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The case study sets out group acquisitions and disposals including contingent consideration, non-controlling interest measurement, equity-accounted investments, and classification of remaining interests under IFRS 9. It also covers whether a newly formed biotech entity is a business or an asset acquisition under IFRS 3, plus accounting for bond investments involving sale, fair value changes, and repurchase/option-like obligations.",{"@graph":69,"@context":121},[70,84,104],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":20,"@type":76,"position":81},"https://docshare.wps.com/document/exam/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/strategic-professional-essentials-strategic-business-reporting-united-kingdom-sbr-uk-acca/661524/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":98,"encodingFormat":97,"isAccessibleForFree":99,"interactionStatistic":100},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/strategic-professional-essentials-strategic-business-reporting-united-kingdom-sbr-uk-acca/661524.png","ImageObject",300,407,{"name":92,"@type":93},"jay","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-28",true,{"@type":101,"interactionType":102,"userInteractionCount":8},"InteractionCounter",{"@type":103},"ViewAction",{"@type":105,"mainEntity":106},"FAQPage",[107,113,117],{"name":108,"@type":109,"acceptedAnswer":110},"How should goodwill and non-controlling interest be calculated for the acquisition of Grape?","Question",{"text":111,"@type":112},"Goodwill should be recalculated using the correct treatment of contingent consideration and measuring non-controlling interest at fair value, reflecting the stated valuation basis rather than the proportional net asset method.","Answer",{"name":114,"@type":109,"acceptedAnswer":115},"What accounting approach applies to the remaining 10% interest in Strawberry after disposal of 75%?",{"text":116,"@type":112},"After losing the right to appoint a director, the remaining 10% interest should be reclassified and measured according to IFRS 9, with the document stating the group’s intention to account for it as fair value through other comprehensive income.",{"name":118,"@type":109,"acceptedAnswer":119},"Is the acquisition of Melon treated as a business combination or an asset acquisition?",{"text":120,"@type":112},"Melon is newly formed, has no employees and performs outsourced early-stage research, so the directors believe it should be treated as an asset acquisition rather than a business combination under IFRS 3, while noting uncertainty due to the IASB exposure draft.","https://schema.org",{"og:url":83,"og:type":123,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":125,"canonical":83},"index,follow",{"doc_id":127,"site_id":62},661524,1793168912,{"code":4,"msg":5,"data":130},{"doc_id":127,"user_id":131,"nickname":92,"user_avatar":132,"doc_module":4,"category_id":19,"category_name":20,"doc_title":65,"doc_description":67,"doc_content":133,"file_id":134,"file_url":135,"file_type":136,"file_size":137,"view_count":8,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":34,"language":138,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":139,"faqs":140,"seo_title":141,"seo_description":67,"update_tm":128,"read_time":142},3985747858866,"https://ap-avatar.wpscdn.com/davatar_a8503ba1806abce46bf441b54a3ca4cd","Strategic Professional – Essentials  \nStrategic Business Reporting  \n– United Kingdom  \nThursday 6 September 2018  \nSBR UK ACCA  \nTime allowed: 3 hours 15 minutes  \nThis question paper is divided into two sections:  \nSection A – BOTH questions are compulsory and MUST be attempted  \nSection B – BOTH questions are compulsory and MUST be attempted  \nDo NOT open this question paper until instructed by the supervisor. This question paper must not be removed from the examination hall.  \nPaper S BR – UK  \nThe Association of Chartered Certified Accountants  \nSection A – BOTH questions are compulsory and MUST be attempted  \n1 Background  \nBanana is the parent of a listed group of companies which have a year end of 30 June 20X7 . Banana has made a number of acquisitions and disposals of investments during the current financial year and the directors require advice as to the correct accounting treatment of these acquisitions and disposals.  \nThe acquisition of Grape  \nOn 1 January 20X7, Banana acquired an 80% equity interest in Grape. The following is a summary of Grape’s equity at the acquisition date.  \n$ millions  \nEquity share capital ($1 each) 20  \nRetained earnings 42  \nOther components of equity 8  \n–––  \nTotal 70  \n–––  \nThe purchase consideration comprised 10 million of Banana’s shares which had a nominal value of $1 each and a market price of $6·80 each. Additionally, cash of $18 million was due to be paid on 1 January 20X9 if the net profit after tax of Grape grew by 5% in each of the two years following acquisition. The present value of the total contingent consideration at 1 January 20X7 was $16 million. It was felt that there was a 25% chance of the profit target being met. At acquisition, the only adjustment required to the identifiable net assets of Grape was for land which had a fair value $5 million higher than its carrying amount. This is not included within the $70 million equity of Grape at 1 January 20X7 .  \nGoodwill for the consolidated financial statements has been incorrectly calculated as follows:  \n$m  \nShare consideration 68  \nAdd NCI at acquisition (20% x $70 million) 14  \nLess net assets at acquisition (70)  \n–––  \nGoodwill at acquisition 12  \n–––  \nThe financial director did not take into account the contingent cash since it was not probable that it would be paid. Additionally, he measured the non-controlling interest using the proportional method of net assets despite the group having a published policy to measure non-controlling interest at fair value. The share price of Grape at acquisition was $4·25 and should be used to value the non-controlling interest.  \nThe acquisition and subsequent disposal of Strawberry  \nBanana had purchased a 40% equity interest in Strawberry for $18 million a number of years ago when the fair value of the identifiable net assets was $44 million. Since acquisition, Banana had the right to appoint one of the five directors on the board of Strawberry. The investment has always been equity accounted for in the consolidated financial statements of Banana. Banana disposed of 75% of its 40% investment on 1 October 20X6 for $19 million when the fair values of the identifiable net assets of Strawberry were $50 million. At that date, Banana lost its right to appoint one director to the board. The fair value of the remaining 10% equity interest was $4·5 million at disposal but only $4 million at 30 June 20X7 . Banana has recorded a loss in reserves of $14 million calculated as the difference between the price paid of $18 million and the fair value of $4 million at the reporting date. Banana has stated that they have no intention to sell their remaining shares in Strawberry and wish to classify the remaining 10% interest as fair value through other comprehensive income in accordance with IFRS 9 Financial Instruments.  \nThe acquisition of Melon  \nOn 30 June 20X7, Banana acquired all of the shares of Melon, an entity which operates in the biotechnology industry. Melon was only recently for","cbCaiaYng0OT4ixo","https://ap.wps.com/l/cbCaiaYng0OT4ixo","pdf",181487,"English","# Section A\n## Compulsory questions\n## Question 1 background: acquisitions and disposals\n# Case topics\n## Acquisition of Grape and goodwill/NCI/contingent consideration\n## Disposal of Strawberry investment and classification of remaining interest\n## Acquisition of Melon: business vs asset acquisition\n## Bonds acquisition, sale, repurchase right, and measurement","[{\"question\":\"How should goodwill and non-controlling interest be calculated for the acquisition of Grape?\",\"answer\":\"Goodwill should be recalculated using the correct treatment of contingent consideration and measuring non-controlling interest at fair value, reflecting the stated valuation basis rather than the proportional net asset method.\"},{\"question\":\"What accounting approach applies to the remaining 10% interest in Strawberry after disposal of 75%?\",\"answer\":\"After losing the right to appoint a director, the remaining 10% interest should be reclassified and measured according to IFRS 9, with the document stating the group’s intention to account for it as fair value through other comprehensive income.\"},{\"question\":\"Is the acquisition of Melon treated as a business combination or an asset acquisition?\",\"answer\":\"Melon is newly formed, has no employees and performs outsourced early-stage research, so the directors believe it should be treated as an asset acquisition rather than a business combination under IFRS 3, while noting uncertainty due to the IASB exposure draft.\"}]","Strategic Professional - Essentials - Strategic Business Reporting - United Kingdom - SBR UK ACCA | PDF",18]