IFRS 3 Business Combinations

On 1 January 2016 Invigilator Enterprises acquired 80 per cent of the shares of Lemma
Company. The separate condensed statements of financial position immediately after the
acquisition appeared as shown below (all amounts in €):
Invigilator Lemma
Assets
Intangible assets — 2,000
Property, plant and equipment (net) 490,000 80,000
Investment in Lemma 600,000 —
Inventories 230,000 360,000
Trade and other receivables 400,000 240,000
Total assets 1,720,000 682,000
Share Capital and Liabilities
Share capital 1,000,000 200,000
Retained earnings 140,000 100,000
Provisions 20,000 30,000
Current liabilities 560,000 352,000
Total equity and liabilities 1,720,000 682,000

Additional information (at acquisition date):

1) Lemma owns a patent for the production of a new product. Lemma did not recognize the
patent in its financial statements. The estimated fair value of the patent amounts to €80
000.
2) The fair value of Lemma’s main corporate offices is €130 000 (net book value of €50 000).
3) The fair value of Lemma’s inventories amounts to €320 000.
4) On 1 January 20X5, Invigilator Enterprises still has to pay an invoice (€100 000) for
services rendered by Lemma Company in December 20X4.
Required:
a) Prepare the consolidated statement of financial position of the Invigilator Group as at 1
January 20X5.
b) Prepare the consolidated statement of financial position of the Invigilator Group as at 1
January 20X5, assuming that the investment in Lemma represents only 90 per cent of the
outstanding shares of Lemma Company (apply the partial goodwill method).