ARM Limited

Requirement (a):
Calculation of goodwill on acquisition of AMK:

Consideration 105,000 W1
Less: Net Assets at Acq (78,000) W2
Goodwill at 1 Aug 2007 27,000
Less: Impairment (2,000)
Goodwill as at 31 March 2008 25,000

Requirement (b):
ARM Limited
Consolidated Income Statement
For the year ended 31 March 2008
Workings
Revenue 192,000 (150,000 + ( 78,000 x 8/12 ) - (W3) 10,000 )
Cost of sales (119,100) (94,000 + ( 51,000 x 8/12 ) - (W3) 10,000 + 500 (W4) 600)
Gross Profit 72,900
Distribution cost (9,400) (7,400 + (3,000 x 8/12) )
Administrative expenses (18,500) (12,500 + (6,000 x 8/12 + Req (a) 2,000)
Finance cost (5,000) (2,000 + (900 x 8/12) + (36,000 x 10% x 8/12)
Profit before tax 40,000
Income tax (12,800) ((10,400 + (3,600 x 8/12))
27,200

Attributable to:
Parent Bal Figure 25,100
NCI W10 2,100

Workings

W1: Consideration

Shares Consideration:
# of shares 18 million
% Holding 75%
Shares given 12,000 A
MP of ARM's share 5.75 B
Value of consideration 69,000 C= A x B

Deffered Consideration:
Value agreed to be given 43,560
Discount factor 0.8264
PV of Deferred Consideration 36,000

Total Consideration 105,000

W2: Net Assets

Reserves at April 1, 2007 69,000

Share Capital 24,000
Opening net assets 93,000
Add: 4 months profit 4,500
Fv adjustment - Property 4,100
Fv adjustment - Plant 2,400
104,000
Share of ARM 75% 78,000

W3: URP
Sales 10,000 ( 1,250 x 8 )

Goods in Inventory 3,000

URP on unsold stock 500 ( 3,000 x 20/120 )

W4: Excess Depreciation Adjustments

Property (given) 200
Plant ( 2,400/4 x 8/12 ) 400
600

W10: Profit attributable to NCI

Subsidiary Profit 9,000

Adjustments
Depreciation adjustment (600) W4
8,400

Share of NCI 25% 2,100

 Pedantic
Consolidated Statement Of Financial Statements
As at 30 September 2008

Assets
Non-current assets
Goodwill 4,500 W2
Property, plant and Equipment 55,000 (40600 + 12600 + (W6) 1800)
59,500
Current assets 21,400 (16000 + 6600 - 400 - (W7) 800)
80,900

Equity and liabilities

Share Capital 19,600 (10000+ (W6) 9600)
Group Reserves 35,700 W4
55,300
Non-current Liabilities
10% loan notes 7,000 (3000+4000)
NCI 6,100 W3
13,100
Current liabilities 12,500 (8200+4700-400)
Total equity and liabilities 80,900

Pedantic
Consolidated Income Statement
For the year ended '30 September 2008
Workings
Revenue 98,000 (85000 + ( 42000 x 0.5 ) - (W8) 8000 )
Cost of sales (71,800) (63000 + ( 32000 x 0.5 ) - (W8) 8000 + (W8) 800 )
Gross Profit 26,200
Distribution cost (3,000) (2000 + (2000 x 0.5))
Administrative expenses (7,800) (6000 + ( 3200 x 0.5 ) + (W6) 200)
Finance cost (500) (300 + (400 x 0.5) )
Profit before tax 14,900
Income tax (5,400) ((1400 x 0.5) + 4700)
9,500

Attributable to:
Parent Bal Figure 9,300
NCI W10 200
 Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 4,000 4,000
Retained earnings W5 5,000 6,500
FV and other Adjustments: 60% 40%
Plant 2,000 W6 1,800
URP on Inventory - W7 (800)
11,000 11,500 500 300 200

W2: Goodwill:

Consideration W8 9,600
FV of NCI W9 5,900
Total Consideration 15,500
Less: Net Assets at Acq (11,000)
Goodwill 4,500

