Chapter 18 Consolidated Statement of Financial Position

1.
1.1 1.2 1." 1.%

Objectives
Define a parent, a subsidiary, a group, non-controlling interest, group accounts and consolidated financial statements. Discuss the legal requirements of group accounts and the relevant requirements of HKA 2!. #$plain the disclosure requirements of group accounts under HKA 2!. #$plain the consolidation procedures and relevant conceptual issues, in particular, &ith regard to' (i) good&ill* (ii) non-controlling interest. ,repare the consolidated statement of financial position for a group of companies &ith a simple structure.
D e fi n i ti o n s

1.+

A c c o u n ti n g fo r u b s i d i a r i e s i n th e , a r e n ts o & n - i n a n c i a l ta te m e n ts

te p s o f s ta te m e n t o f fi n a n c i a l p o s i ti o n c o n s o lid a tio n

D isc lo s ure

. o o d & ill

/ o n - c o n tr o l l i n g 0n te r e s t

2.
2.1

Definitions
Definitions (a) ubsidiary 1 An entity that is controlled by another entity (2no&n as the parent). 0n accordance &ith ection 2(%) of the 3ompanies 4rdinance, a subsidiary shall be deemed to be a subsidiary of another company if that another company' (i) controls the composition of the board of directors of the investee company* or (ii) controls more than +56 of the voting po&er of the investee company* or (iii) o&ns more than +56 of the issued equity share capital of the investee
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company. HKA 2! &idens the definition of a subsidiary based on the concept of control. 0t defines a subsidiary as an enterprise that is controlled by another enterprise (2no&n as the parent). -or this purpose, control is defined as the power to govern the financial and operating policies of another enterprise so as to obtain benefits from its activities. Adopting the &ide definition of a subsidiary in HKA 2! could result in an enterprise being classified as a subsidiary &hen the enterprise does not meet the legal definition of a subsidiary under the 3ompanies 4rdinance. ,arent 1 is an entity that has one or more subsidiaries. .roup companies 1 consist of a holding company and its subsidiaries. .roup accounts 1 are the financial statements of a group of companies. 3onsolidated financial statements 1 is one particular form of group accounts that represent the financial information as if they &ere the financial statement of a single entity. /on-controlling interest (8inority interests) 1 is the entity in a subsidiary not attributable, directly or indirectly, to a parent. ,re-acquisition profits 1 are the reserves &hich e$ist in a subsidiary company at the date &hen it is acquired. 9hey are capitali:ed at the date of acquisition by including them in the good&ill calculation. ,ost-acquisition profits 1 are profits made and included in the retained earnings of the subsidiary company follo&ing acquisition. 9hey are included in group retained earnings.

(b) (c) (d) (e)

(f) (g)

(h)

3.

Control and Special Purpose ntit!

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A c c o u n t in g f o r u b s id ia r ie s

8 e a n in g o f 3 o n tro l

0 n c lu s io n s

# $ c lu s io n s

D if f e r e n t A c c o u n t in g , o lic ie s

D is c lo s u r e ; e q u ir e m e n t s

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(A) ".1

Concept of control Definition HKA 2! establishes a parent-subsidiary relationship on the concept of control. Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.

".2

3ontrol is presumed to e$ist &hen the parent o&ns, directly or indirectly through subsidiaries, more than one half of the voting po&er of an enterprise. 3ontrol also e$ists even &hen the parent o&ns one half or less of the voting po&er of an enterprise &hen there is' (i) po&er over more than one half of the voting rights by virtue of an agreement &ith other investors* (ii) po&er to govern the financial and operating policies of the enterprise under a statute or an agreement* (iii) po&er to appoint or remove the ma<ority of the members of the board of directors or equivalent governing body* or (iv) po&er to cast the ma<ority of votes at meetings of the board of directors or its equivalent. Example 1 A=3 >td is considering an investment in amson, the capital structure of &hich is as follo&s' 15,555 class A voting ordinary shares and 15,555 class = non-voting ordinary shares. =oth classes of shares have the same dividend rights. Required Describe the appropriate group accounting for amson if' (a) (b) A=3 >td purchases ?,555 class A ordinary shares. A=3 >td purchases 15,555 class = and %,555 class A ordinary shares.

"."

