Honey Co acquired 75% of Bee Co on 1 April 2013, pay $2 for each ordinary share acquired. The fair value of the non-controlling interest at 1 April 2013 was $2,400. Bee Co's individual financial statements as at 30 September 2013 included:
Statement of financial position
| Statement of financial position | $ |
| Ordinary share capital ($1 each) | 8,000 |
| Retained earnings | 1,400 |
| 9,400 |
Income statement
Profit after tax for the year $840
Profit accrued evenly throughout the year.
What is the goodwill on acquisition on 1 April 2013?
Suggested solutions:
| Consideration | 12,000 |
| NCI | 2,400 |
| Total | 14,400 |
| Share Capital | 8,000 |
| Retained earnigns at acquisition | 980 |
| Total | 8,980 |
| Goodwill | 5,420 |
Working
Profit for the year 840 / 12 to get monthly profit. 70
Monthly profit X 6 (April to September) to get the profit after acquistion.420
Year end retained earning 1,400 minus profit after acquisition 420 to get retained earnings at acquisition. 980
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2015 ACCA F3 CONSOLIDATED GOODWILL