W3: NCI

FV of NCI 5,900
Share of Change in NA W1 200
6,100

W4: Group Reserves

Retained Earnings (Given) 35,400
Share of Change in NA W1 300
35,700

W5: Retained Earning at Acquisitoon:

Closing Retained Earnings 6,500
Profit Adjustment (1,500)
5,000

W6: CA of FV Excess of CA:

Given ( Excess of CA ) 2,000
Depreciation for 6 months (200)
1,800
W7: URP
Sales price 8,000
Markup (2,286)
Cost 5,714

Total Cost to Pedantic 8,000

Sold (5,200)
Goods in Inventory 2,800

% of unsold stock 0.35

URP on unsold stock (800)

W8: Consideration:
60% Shares 2,400
Number of shares given in Pendatic 1,600 A
FV of Pendatic Share at Acquisition 6 B
Consideration (A x B) 9,600

W9: FV of NCI:
Share of net Assets (60%) 4,400
FV of goodwill of NCI 1,500
5,900

W10: Profit attributable to NCI

Subsidiary Profit 1,500

Adjustments
Depreciation (200)
URP (800)
500

Share of NCI 40% 200

 Full VIP
Consolidated Statement Of Financial Statements
As at 31 March 2009

Assets
Non-current assets
Goodwill 23 W2
Property, plant and Equipment 900 (597 + 320 - (W1) 17 )
923
Current assets
Inventory 286 (142 + 160 - (W6) 16 )
Trade receivable 183 (95 + 88)
Cash and bank 30 (8 + 22)
499
Total assets 1,422

Equity and liabilities

Share Capital 500
Share premium 100
Group Reserves 176 W4
776
Non-current Liabilities
10% loan notes 200 (180+20)
NCI 81 W3
281
Current liabilities 365 (200 + 165)
Total equity and liabilities 1,422

Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 145 145
Retained earnings 120 260
FV and other Adjustments: 80% 20%
Property (82 - 62) 20 18
Brand 25 20
Sale of PPE Adjustment - (55)
310 388 78 62 16

W2: Goodwill:

Consideration W7 268
FV of NCI 65
Total Consideration 333
Less: Net Assets at Acq W1 (310)
Goodwill 23
W3: NCI

FV of NCI 65
Share of Change in NA W1 16
81

W4: Group Reserves

Retained Earnings (Given) 130
Share of Change in NA W1 62
URP Adjustment W6 (16)
176

W5: Sale of PPE Adjustment CA if asset not sold CA as at 31 march 2009 Adjustment
Carrying amount 60 120 (60)
Depreciation 6 months (5) (10) 5
55 110 (55)

W6: URP
Goods in Inventory 56
Markup by Full VIP 40%
URP on unsold stock 16

W7: Consideration:
Cash consideration 210
Loan notes one for every 200 shares ( 0.58 x 100 ) 58
Consideration 268
 ABC Limited
Consolidated Statement Of Financial Statements
As at 31 December 2012

Assets
Non-current assets Workings Notes
Goodwill 139,950 W2
Property, plant and Equipment 3,306,250 ( 1.8 +1.44 + (W1) 0.095 + 0.085 - 0.11375 )
Other Investments 45,000 ( 700,000 + 25,000 - 680,000 )
Other Intangible 705,800 ( 350,000 + 300,000 + (W1) 55,800 )
Account receivable 65,000 ( 25,000 + 40,000 )
Dividend receivable 5,000
Stock 584,667 ( 340,000 + 250,000 - (W6) 5,333 )
Cash 258,000 ( 100,000 + 88,000 )
Total Assets 5,109,667

Equity and liabilities

Share Capital 1,000,000
Share premium 500,000
Group Reserves 2,598,667 W4
NCI 426,000 W3
Trade payable 585,000 ( 385,000 + 200,000 )
Total equity and liabilities 5,109,667

Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 150,000 150,000
Share Premium 50,000 50,000
Retained earnings W7 228,000 1,788,000
FV and other Adjustments:
Sale of Plant to ABC (W7) - (113,750) 80% 20%
Goodwill of unincorporated business (50,500) (40,000)
Equipment 140,000 95,000
Land 85,000 85,000
Customer List ( Intangble ) 72,000 55,800
674,500 2,070,050 1,395,550 1,116,440 279,110

W2: Goodwill:
Consideration 680,000
FV of NCI 150,000
Total Consideration 830,000
Less: Net Assets at Acq W1 (674,500)
Goodwill at Acquisition 155,500
Impairment during the year (15,550)
Goodwill as at 31 december 2012 139,950

W3: NCI

FV of NCI 150,000
Share of Change in NA W1 279,110
Impairment (3,110)
426,000
W4: Group Reserves
Retained Earnings (Given) 1,500,000
Share of Change in NA W1 1,116,440
Impairment (12,440)
URP Adjustment W6 (5,333)
2,598,667
W5: Sale of PPE Adjustment CA if asset not sold CA as at 31 march 2009 Adjustment
Carrying amount 250,000 380,000 (130,000)
Depreciation 6 months (31,250) (47,500) 16,250
218,750 332,500 (113,750)

W6: URP
Cost of goods sold to Aslam Limited 40,000
GP % - 25% on sales 25%
Unsold stock 40% 16,000
URP on unsold stock 5,333

W7: Calculation of RE at Acquisition

Closing Retained Earnings 1,788,000
Less: Cummulative Post Acq Profit (1,647,500)
Add: Dividend of current year 87,500 W8
Retained earnings at Acquisition 228,000

W7: Dividend Calculation

Dividend Receivable (represents 80%) 70,000
Dividend attributable to NCI 17,500
Gross dividend distributed 87,500
 Chota Beem Limited
Consolidated Statement Of Financial Statements
As at 31 March, 2010

Assets
Non-current assets Workings Notes
Goodwill 13,860 W2
Property, plant and Equipment 75,900 ( 49,500 + 24,500 + (W1) 1,900)

Current assets
Inventory 49,000 ( 38,800 + 9,000 - (W6) 600 + 1800 )
Trade receivable 4,600 ( 6,500 + 1,500 - (W6) 3,400 )
Total Assets 143,360

Equity and liabilities

Share Capital 53,800 ( 25,000 + (W5) 28,800 )
Share premium 19,800
Group Reserves 27,988 W4
101,588
Non - current liabilities
7% Loan notes 16,500 ( 14,500 + 2,000 )
NCI 7,172 W3
23,672
Current liabilities
Contingent consideration 2,700 ( 4,200 - 1,500 )
Payable to Chotu or Taklu 1,200
Trade payable 14,200 ( 8,300 + 7,500 - (W6) 1,600 )
18,100
Total equity and liabilities 143,360

Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 8,000 8,000
Retained earnings 16,500 17,500
FV and other Adjustments: 80% 20%
Factory 2,000 1,900
Software with no recoverable amount (500) -
26,000 27,400 1,400 1,120 280

W2: Goodwill:
Consideration 34,200
FV of NCI 7,200 (8000 x 20%) * 4.5 (MP)
Total Consideration 41,400
Less: Net Assets at Acq (26,000)
Goodwill at Acquisition 15,400
Impairment during the year (1,540)
Goodwill as at 31 March 2010 13,860

W3: NCI
Fv of NCI 7,200
Post Acquisition 280
Impairment share (308)
7,172
W4: Group Reserves
Retained earnings 27,200
Post acquisition 1,120
Impairment share (1,232)
URP (W6) (600)
Change in estimates ( 4,200 - 2,700 ) 1,500
27,988

W5: Consideration
Total Shares Acquired 80% 6,400
Consideration to Raj Kumari Indu
75% shares 6,000
Shares 3 shares for every 2 shares 9,000
MP of Chota bheem shares 3.2
Shares Consideration (not recorded) 28,800
Contingent consideration 4,200
33,000
Consideration to Chotu or Taklu
Cash 1,200
Total Consideration 34,200

