The Statements of Financial Position for Company P and Company

question 21

Multiple Choice

The Statements of Financial Position for company P and company S are shown below:

At the time of the acquisition,the net asset value of S was £50,000.This was £40,000 share capital plus £10,000 retained earnings.If company P owns 75% of Company S,then the consolidated Statement of Financial Position will include,as well as 100% of the assets and liabilities of both companies:

• A) £50,000 which represents 100% of the goodwill on the purchase of S
• B) £37,500 which represents 75% of the goodwill on the purchase of S
• C) £25,000 which represents 50% of the goodwill on the purchase of S
• D) Nothing

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Definitions:

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