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 | 121,960 |
| Retained Earnings at 1 Janaury 2014 | 74,040 |
| Profit for the year ended at 31 December 2014 | 14,400 |
| Total : | 210,400 |
The profit of Tiger Co have accrued evenly throughout 2014. Goodwill arising on the acquistion of Tiger Co was $31,920.
What was the cost of investment in Tiger Co?
Suggested solutions:
| $ | |
| Consideration | C |
| plus NCI | |
| Less Share Capital | 121,960 |
| Retained Earnings at acquisition | 84,840 |
| Equals Goodwill | 31,920 |
Solve the equation, the answer is $ 238,720.
Working consolidated retained earnings at acquisition
= Retained earnings at 1 January + 9 months' profit for the year
=74,040 + 10,800
=$ 84,840
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