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SCENARIO: On 1 January 20X5, Horizon Renewables (a public utility) acquired 80% of the equity share capital of WindTech Innovations (a tech startup) for $5,000,000. Non-controlling interest (NCI) is measured at fair value, which was $1,100,000 at acquisition. WindTech's net assets at acquisition were $4,500,000 (which included a fair value uplift on patents of $500,000). During the year, Horizon sold turbines to WindTech for $800,000 at a 25% mark-up on cost. Half of these remain in inventory at year-end (31 Dec 20X5). Horizon's receivables include $150,000 due from WindTech, but WindTech's payables show $100,000 due to Horizon (the difference is cash in transit). WindTech's profit for the year was $600,000 (assume no extra depreciation on the patent).
Calculate the Goodwill arising on acquisition. (Enter the number only)
ACCA · Question 49 · Group Consolidations
SCENARIO: On 1 January 20X5, Horizon Renewables acquired 80% of WindTech Innovations for $5,000,000. NCI fair value was $1,100,000. WindTech's net assets at acquisition were $4,500,000 (including a fair value uplift on patents of $500,000). During the year, Horizon sold turbines to WindTech for $800,000 at a 25% mark-up on cost. Half remain in inventory at year-end. Horizon's receivables include $150,000 due from WindTech; WindTech's payables show $100,000 due to Horizon. WindTech's profit for the year was $600,000.
How is the $50,000 cash in transit treated in the consolidated statement of financial position?
SCENARIO: On 1 January 20X5, Horizon Renewables acquired 80% of WindTech Innovations for $5,000,000. NCI fair value was $1,100,000. WindTech's net assets at acquisition were $4,500,000 (including a fair value uplift on patents of $500,000). During the year, Horizon sold turbines to WindTech for $800,000 at a 25% mark-up on cost. Half remain in inventory at year-end. Horizon's receivables include $150,000 due from WindTech; WindTech's payables show $100,000 due to Horizon. WindTech's profit for the year was $600,000.
How is the $50,000 cash in transit treated in the consolidated statement of financial position?
Answer options:
It is ignored as it has not been received by the parent.
It is added to consolidated trade receivables.
It is added to consolidated cash and cash equivalents.
It is deducted from consolidated retained earnings.
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