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MX obtains 80% of the 1 million issued $1 ordinary share capital of FZ on 1 May 2009 for $1,750,000 when FZ's reserved earnings were $920,000.

The carrying worth was considered to be the same as fair worth with the exception of the following:

The carrying cost of FZ's property, plant and apparatus at 1 May 2009 was $680,000. The market cost at that date was estimated at $745,000. The remaining useful life of the property, plant and equipment was approximate at 5 years from the date of acquisition.

FZ had a delegation liability with a fair worth of $100,000. There was no modification to the value of this liability at the year-end.

MX estimates that the costs of reorganising the mutual entity following acquisition will be $200,000.

MX depreciates all assets on a straight line basis over their approximate useful lives on a monthly basis.

FZ sold freight to MX with a sales value of $300,000 during the 8 months since the acquisition. All of these stocks remain in MX's inventories at the year end. FZ creates 20% gross profit margin on all sales.

The retained earnings reported in the monetary statements of MX and FZ as at 31 December 2009 are $3.2 million and $1.1 million correspondingly. There has been no mutilation to goodwill since the date of acquisition.

The group policy is to measure non-controlling interest at fair value at the date of attainment. The fair value of non-controlling interest at 1 May 2009 was $320,000.

Required:

Calculate the amounts that will appear in the consolidate statement of financial position of the MX Group as at 31 December 2009 for:

(i) Goodwill;

(ii) Consolidated reserved earnings; and

(iii) Non-controlling interest.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M9556276

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