Question 1

New Ltd acquired all the issued share capital of Orleans Ltd on 1 February 20X1.Orleans Ltd's shareholders equity (all at fair value) at that date was as follows:
$\begin{array}{llcc}
&  \text {000s  } &  \
 \text {Paid up capital  } &\$4000\
 \text {Retained profits  } &\$1000\
 \text { Asset revaluation reserve } &\$2000\
\end{array}$

If New Ltd paid $8 000 000 for this acquisition what is the substitution elimination entry if consolidated financial statements were prepared on 1 February 20X1?

Accepted Answer

A)    Accounts  Debit $000 Credit $000 Paid up capital 4000 Retained profits 1000 Asset revaluation reserve 2000 Goodwill 1000\begin{array} { l r r } 	ext { Accounts } & 	ext { Debit } \mathbf { \$ 0 0 0 } & 	ext { Credit } \$ \mathbf { 0 0 0 } \	ext { Paid up capital } & 4000 \	ext { Retained profits } & 1000 \	ext { Asset revaluation reserve } & 2000 \	ext { Goodwill } & 1000\end{array} Accounts  Paid up capital  Retained profits  Asset revaluation reserve  Goodwill ​ Debit $0004000100020001000​ Credit $000 
B)    Accounts  Debit $000 Credit $000 Paid up capital 4000 Retained profits 1000 Asset revaluation reserve 2000 Goodwill 1000 Investment in Orleans Ltd 8000\begin{array} { l r r } 	ext { Accounts } & 	ext { Debit } \$ \mathbf { 0 0 0 } & 	ext { Credit } \$ \mathbf { 0 0 0 } \	ext { Paid up capital } & 4000 & \	ext { Retained profits } & 1000 & \	ext { Asset revaluation reserve } & 2000 & \	ext { Goodwill } & 1000 & \	ext { Investment in Orleans Ltd } & & 8000\end{array} Accounts  Paid up capital  Retained profits  Asset revaluation reserve  Goodwill  Investment in Orleans Ltd ​ Debit $0004000100020001000​ Credit $0008000​ 
C)    Accounts  Debit $000 Credit $000 Paid up capital 4000 Retained profits 1000 Asset revaluation reserve 2000 Investment in Orleans Ltd 7000\begin{array} { l r r } 	ext { Accounts } & 	ext { Debit } \$ \mathbf { 0 0 0 } & 	ext { Credit } \$ \mathbf { 0 0 0 } \	ext { Paid up capital } & 4000 & \	ext { Retained profits } & 1000 & \	ext { Asset revaluation reserve } & 2000 & \	ext { Investment in Orleans Ltd } & &7000\end{array} Accounts  Paid up capital  Retained profits  Asset revaluation reserve  Investment in Orleans Ltd ​ Debit $000400010002000​ Credit $0007000​ 
D)    Accounts  Debit $000 Credit $000 Paid up capital 4000 Retained profits 1000 Asset revaluation reserve 2000 Acquisition expense 1000 Bank 8000\begin{array}{lrr}	ext { Accounts } & 	ext { Debit } \$ \mathbf{0 0 0} & 	ext { Credit } \$ \mathbf{0 0 0} \	ext { Paid up capital } & 4000 & \	ext { Retained profits } & 1000 & \	ext { Asset revaluation reserve } & 2000 & \	ext { Acquisition expense } & 1000 & \	ext { Bank } & & 8000\end{array} Accounts  Paid up capital  Retained profits  Asset revaluation reserve  Acquisition expense  Bank ​ Debit $0004000100020001000​ Credit $0008000​   B

Question 2

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant:
$\begin{array}{c}
\begin{array}{lll}
 \text { Recorded by Pamela }\
 \text {  Property}\
 \text {  }\
 \text {Intangible patent  }\
 \text { Accounts receivable }\
 \text {  }\
 \text { Vehicles }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text { Accum. depreciation }\
 \text { vehicles }\
 \text { Inventory }\
\end{array}
\begin{array}{lll}
 \$\
 \text {7500  } \
 \text {  }\
 \text { 0 }\
 \text {30000  }\
 \text {  }\
120000\
\
\
\
\
24000\
\
85000\
\end{array}
\begin{array}{lll}
 \text {  Comments}\
 \text { valued at cost, fair value is \( \$ 90000 $.  }\
 \text { Group policy is to use the revaluation model. }\
 \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\
 \text {estimated uncollectible debts are thought to be $ \$ 10000 $  }\
 \text {  higher than those recorded.}\
 \text { straight line depreciation is used by Pamela.  }\
 \text {Group policy is for reducing balance.   }\
 \text {However, no other group member has   }\
 \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\
 \text { Vehicles have ten year life.   }\
 \text { vehicles purchased two years ago, no scrap value. }\
 \text {  }\
 \text {discovered to be over-valued by $ \$ 10000 $, due to an erro  }\

\end{array}
\end{array}\)

-With regard to accounts receivable, which is the correct consolidation adjustment entry at control date?