!olution (a) A=3 >td has purchased ?,555 of the 15,555 class A voting shares. @ith ?56 of the voting shares A=3 should control amson. amson should therefore be

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(b)

treated as a subsidiary. A=3 >td has purchased %,555 of the 15,555 class A voting shares and 15,555 class = non-voting shares. As A=3 has less than +56 of the voting share this time, it probably &ill not be able to control amson. amson &ill not be a subsidiary.

(") ".%

!pecial purpose entit# pecial purpose entities ( ,#s) (also 2no&n as vehicles and quasi-subsidiaries) are legally independent entities that are used to ta2e on the loans or liabilities of another enterprise. An enterprise (often referred to as the sponsor) &ill sell assets to the ,#, but retain the right to use the asset and gain from any future increase in its value. 9he ,# normally has no assets or capital of its o&n. 0t &ill borro& the money needed to buy the asset from a Acapital providerB. 9he purpose of ,#s is to remove assets and liabilities from the balance sheet of the sponsor. 9his has the effect of improving the return on capital employed and gearing of the sponsor. HKA -0nt 12 A3onsolidation 1 pecial ,urpose #ntitiesB states that an enterprise should consolidate an ,# if it controls that ,#. A reporting enterprise probably has control over an ,# if' (i) in substance, the activities of the ,# are being conducted on behalf of the enterprise according to its specific business needs so that the enterprise obtains benefits from the ,#Cs operation* (ii) in substance, the enterprise has the decision-ma2ing po&ers to obtain the ma<ority of the benefits of the activities of the ,#* (iii) in substance, the enterprise has rights to obtain the ma<ority of the benefits of the ,# and therefore may be e$posed to ris2s incident to the activities of the ,#* or (iv) in substance, the enterprise retains the ma<ority of the residual or o&nership ris2s related to the ,# or its assets in order to obtain benefits from its activities.

".+

".?

".
(A)

#clusion and #emption of Subsidiaries from Consolidation

Exclusion of subsidiaries

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%.1

9he rules on e$clusion of subsidiaries from consolidation are necessarily strict, because this is a common method used by enterprises to manipulate their results. 0f a subsidiary &hich carries a large amount of debt can be e$cluded, then the gearing of the group as a &hole &ill be improved. 0n other &ords, this is a &ay of ta2ing debt off the balance sheet.

%.2

$e# %oint HKA 2! prescribes only one circumstance &hen a subsidiary should be e$cluded from consolidation. 9his happen &hen there is evidence that if there are severe restrictions on the abilit# of the subsidiar# to act independentl# that are so great that control is lost, then it should not be consolidated. 0n particular, it notes that loss of control could occur &hen the subsidiary becomes sub<ect to the control of a government, court, administrator or regulator, or as a result of a contractual agreement, even though there is no indication in share o&nership. 9hey should be accounted for under HKA "D, as investments stated at fair value.

%."

%.% %.+ %.? %.!

9he previous tandard required a subsidiary to be e$cluded from consolidation &here control is intended to be temporar# ' the subsidiary &as acquired and is held e$clusively &ith a vie& to its subsequent disposal &ithin t&elve months from acquisition and management is actively see2ing a buyer. 9his e$clusion has no& been removed* subsidiaries held for sale must be consolidated. ubsidiaries held for sale are accounted for in accordance &ith HK-; + A/oncurrent Assets Held for ale and Discontinued 4perationsB. 0t is important to note that e$clusion of subsidiaries from consolidation under the reasoning of dissimilar activities is not permitted under HKA 2!. Accounting standards do not apply to immaterial items. 9herefore an immaterial subsidiary need not be consolidated. ummary' Reason &$A! '( )reatment /on-current asset investment per HKA "D 3onsolidate per HK-; + 3onsolidate. ,repare HKA evere long-term restrictions 8andatory e$clusion meaning loss of control 9emporary investment Different activities 8andatory inclusion 8andatory inclusion

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1% segment information 0mmaterial %.7 Example ' (a) E, an international manufacturing group, has a subsidiary underta2ing, F, &hich is an insurance company. 3an the group be e$empted from consolidating F on the grounds of different activitiesG A o&ns a subsidiary underta2ing, ,, &hich is located in an African state &here the .overnment has for a number of years fro:en all remittances out of the country by private individuals and companies. /ot applicable 4ptional

(b)

Does A need to include , in its consolidated accountsG !olution (a) F must be included under HKA 2!.