W6: URP Adjustment

Entry for Balance Sheet:
Account payable 1,600
Goods in transit 1,800
Receivable 3,400

Transit goods sale price 1,800

Markup 50% - URP 600
 Chintu Limited
Consolidated Statement Of Financial Statements
As at 31 December 2017

Assets
Non-current assets Workings Notes
Goodwill 12,420 W2
Intangible assets 10,000 ( 7,500 + (W1) 2,500 )
Property, plant and Equipment 92,250 ( 50,000 + 39,000 + (W1) 1,000 + 2,250)

Current assets
Inventory 19,600 ( 11,200 + 8,400)
Trade receivable 12,700 ( 7,400 + 5,300 )
Bank 5,400 ( 3,400 + 2,000 )
Total Assets 152,370

Equity and liabilities

Share Capital 50,000
Group Reserves 44,920 W4
94,920
Non - current liabilities
7% Loan notes 23,000 ( 15,000 + 8,000 )
NCI 7,150 W3
30,150
Current liabilities
Deffered Consideration 5,400
Bank OD 2,500
Dividend payable 1,600 ( 8,000 - 6,400 )
Trade payable 17,800 ( 11,600 + 6,200 )
27,300
Total equity and liabilities 152,370

Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 10,000 12,000
Retained earnings 12,000 18,000
FV and other Adjustments:
80% 20%
Land 1,000 1,000
Equipment 3,000 2,250
Intangible - customer base 3,000 2,500
29,000 35,750 6,750 5,400 1,350

W2: Goodwill:
Consideration 37,000
Less: Net Assets at Acq (23,200)
Goodwill at Acquisition 13,800
Impairment during the year (1,380)
Goodwill as at 31 Dec 2017 12,420
W3: NCI
Share of NVI 5,800
Post Acquisition 1,350
7,150

W4: Group Reserves

Retained earnings 41,300
Post acquisition 5,400
Interest of Deferred Cons (400)
Impairment share (1,380)
44,920

W5: Consideration Interest Closing

Cash 32,000
Pv of Deferred Considteration 5,000 400 5,400
Total Consideration 37,000
 Lay dey
Consolidated Statement Of Financial Statements
As at 31 December 2016

Assets
Non-current assets Workings Notes
Goodwill 188.10 W2
Building 2,058 ( 1,600 + 545 - (W1) 77 - (W6) 9.75 )
Plant and machinery 2,155 ( 1,465 + 690 )
Current assets 2,839 ( 2,068 + 780 - (W1) 4.8 - (W4) 4.62 )
Total Assets 7,240

Equity and liabilities

Share Capital 980
Share premium 990
Group Reserves 3,235 W4
5,205
NCI 275
Current liabilities 1,760 ( 600 + 1,160 )
Total equity and liabilities 7,240

Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 450 495
Share premium 150 150
Retained earnings 100 210
FV and other Adjustments:
Building ( 250-170 ) (80) (77) 60% 40%
Inventory (112-62) (50) -
Provision for Bad debt (15-24) (9) -
PPE sale Adjustment (W6) - -
URP Adjustment (W7) - (4.80)
561 773 212 127.32 84.88

W2: Goodwill:
Consideration 572
Fv of NCI (18*11) 198 27/450 = 60% Share holding
Total Consideration 770
Less: Net Assets at Acq (561)
Goodwill at Acquisition 209
Impairment (20.90)
Goodwill at 31 Dec 2016 188.10

W3: NCI
Share of NVI 198
Impairment Share 40% (8)
Post Acquisition 84.88
274.52

W4: Group Reserves

Retained earnings 3,150
Post acquisition 127.32
Impairment share (12.54)
PPE Sale to Subsidary (W6) (9.75)
Wrongly Cap Investment (15.00)
URP to Subsidary (4.62)
3,235.41

