had bought 756 of the ordinary shares of >td on 1 Manuary 2515 &hen the retained earnings of >td &ere I1+.ood&ill . !olution @1 hareholdings in >td.repare the consolidated statement of financial position of H >td as at "1 December 2515.555. /o impairment of good&ill has occurred to date.roup /on-controlling interest hare capital . 6 75 25 155 @2 /et asset of >td At date of acquisition I555 155 1+ 11+ At the reporting date I555 155 25 125 .Equit# hare capital I1 .etained earnings /et assets @" 3alculation of .arent holding (investment) at fair value /30 value at acquisition (256 $ 11+ (@2)) I555 115 2" 1"" /17-1? . .

roperty.on*controlling interest (64) Current liabilities ("5.555 L 15.! Exercise 1 5 +air value method 9he draft statements of financial position of H >td and /17-1! >td on "1 December 2515 .etained earnings (@+) .ood&ill (@") .555 L "5.on*current assets .555) )otal assets Equit# and liabilities Equit# hare capital (H >td only) .>ess' -air value of net assets at acquisition (@2) . plant and equipment (D5.555) Current assets (+5.555) )otal equit# and liabilities I555 17 1D5 257 75 277 155 12% 22% 2% 2%7 %5 277 !.roup retained earnings H >td >td' 756 $ (125 1 11+(@2)) I555 125 % 12% 3onsolidated statement of financial position as at "1 December 2515 .ood&ill on acquisition @% /on-controlling interest /30 value at acquisition (@") /30 share of post acquisition reserves N256 $ (125 1 11+)O (11+) 17 I555 2" 1 2% @+ .555 L 155.

555 1?5.555 7%. plant and equipment 0nvestments in at cost Current assets )otal assets Equit# and liabilities Equit# hare capital I1 hare premium .555 25.555 "5+.on*current assets . H >td I 7+.555 ++.+55.555 .555 "+.are as follo&s.555 1!5.555 !5. 4n this date. the fair value of the 256 noncontrolling shareholding in >td &as I12.555 15.repare the consolidated statement of financial position of H >td as at "1 December 2515.555 >td I 17.555 Current liabilities )otal equit# and liabilities 1"+.555 ?5. !olution /17-17 .555 2+.555 "5+.555 152.etained earnings ?+.555 152. Required .555. assuming that the H group values the non-controlling interest using the fair value method. /o impairment of good&ill has occurred to date.roperty.555 H >td had bought 756 of the ordinary shares of >td on 1 Manuary 2515 &hen the retained earnings of >td &ere I25.555 %!.555 1%+.555 17.

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(a) 3onsolidated accounts are prepared from the perspective of the group. 9he boo2 values of the subsidiaryCs assets and liabilities are largely irrelevant.7 +air value of consideration and net assets +air value of consideration and net assets 9o ensure that an accurate figure is calculated for good&ill' (a) the consideration paid for a subsidiary must be accounted for at fair value* (b) the subsidiar#3s identifiable assets and liabilities acquired must be accounted for at their fair values.(C) !. not their original cost to the subsidiary. 9he cost to the group is their fair value at the date of acquisition. !. because the consolidated accounts must reflect their cost to the group.urchased good&ill is the difference bet&een the value of an acquired entity and the aggregate of the fair value of that entityCs identifiable assets and liabilities. 0f fair values are not used. /17-25 . the value of good&ill &ill be meaningless. (b) .D 9he subsidiaryCs identifiable assets and liabilities are included in the consolidated accounts at their fair value for the follo&ing reasons. rather than from the perspectives of the individual companies.