(b) 0t depends on &hether A controls ,. 3ontrol is defined as the po&er to govern the financial and operating policies so as to obtain benefit. 9he current free:e on remittances does not in itself prove that A does not control ,. o , should be included. 9he actual relationship bet&een A and , must be investigated to decide &hether control e$ists. (") %.D Exemption from preparing group accounts A parent need not present consolidated financial statements if and only if' (i) it is a wholl#*owned subsidiar# or it is a partiall# owned subsidiar# of another entity and its other o&ners, including those not other&ise entitled to vote, have been informed about, and do not re<ect to, the parent not presenting consolidated financial statements* (ii) its securities are not publicl# traded* (iii) it is not in the process of issuing securities in public securities mar2ets* and (iv) the ultimate or intermediate parent publishes consolidated financial statements that comply &ith Hong Kong -inancial ;eporting tandards.

$.

Different %eportin& Dates and Different 'ccountin& Policies

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(A) +.1 +.2

Reporting dates =oth ection 12!(1) of the 3ompanies 4rdinance and HKA 2! requires that the financial year-ends of all group companies must coincide. 0f the subsidiary does not prepare conterminous financial statements to the same reporting date as the parent, the financial statements of that subsidiary should be ad<usted for the effects of significant transactions or other events that occur bet&een the t&o different dates. HKA 2! includes a further restriction that the difference bet&een reporting dates should not exceed three months. Accounting policies 3onsolidated financial statements should be prepared using uniform accounting policies for li2e transactions and other events in similar circumstances. 0f it is not practicable to do so, HKA 2! requires the reason be disclosed together &ith the proportions of the items in the consolidated financial statements to &hich the different accounting policies have been applied.

+."

(") +.% +.+

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(.
?.1

Disclosure %e)uirements
9he disclosures required by HKA 2! are as follo&s' (i) 9he reasons for not consolidating the subsidiaries, their summari:ed financial information, either individually or in groups, including the amount of total assets, total liabilities, revenues and profit or loss. (ii) 9he reasons for consolidating the subsidiaries &hich the parent does not have ma<ority voting control. (iii) 9he nature and e$tent of any significant restrictions (e.g. resulting from borro&ing arrangements or regulatory requirements) on the ability of subsidiaries to transfer funds to the parent in the form of cash dividends or to repay loans or advances. (iv) 0f the group elected only to present the parentCs financial statements, and not consolidating its subsidiaries, <ointly controlled entities and associates, those separate financial statements shall disclose the method of accounting for investments in subsidiaries, <ointly controlled entities and associates.

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*.

+he ,asic Consolidation of Statement of Financial Position

te p s in 3 o n s o lid a tio n

1 . h a re h o ld in g s in u b s id ia ry

2 . 3 o n s o lid a tio n A d <u s tm e n ts

" . / e t A s s e ts H a lu e o f u b s id ia ry

% . . o o d & ill 3 a lc u la tio n

+ . / o n -c o n tro llin g 0n te re s t 3 a lc u la tio n

? . . ro u p ; e s e rv e s 3 a lc u la tio n

- a ir H a lu e 3 o n s id e ra tio n

, o s itiv e . o o d & ill

, ro p o rtio n o f / e t A s s e ts 8 e th o d - a ir H a lu e 8 e th o d

/ e g a tiv e . o o d & ill

3 o s t o f 0n v e s tm e n t 3 o m p u ta tio n

!.1

!teps for %reparing the Consolidated !tatement of +inancial %osition (@1) hareholding in the subsidiary (@2) 3onsolidation ad<ustments. (@") /et assets of subsidiary At date of acquisition I E E E E At the reporting date I E E E E

hare capital ;eserves' hare premium ;etained earnings

(@%) .ood&ill I E E E

,arent holding (investment) at fair value /30 value at acquisition (J) >ess'
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-air value of net assets at acquisition (@2) .ood&ill on acquisition 0mpairment of good&ill 3arrying good&ill

(E) E (E) E

(J) 0f fair value method adopted, /30 value K fair value of /30Cs holding at acquisition (number of shares ,C- own . subsidiar# share price). (J) 0f proportion of net assets method adopted, ,C- value / ,C- 0 . fair value of net assets at acquisition (from @2). (@+) /on controlling interest I E E (E) E

/30 value at acquisition (as in @") /30 share of post-acquisition reserves (@2) /30 share of impairment (fair value method only)

(@?) .roup retained earnings I E E (E) E

,Cs retained earnings (1556) ,Cs 6 of subCs post-acquisition retained earnings >ess' ,arent share of impairment (@")

(A) !.2

1oodwill 1oodwill .ood&ill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recogni:ed. 1oodwill arising on consolidation is the difference bet&een the cost of an

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acquisition and the fair value of the subsidiaryCs net assets acquired.

