International Financial Reporting Standards – Homework
Groups Accounts/Consolidation
Alpha, a public listed company, acquired 750 million ordinary shares in Beta on 1 January 2023.
The purchase consideration is made up as follows:
 An immediate cash payment of $280 million
 A share exchange of 1 share in Alpha for 3 shares in Beta. The value of each share in Alpha
and Beta at the date of acquisition was 80 cents and 41 cents respectively.
The statements of the financial position of the two companies at 31 December 2023 are shown
below:
Alpha
$m
Beta
$m
930
420
69
Non-current assets
Property, plant and equipment
Intangible assets
Investments
In Beta
Current assets
Inventory
Trade receivables
Cash
84
146
30
30
62
9
Total assets
1,470
590
450
$250
315
550
180
220
Equity and liabilities
Equity
Equity shares of $0.25 each
Retained earnings
1 Jan 2022
year ended 31 Dec 2022
280
Non-current liabilities
10% loan notes
Current liabilities
Trade payables
Income taxes payable
Operating overdraft
200
26
185
73
12
64
30
Total equity and liabilities
1,470
590
The following information is relevant:
(i)
On the 1 January 2023 the fair value of Beta's property, plant and equipment exceeded
their carrying value by $80 million. The property, plant and equipment had a remaining
useful life of 10 years at this date.
(ii)
The intangibles of Beta represent the development cost of an electronic reporting package.
At the date of acquisition, the development had a fair value of $3 million below it
carrying amount. The impairment test at 31 December 2023 on the development resulted
in write- down from $69 to $61 million.
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International Financial Reporting Standards – Homework
(iii)
In the post-acquisition period Beta sold goods to Alpha for $10 million, which remain in
Inventory at 31 December 2023. Beta applies a 20% gross profit margin on all sales.
(iv)
Beta's trade receivables account balance includes $15m due from Alpha at the year-end.
However, this does not agree with the current account balance included within Alpha's
trade payables account due to cash-in-transit of $8 million paid by Alpha.
Goodwill is reviewed for impairment annually. At 31 December 2023 there had been an
impairment loss of $30 million in the value of consolidated goodwill since acquisition.
(v)
(vi)
It is group policy to value the non-controlling interest at acquisition at full (or fair) value.
For this purpose, Beta's share price at that date is representative of the fair value of the
shares held by the non-controlling interest.
Required:
(a) Calculate the goodwill on acquisition of Alpha
(8 marks)
(b) Prepare the consolidated statement of financial position of Alpha as at 31 December 2022.
Note: Calculations are required.(32 marks)
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International Financial Reporting Standards – Homework
Solution Section C Question 1
(a) Goodwill at Consolidation
Количество акций у компании Beta: 250.000.000$ / 0,25$ per share = 1.000.000.000
Компания Alpha купила 75% акций компании Beta, номинал которых равен 0,25$
1:3 Shares. 750/4 = 187,5
187,5 shares of Alpha for 0,8$ per share = 150 mil $
562,5 shares of Beta for 0,41$ per share = 230,625 mil $
Consideration transferred:
1) Shares: 230,625 – 150 = $80,625 mil
2) Cash: $280 mil
Non-controlling interest: 25% * 1.000.000.000 * $0,41 per share = 102,5 mil $
Less: Fair value
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International Financial Reporting Standards – Homework
(b) Consolidated Statement of financial position (in $millions)
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International Financial Reporting Standards – Homework
Workings
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International Financial Reporting Standards – Homework
Workings
6