e.1% /17-21 . Example : 5 Calculation of cost of investment H >td acquires 2% million I1 shares (756) of the ordinary shares of >td by offering a share-for-share e$change of t&o shares for every three shares acquired in >td and (a) !. i. (c) #ach year the discount is then unwound. Share exchange 4ften the parent company &ill issue shares in its o&n company in return for the shares acquired in the subsidiary. a promise to pay an agreed sum on a predetermined date in the future ta9ing into account the time value of mone#. (a) Deferred consideration should be measured at fair value at the date of the acquisition.12 (b) !. 9he issue costs of debt or equit# associated &ith the acquisition should be recogni7ed in accordance with &$A! 28. instead a part of the payment is deferred until a later date 1 deferred consideration. Deferred and contingent consideration 0n some situations not all of the purchase consideration is paid at the date of the acquisition.1" !. (b) 9he fair value of any deferred consideration is calculated by discounting the amounts payable to present value at acquisition. !.e. valuation and other professional fees should be expensed as incurred. deferredP contingent considerations and share e$changes. 9he share price at acquisition should be used to record the cost of the shares at fair value.15 Calculation of cost of investment )he cost of acquisition 9he cost of acquisition includes the follo&ing elements' (a) Cash paid* and (b) fair value of an# other consideration. 9his increases the deferred liability each year (to increase to future cash liability) and the discount is treated as a finance cost.11 -ncidental costs of acquisition such as legal.(D) !. accounting. i.

(E) !. " (revised) requires that the subsidiaryCs assets and liabilities are recorded at /17-22 . ho& ho& the discount &ould be un&ound.1+ +air value of net assets acquired HK-.a cash payment of I1 per share payable three years later. 9he cost of capital is 156 and I1 receivable in " years can be ta2en as I5. !olution (a) 3ost of investment Deferred cash (at present value) NI5. Required (a) (b) 3alculate the cost of investment and sho& the <ournals to record it in H >tdCs accounts.7 -or the ne$t three years the discount &ill be un&ound. ta2ing the interest to finance cost until the full I2% million payment is made in Rear ".7m Im Dr -inance cost 1.!+. Im +5 17 1? 1? Dr 3ost of investment in subsidiary 3r /on-current liabilities 1 deferred consideration 3r hare capital (1?m shares $ I1) 3r hare premium (1?m shares $ I1) (b) Qn&inding the discount I17m $ 156 K I1. H >tdCs shares have a nominal value of I1 and a current mar2et value of I2.7 3r /on-current liabilities 1 deferred consideration 1.!+ $ (I1 $ 2%m)O hares e$change N(2%m $ 2P") $ I2O Im 17 "2 +5 I+5m is the cost of investment for the purposes of the calculation of good&ill.

555 ?. Ad<ustments &ill therefore be required &here the subsidiaryCs accounts themselves do not reflect fair value.?+5 +55 "55 755 %55 ?+5 1.555 in three yearsC time.555 1.eceivables 3ash )otal assets Equit# and liabilities Equit# hare capital .555. H >td paid initial cash consideration of I1 million. Additionally H >td issued 255.etained earnings . &hen the reserves of >td stood at I12+. 0t &as also agreed that H >td &ould pay a further I+55.1! 2.+55 0nvestments in at cost 1.ustment H >td acquired 756 of the share capital of >td t&o years ago.%55 ".7+5 !.2+5 !.555 shares &ith a nominal value of I1 and a current mar2et value of I1. Exercise ' 5 +air value of net assets ad.%55 ".!. 9he shares and deferred consideration have not yet been recorded.7+5 >tdCs plant e$ceeded its boo2 value by I255. plant and equipment +.75.roperty.+55 1.?+5 1. /17-2" . =elo& are the statements of financial position of H >td and >td as at "1 December 2515' H >td >td .1? their fair value for the purposes of the calculation of good&ill and production of consolidated accounts.on*current liabilities Current liabilities )otal equit# and liabilities At acquisition the fair values of ++5 %55 255 !.555 1.+55 Current assets 0nventory .on*current assets I555 I555 . 9he appropriate discount factor for I1 receivable three years from no& is 5. 3urrent interest rates are 156 pa.!+1.555.+55 155 255 +5 1.

555 &ith a remaining life of 15 years. -or many years >td has been selling some of its products under the brand name of A pearmintB.555. At the date of acquisition the fair value of the 256 non-controlling interest &as I"75.9he plant had a remaining useful life of five years at this date. Required . At the date of acquisition the directors of H >td valued this brand at I2+5. 9he consolidated good&ill has been impaired by I2+7. !olution /17-2% . 9he H .555.roup values the non-controlling interest using the fair value method. 9he brand is not included in >tdCs statement of financial position.repare the consolidated statement of financial position of H >td as at "1 December 2515.

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