!."

)reatment of 1oodwill (a) %ositive goodwill' (i) Capitalised as an intangible non-current asset. (ii) )ested annuall# for possible impairments. (iii) Amortisation of good&ill is not permitted by the standard. -mpairment of positive good&ill' 0f good&ill is considered to have been impaired during the post-acquisition period it must be reflected in the group financial statements. Accounting for the impairment differs according to the policy follo&ed to value the noncontrolling interests. (i) ,roportion of net assets method'

(b)

Dr .roup reserves 3r .ood&ill (ii) -air value method 1 the good&ill in the statement of financial position includes good&ill attributable to the non-controlling interest. 0n this case the double entry &ill reflect the non-controlling interest proportion based on their shareholding as follo&s'

Dr .roup reserves (6 of impairment attributable to the parent) Dr ,C- (6 of impairment attributable to /30) 3r .ood &ill (c) ,egative goodwill (i) Arises &here the cost of the investment is less than the value of net assets purchased. (ii) HK-; " does not refer to this as negative good&ill (instead it is referred to as a bargain purchase), ho&ever this is the commonly used term. (iii) 8ost li2ely reason for this to arise is a misstatement of the fair values of assets and liabilities and accordingly the standard requires that the

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(iv)

calculation is revie&ed. After such a revie&, any negative goodwill remaining is credited directl# to the income statement.

!.%

Example 2 9he follo&ing statements of financial position &ere e$tracted from the boo2s of t&o companies at "1 December 2515. H >td I !+,555 2!,555 152,555 21%,555 "1?,555 >td I 11,555 11,555 "",555 %%,555

,on*current assets ,roperty, plant and equipment 0nvestments in Current assets )otal assets Equit# and liabilities Equit# hare capital hare premium ;etained earnings

75,555 25,555 %5,555 1%5,555

%,555 ?,555 D,555 1D,555 2+,555 %%,555

Current liabilities )otal equit# and liabilities

1!?,555 "1?,555

H acquired all of the share capital of one year ago. 9he retained earnings of stood at I2,555 on the day of acquisition. .ood&ill is calculated using the proportion of net asset method. 9here has been no impairment of good&ill since acquisition. ,repare the consolidated statement of financial position of H >td as at "1 December 2515. !olution @1 hareholdings in >td.
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.roup /on-controlling interest

6 155 155

@2 /et asset of

>td At date of acquisition I %,555 ?,555 2,555 12,555 At the reporting date I %,555 ?,555 D,555 1D,555

hare capital ;eserves' hare premium ;etained earnings

@" 3alculation of .ood&ill ,arent holding (investment) at fair value >ess' -air value of net assets at acquisition (@2) .ood&ill on acquisition @% /on-controlling interest /ot applicable to this e$ample as @+ .roup retained earnings H >td' >td' 1556 $ (1D,555 1 12,555) I %5,555 !,555 %!,555 3onsolidated statement of financial position as at "1 December 2515 ,on*current assets .ood&ill (@") ,roperty, plant and equipment (!+,555 L 11,555)
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I 2!,555 (12,555) 1+,555

>td is 1556 o&ned.

I555 1+ 7?

Current assets (21%,555 L "",555) )otal assets Equit# and liabilities Equit# hare capital (H >td only) hare premium (H >td only) .roup retained earnings (@+) Current liabilities (1!?,555 L 2+,555) )otal equit# and liabilities

2%! "%7

75 25 %! 1%! 251 "%7

(") !.+

,on*controlling interests Computation of ,on*controlling -nterests HK-; " allo&s t&o alternative &ays of calculating non-controlling interest in the group statement of financial position. /on-controlling interest can be valued at' (a) %roportion of net assets method 1 /30 value / ,C- 0 . fair value of net assets at acquisition* or (b) +air (full) value method 1 /30 value K fair value of ,C-3s holding at acquisition (number of shares ,C- own . subsidiar# share price).

!.?

