a) Discussion of Acquisition of InTech Ltd:
(i) Acquisition Date:
, The acquisition date is 31 March 2023. Control is obtained when the South African
Competition Board approved the acquisition, fulfilling the condition precedent.
Payment of consideration and transfer of ownership occurred on this date.
(ii) Goodwill Calculation:
Consideration Transferred: R654,000 (60% of ordinary shares).
NCI Calculation:
Ordinary equity (Share capital + Retained earnings + Revaluation surplus):
R280,000 + R498,600 + R195,000 = R973,600.
NCI (40% of ordinary equity): 40% × R973,600 = R389,440.
Preference shares (100% NCI): R200,000.
Total NCI: R389,440 + R200,000 = R589,440.
Fair Value of Net Assets: R1,173,600 (InTech’s total equity).
Goodwill: R654,000 + R589,440 - R1,173,600 = R69,840.
(iii) Dividends Treatment:
Cumulative Preference Dividends: Fully paid pre-acquisition; no impact on
post-acquisition profits.
Ordinary Dividends (30 June 2023): Post-acquisition dividends. Parent’s
share (60%) eliminated as intra-group.
(i) Acquisition Date:
, The acquisition date is 31 March 2023. Control is obtained when the South African
Competition Board approved the acquisition, fulfilling the condition precedent.
Payment of consideration and transfer of ownership occurred on this date.
(ii) Goodwill Calculation:
Consideration Transferred: R654,000 (60% of ordinary shares).
NCI Calculation:
Ordinary equity (Share capital + Retained earnings + Revaluation surplus):
R280,000 + R498,600 + R195,000 = R973,600.
NCI (40% of ordinary equity): 40% × R973,600 = R389,440.
Preference shares (100% NCI): R200,000.
Total NCI: R389,440 + R200,000 = R589,440.
Fair Value of Net Assets: R1,173,600 (InTech’s total equity).
Goodwill: R654,000 + R589,440 - R1,173,600 = R69,840.
(iii) Dividends Treatment:
Cumulative Preference Dividends: Fully paid pre-acquisition; no impact on
post-acquisition profits.
Ordinary Dividends (30 June 2023): Post-acquisition dividends. Parent’s
share (60%) eliminated as intra-group.
