On 01 April
2024, Stratton Limited. acquires 60% of the share capital of Madden Limited for
R2 400 000. On 01 January 2024 , the fair value of Madden Limited’s net
assets was R3 200 000. The remaining 40% is held by external shareholders,
representing the non-controlling Interest (NCI).

Madden
Limited. reported a profit for the year of R900 000 for the year ended 31 December
2024, which was earned evenly throughout the year. Madden Limited’s retained
earnings on 01 April 2024 were R1 800 000.

Additional
Information

a)
On 31 December 2024, Madden Limited paid an
ordinary dividend of R100 000 to its shareholders.

b)
The financial year end for the group is 31
December 2024. REQUIRED:
In the consolidated financial statements, how is Stratton Limited's investment in Madden Limited treated?

Question

On 01 April
2024, Stratton Limited. acquires 60% of the share capital of Madden Limited for
R2 400 000. On 01 January 2024 , the fair value of Madden Limited’s net
assets was R3 200 000. The remaining 40% is held by external shareholders,
representing the non-controlling Interest (NCI).

Madden
Limited. reported a profit for the year of R900 000 for the year ended 31 December
2024, which was earned evenly throughout the year. Madden Limited’s retained
earnings on 01 April 2024 were R1 800 000.

Additional
Information

a)   
 On 31 December 2024, Madden Limited paid an
ordinary dividend of R100 000 to its shareholders.

b)   
 The financial year end for the group is 31
December 2024. REQUIRED: 
 In the consolidated financial statements, how is Stratton Limited's investment in Madden Limited treated?

Answer

It is recognised against equity of the group

Answer

It is eliminated against the subsidiary's equity

Answer

It is added to goodwill fo the group

Answer

It is recognized as an asset of the group

Crowdly

On 01 April 2024, Stratton Limited. acquires 60% of the share capital of Madden ...

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