Example 4 5 %roportion of net assets method 9he draft statements of financial position of H >td and are as follo&s. >td on "1 December 2515

,on*current assets ,roperty, plant and equipment 0nvestments in at cost Current assets )otal assets Equit# and liabilities

H >td I555 D5 115 255 +5 2+5

>td I555 155 155 "5 1"5

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Equit# hare capital I1 ;etained earnings

155 125 225

155 25 125 15 1"5

Current liabilities )otal equit# and liabilities

"5 2+5

H >td had bought 756 of the ordinary shares of >td on 1 Manuary 2515 &hen the retained earnings of >td &ere I1+,555. /o impairment of good&ill has occurred to date. ,repare the consolidated statement of financial position of H >td as at "1 December 2515, assuming that the H group values the non-controlling interest using the proportion of net assets method. !olution @1 hareholdings in >td. 6 75 25 155 @2 /et asset of >td At date of acquisition I555 155 1+ 11+ At the reporting date I555 155 25 125

.roup /on-controlling interest

hare capital ;etained earnings /et assets @" 3alculation of .ood&ill ,arent holding (investment) at fair value /30 value at acquisition (256 $ 11+ (@2))

I555 115 2" 1""

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>ess' -air value of net assets at acquisition (@2) .ood&ill on acquisition @% /on-controlling interest /30 value at acquisition (@") /30 share of post acquisition reserves N256 $ (125 1 11+)O

(11+) 17

I555 2" 1 2%

@+ .roup retained earnings H >td >td' 756 $ (125 1 11+(@2)) I555 125 % 12% 3onsolidated statement of financial position as at "1 December 2515 ,on*current assets .ood&ill (@") ,roperty, plant and equipment (D5,555 L 155,555) Current assets (+5,555 L "5,555) )otal assets Equit# and liabilities Equit# hare capital (H >td only) ;etained earnings (@+) ,on*controlling interest (64) Current liabilities ("5,555 L 15,555) )otal equit# and liabilities I555 17 1D5 257 75 277

155 12% 22% 2% 2%7 %5 277

!.!

Exercise 1 5 +air value method 9he draft statements of financial position of H >td and
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>td on "1 December 2515

are as follo&s. H >td I 7+,555 ?5,555 1%+,555 1?5,555 "5+,555 >td I 17,555 17,555 7%,555 152,555

,on*current assets ,roperty, plant and equipment 0nvestments in at cost Current assets )otal assets Equit# and liabilities Equit# hare capital I1 hare premium ;etained earnings

?+,555 "+,555 !5,555 1!5,555

25,555 15,555 2+,555 ++,555 %!,555 152,555

Current liabilities )otal equit# and liabilities

1"+,555 "5+,555

H >td had bought 756 of the ordinary shares of >td on 1 Manuary 2515 &hen the retained earnings of >td &ere I25,555. 4n this date, the fair value of the 256 noncontrolling shareholding in >td &as I12,+55. /o impairment of good&ill has occurred to date. Required ,repare the consolidated statement of financial position of H >td as at "1 December 2515, assuming that the H group values the non-controlling interest using the fair value method. !olution

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(C) !.7

+air value of consideration and net assets +air value of consideration and net assets 9o ensure that an accurate figure is calculated for good&ill' (a) the consideration paid for a subsidiary must be accounted for at fair value* (b) the subsidiar#3s identifiable assets and liabilities acquired must be accounted for at their fair values.

!.D

9he subsidiaryCs identifiable assets and liabilities are included in the consolidated accounts at their fair value for the follo&ing reasons. (a) 3onsolidated accounts are prepared from the perspective of the group, rather than from the perspectives of the individual companies. 9he boo2 values of the subsidiaryCs assets and liabilities are largely irrelevant, because the consolidated accounts must reflect their cost to the group, not their original cost to the subsidiary. 9he cost to the group is their fair value at the date of acquisition. (b) ,urchased good&ill is the difference bet&een the value of an acquired entity and the aggregate of the fair value of that entityCs identifiable assets and liabilities. 0f fair values are not used, the value of good&ill &ill be meaningless.

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(D) !.15

Calculation of cost of investment )he cost of acquisition 9he cost of acquisition includes the follo&ing elements' (a) Cash paid* and (b) fair value of an# other consideration, i.e. deferredP contingent considerations and share e$changes.