W5: Consideration
Shares 20 * 25 500
Cash ( 87 - 15 ) 72
Total Consideration 572
W6: Sale of PPE Adjustment Parent Parent
CA if asset not sold CA as at 31 Dec 2016 Adjustment
Carrying amount 110 120 (10) Plant 120
Depreciation for 3 months (2.75) (3.00) 0.3 Building 110
107.25 117.00 (9.75) Gain on disp 10

Subsidary Subsidary
CA if asset not sold CA as at 31 Dec 2016 Adjustment
Carrying amount 120 120 - Plant 120
Depreciation for 3 months (3.00) (3.00) - Building 120
117 117 - Gain on disp -

W7: URP Adjustment

Dey to lay ( subsdiary )
Inventory in Stock 32
URP 15% on sales 4.80

Lay to dey ( Parent )

Inventory in Stock 20
URP 30% on Cost 4.62
 Salang Limited
Consolidated Income Statement
For the year ended 30 June 2017
Workings
Sales 3,270 (2060 + (1524/12*10 - 60 )
Cost of sales (1,948) (1,300 + (846/12*10) - 60 + 3 )
Gross Profit 1,322
Selling and administrative expenses (580.55) ( 350 + (225/12*10) + (W1) 7.5 + (W2) 39.55 + (W3) 1 )
Investment income 106 ( 190 - ( 2,600 x 5% x 65% )
Other income 47 ( 35 + (W3) 12 )
Profit before tax 894
Income tax (130) ( 80 + ( 60 / 12 * 10) )
763.95

Attributable to:
Parent Bal Figure 665.09
NCI W6 98.86

Workings
W1: Net Assets of Subsidary:

At Acquisition At Reporting Difference Parent NCI

Share capital 2,600 2,600
Retained earnings 556.5 704
FV and other Adjustments: 65% 35%
URP Adjustment - (3)
Brand 90 82.50 7.50
3,247 3,384 137 89 48

W2: Goodwill and Impairment

Consideration 3,592 W5
Less: Net Assets at Acq (3,247)
Gross Goodwill 345.50
Impairment (34.55)
Net Goodwill 310.950

W3: Disposal of asset to subsidiary

Loss on Disposal ( 42 - 30 ) (12)
Depreciation for 10 months 1

W4: URP
Total sales 100
Retained goods 60% 60
In Closing inventory 20% x 60 12
URP (12/133.33 x 33.33) 3

W5: Consideration:
Cash 900
Nominal Share issue 1,000 / 10 * 16 ( Share capital ) 1,600
2,500
Fv on NCI 260 x 35% x 12 1,092
Total Consideration 3,592
W6: Profit attributable to NCI

Subsidiary Profit 393 x 35% x 10/12 327.50 W7

Adjustments
URP (3)
Impairment goodwill (35)
Fv Adjustment Brand (8)
282

Share of NCI 35% 98.86

W7: Subsidiary profit

1,524 1,524
(846) 50
(225) (846)
(60) (225)
393 (60)
443

Opening Retained Earnings 441.00

Profit for 2 months 65.50
50.00
At Acq retained earnings 556.5
 ETL TL Adjustments Consolidated Profit and Loss
Sales 835 430 [ (W7) - 20 - 33.33 - (Adj 3) (2.5 x 8) - (W6) 3.2 ] Sales 1,188.47
COGS (525) (264) [ (W7) - 20 - 33.33 + (W7) 7 - (W6) 0.1 + (W5) 6 - (W8) 8 ] COGS (740.57)
Gross Profit 310 166 Gross Profit 447.90
Operating Expenses (115) (68) [ + (W2) 2.64 - (Adj 3) (2.5 x 8) - (W8) 16.67 ] Operating Expenses (146.33)
Investment Income 25 - [ 250 x 80% x 10% ] Investment Income 5
Profit Before Tax 220 98 Profit Before Tax 306.57
Tax Expense (65) (32) Tax Expense (97)
Profit After Tax 155 66 Profit After Tax 209.57

4 Month's Profit 33 10 3.2 6.8

(5.00) 0.1 (4.90)
5 3.1 1.9 3.1
ETL TL
Assets
Non-current assets
Property, plant and Equipment 390 350
Investment 500 -

