How do i solve this? Question 1 Pare plc acquired 78% of the shares of Banan ple

Question

How do i solve this? Question 1 Pare plc acquired 78% of the shares of Banan ple for $600,000 cash on 1 January 2010. At that date, the fair value of Banan's assets was $1,100,000 and liabilities $400,000. Banan had a profit of S130,000 for the year ending 31 December 2010. Non-controlling interests are measured at their proportionate share of the FV of identifiable net assets acquired in Banan Assume that Pare sells its entire 78% stake in Banan ple for S680,000 on 31 December 2010. Required 1- The sale of the above investment will result in the following gain/loss recognized in the consolidated financial statements of Pare group ? 2- The sale of the above investment will result in the gain/loss recognized in the books of Pare (parent books) assuming the investment in subsidiary is recorded at cost? The goodwill derecognized on the sale of above investment in the consolidated financial statements of Pare group is 3- The non-controlling interests derecognized on the sale of above investment in the consolidated financial statements of Pare group is 4- Net assets of Banan ple derecognized on the sale of above investment in the consolidated financial statements of Pare group is 5- Question 2 Hornet plc acquired 75% of the equity share capital of Alton on 1 January 2008 fora cash

Explanation / Answer

COST OF CONTROL A/C

$

$

CASH

600,000

NET ASSETS

78% 700,000*

546,000

GOODWILL

54000

NCI

$

$

FV OF INVESTMENT

154,000

INCOME OF BANAN

28,600

182,600

INCOME STATEMENT Y.E. 2010

$

NCI

28,600

C/D

130,000

INCOME P

101,400

SALE OF INVESTMENT PARE IN BANAN

INVESTMENT

546,000

CASH

680,000

PROFIT

134,000

COST OF CONTROL A/C

$

$

CASH

600,000

NET ASSETS

78% 700,000*

546,000

GOODWILL

54000

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