!.11

-ncidental costs of acquisition such as legal, accounting, valuation and other professional fees should be expensed as incurred. 9he issue costs of debt or equit# associated &ith the acquisition should be recogni7ed in accordance with &$A! 28. Deferred and contingent consideration 0n some situations not all of the purchase consideration is paid at the date of the acquisition, instead a part of the payment is deferred until a later date 1 deferred consideration. (a) Deferred consideration should be measured at fair value at the date of the acquisition, i.e. a promise to pay an agreed sum on a predetermined date in the future ta9ing into account the time value of mone#. (b) 9he fair value of any deferred consideration is calculated by discounting the amounts payable to present value at acquisition. (c) #ach year the discount is then unwound. 9his increases the deferred liability each year (to increase to future cash liability) and the discount is treated as a finance cost. Share exchange 4ften the parent company &ill issue shares in its o&n company in return for the shares acquired in the subsidiary. 9he share price at acquisition should be used to record the cost of the shares at fair value. Example : 5 Calculation of cost of investment H >td acquires 2% million I1 shares (756) of the ordinary shares of >td by offering a share-for-share e$change of t&o shares for every three shares acquired in >td and

(a) !.12

(b) !.1"

!.1%

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a cash payment of I1 per share payable three years later. H >tdCs shares have a nominal value of I1 and a current mar2et value of I2. 9he cost of capital is 156 and I1 receivable in " years can be ta2en as I5.!+. Required (a) (b) 3alculate the cost of investment and sho& the <ournals to record it in H >tdCs accounts. ho& ho& the discount &ould be un&ound.

!olution (a) 3ost of investment Deferred cash (at present value) NI5.!+ $ (I1 $ 2%m)O hares e$change N(2%m $ 2P") $ I2O Im 17 "2 +5 I+5m is the cost of investment for the purposes of the calculation of good&ill. Im +5 17 1? 1?

Dr 3ost of investment in subsidiary 3r /on-current liabilities 1 deferred consideration 3r hare capital (1?m shares $ I1) 3r hare premium (1?m shares $ I1) (b) Qn&inding the discount I17m $ 156 K I1.7m

Im Dr -inance cost 1.7 3r /on-current liabilities 1 deferred consideration 1.7 -or the ne$t three years the discount &ill be un&ound, ta2ing the interest to finance cost until the full I2% million payment is made in Rear ". (E) !.1+ +air value of net assets acquired HK-; " (revised) requires that the subsidiaryCs assets and liabilities are recorded at

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!.1?

their fair value for the purposes of the calculation of good&ill and production of consolidated accounts. Ad<ustments &ill therefore be required &here the subsidiaryCs accounts themselves do not reflect fair value. Exercise ' 5 +air value of net assets ad;ustment H >td acquired 756 of the share capital of >td t&o years ago, &hen the reserves of >td stood at I12+,555. H >td paid initial cash consideration of I1 million. Additionally H >td issued 255,555 shares &ith a nominal value of I1 and a current mar2et value of I1.75. 0t &as also agreed that H >td &ould pay a further I+55,555 in three yearsC time. 3urrent interest rates are 156 pa. 9he appropriate discount factor for I1 receivable three years from no& is 5.!+1. 9he shares and deferred consideration have not yet been recorded. =elo& are the statements of financial position of H >td and >td as at "1 December 2515' H >td >td ,on*current assets I555 I555 ,roperty, plant and equipment +,+55 1,+55 0nvestments in at cost 1,555 ?,+55 Current assets 0nventory ;eceivables 3ash )otal assets Equit# and liabilities Equit# hare capital ;etained earnings ,on*current liabilities Current liabilities )otal equit# and liabilities At acquisition the fair values of ++5 %55 255 !,?+5 1,+55 155 255 +5 1,7+5

!.1!

2,555 1,%55 ",%55 ",555 1,2+5 !,?+5

+55 "55 755 %55 ?+5 1,7+5

>tdCs plant e$ceeded its boo2 value by I255,555.

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9he plant had a remaining useful life of five years at this date. -or many years >td has been selling some of its products under the brand name of A pearmintB. At the date of acquisition the directors of H >td valued this brand at I2+5,555 &ith a remaining life of 15 years. 9he brand is not included in >tdCs statement of financial position. 9he consolidated good&ill has been impaired by I2+7,555. 9he H .roup values the non-controlling interest using the fair value method. At the date of acquisition the fair value of the 256 non-controlling interest &as I"75,555. Required ,repare the consolidated statement of financial position of H >td as at "1 December 2515. !olution

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