Current assets
Inventory 125 115
Trade receivable 140 125
Dividend Receivable 20 -
Cash and bank 110 103
Total Assets 1,285 693

Equity and liabilities

Share Capital 600 250
Share premium 150 60
Retained earnings (265+155) 420 253 [179+99 Sub Profit total - 250 x 10%]
1,170 563
Current liabilities 115 130 [105 + 250 x 10%]

Total equity and liabilities 1,285 693

Workings
W1: Net Assets of Subsidary: OP 179 + 33 (4 months profit )

At Acquisition At Reporting Difference Parent NCI

Share capital 250 250
Share premium 60 60 OP 179 + 99 ( Profit during the year )
Retained earnings 212 278
Dividend - (25)
FV and other Adjustments: 80% 20%
Brand (W5) 45 43

Page 18of 22
 80% 20%

Plant (W5) 30 26
Land (W5) (5) (5)
Sale of PPE by TL (W6) - (3.10)
URP Adjustment - (5.00)
592 619 27 21.52 5.38

W2: Goodwill
Consideration 500 [ (2/4 x 25 x 12) + (110/1.1) + 250]
Net Assets Share 80% (473.60)
26.40
Impairment 10% (2.64)
Net Goodwill 23.76

W3: NCI
Share of net assets 118.40
Post acquisition 5.38
123.78

W4: Group Reserves

Retained Earnings Op 265
Profit during the year 155
Increase in closing stock 8 W8
Reversal of Expense against PPE 16.67 W8
Impairment (2.64) W2
Post Acquisition Share 21.52 W1
URP adjustment' (2.00) W7
461.55

W5: Fair Value Adjustments

Fair Value Carrying Amount Difference Depreciation Closing
Brand 45 - 45 2 43
Plant 50 20 30 4 26
Land 15 20 (5) - (5)

W6: Sale of PPE to Ek tha Limted (Parent)

Initial Cost 26
Life (Total) 10 years
Carrying amount at disposal 20.80 B = 26/10 x 8
Sales price 24.00 A= Given
Gain on disposal 3.20 C=A-B
Excess Depreciation 0.10 3.2 /8 x 3 /12
Net BS Adjustment 3.10

Another Approach CA if asset not sold CA as at 31 Dec 2015 Adjustment

Carrying amount 20.80 24 (3.20)
Depreciation 3 months (0.65) (0.75) 0.10

Page 19of 22
20.15 23.25 (3.10)

Page 20of 22
W7: URP Adjustment

Ek Tha Limited Profit Tiger Limited

20 3.33 20
5 Further Processing
33.33 8.33 25
11.67
60% Remaining URP 7.00

Breakup of URP
ETL 2.00
TL 5.00
7.00

W8: Error Adjustments

1. Machinery Purchased on March 1, 2015 20

Life of the asset 5 Years
P&L Adjustment
Expense recorded 20
Expense to be recorded 3.33
Reversal of expense 16.67

Entry:
Asset 16.67
Expense 16.67

2. Stock count adjustment

Decrease COGS 8 Million

As increase in closing would result in decrease in COGS which would
ultimately result in increase in profit.

Page 21of 22
 Ek Tha Limited
Consolidated Statement Of Financial Statements
As at 31 December 2015

Assets
Non-current assets Workings Notes
Goodwill 23.76 W2
Property, Plant and Equipment 818 ( 390 + 350 + (W8) 16.67 + (W1) 43 + 26 -5 - 3.1 )
Total Assets 841

Current assets
Inventory 241 ( 125 + 115 + (W8) 8 - (W7) 7 )
Trade receivable 265 ( 140 + 125 )
Cash and bank 213 ( 130+103 )
719
Total Assets 1,560

Equity and liabilities

Share Capital 600.00
Share premium 150.00
Group Reserves 461.55 W4
1,212 -
NCI 124 W3
Current liabilities 225 ( 115 + 105 -20 )
Total equity and liabilities 1,560

Page 22of 22