Accepted Answer

A)  Dr bad debts expense $10 000; credit accounts receivable
B)  Dr fair value reserve $10 000; credit allowance for doubtful debts
C)  Dr bad debts expense $10 000; credit allowance for doubtful debts
D)  No entry required  C

Question 3

Fiona Ltd obtained control of Belinda Ltd on 1 January 20X2.The following items may require attention for group data adjustments:
Belinda had shipped $50 000 of inventory to Fiona.As at control date Fiona had not received or recognised this shipment.
Fiona had made a $10 000 payment to Belinda for interest payment on an inter-company loan, but as of 1 January 20X2 Belinda had not received the payment.
The loan made from Fiona to Belinda was $100 000 and has a maturity date of 20X7.
The Fiona Group uses the revaluation model for property.Belinda's property needs to be revalued upwards $30 000, and Belinda has agreed to do so, but as of control date this had not been done.
Belinda has an intangible copyright asset which is not recognised by Belinda but has a fair value of $80 000.
The question refers to the consolidation worksheet prepared at control date.
-The consolidation adjustment entry for inventory would be:

Accepted Answer

A)  Dr inventory $50 000; Cr accounts payable
B)  Dr inventory $50 000; Cr fair value reserve
C)  Dr inventory $50 000; Cr retained profits
D)  No entry required A

Question 4

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant:
$\begin{array}{c}
\begin{array}{lll}
 \text { Recorded by Pamela }\
 \text {  Property}\
 \text {  }\
 \text {Intangible patent  }\
 \text { Accounts receivable }\
 \text {  }\
 \text { Vehicles }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text { Accum. depreciation }\
 \text { vehicles }\
 \text { Inventory }\
\end{array}
\begin{array}{lll}
 \$\
 \text {7500  } \
 \text {  }\
 \text { 0 }\
 \text {30000  }\
 \text {  }\
120000\
\
\
\
\
24000\
\
85000\
\end{array}
\begin{array}{lll}
 \text {  Comments}\
 \text { valued at cost, fair value is \( \$ 90000 $.  }\
 \text { Group policy is to use the revaluation model. }\
 \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\
 \text {estimated uncollectible debts are thought to be $ \$ 10000 $  }\
 \text {  higher than those recorded.}\
 \text { straight line depreciation is used by Pamela.  }\
 \text {Group policy is for reducing balance.   }\
 \text {However, no other group member has   }\
 \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\
 \text { Vehicles have ten year life.   }\
 \text { vehicles purchased two years ago, no scrap value. }\
 \text {  }\
 \text {discovered to be over-valued by $ \$ 10000 $, due to an erro  }\

\end{array}
\end{array}\)

-With regard to the patent, which is the correct consolidation adjustment entry at control date?

Accepted Answer

A)  Dr patent $30 000; credit asset revaluation reserve
B)  Dr patent $30 000; credit fair value reserve
C)  No adjustment entry required.
D)  Dr patent $30 000; credit consolidated profit or loss

Question 5

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant:
$\begin{array}{c}
\begin{array}{lll}
 \text { Recorded by Pamela }\
 \text {  Property}\
 \text {  }\
 \text {Intangible patent  }\
 \text { Accounts receivable }\
 \text {  }\
 \text { Vehicles }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text { Accum. depreciation }\
 \text { vehicles }\
 \text { Inventory }\
\end{array}
\begin{array}{lll}
 \$\
 \text {7500  } \
 \text {  }\
 \text { 0 }\
 \text {30000  }\
 \text {  }\
120000\
\
\
\
\
24000\
\
85000\
\end{array}
\begin{array}{lll}
 \text {  Comments}\
 \text { valued at cost, fair value is \( \$ 90000 $.  }\
 \text { Group policy is to use the revaluation model. }\
 \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\
 \text {estimated uncollectible debts are thought to be $ \$ 10000 $  }\
 \text {  higher than those recorded.}\
 \text { straight line depreciation is used by Pamela.  }\
 \text {Group policy is for reducing balance.   }\
 \text {However, no other group member has   }\
 \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\
 \text { Vehicles have ten year life.   }\
 \text { vehicles purchased two years ago, no scrap value. }\
 \text {  }\
 \text {discovered to be over-valued by $ \$ 10000 $, due to an erro  }\

\end{array}
\end{array}\)

-With regard to inventory, which is the correct consolidation adjustment entry at control date?

Accepted Answer

A)  Dr inventory expense $10 000; credit inventory
B)  Dr inventory expense $10 000; credit fair value reserve
C)  Dr fair value reserve $10 000; credit inventory
D)  No entry required

Question 6

AASB 3 makes no attempt to explain the presence of goodwill when the share acquisition is first made.

Accepted Answer

A) True 
 B)False

Question 7

SOS Ltd acquired all the assets and liabilities of Police Ltd for a total cost of acquisition (control date fair value of the consideration paid) of $1 000 000.The fair value of these assets at acquisition date was $900 000 and the fair value of the liabilities was $100 000.Police Ltd controls Roxanne Ltd.
SOS Ltd will record goodwill of $200 000 in its consolidated financial statements.

Accepted Answer

A) True 
 B)False

Question 8

Fiona Ltd obtained control of Belinda Ltd on 1 January 20X2.The following items may require attention for group data adjustments:
Belinda had shipped $50 000 of inventory to Fiona.As at control date Fiona had not received or recognised this shipment.
Fiona had made a $10 000 payment to Belinda for interest payment on an inter-company loan, but as of 1 January 20X2 Belinda had not received the payment.
The loan made from Fiona to Belinda was $100 000 and has a maturity date of 20X7.
The Fiona Group uses the revaluation model for property.Belinda's property needs to be revalued upwards $30 000, and Belinda has agreed to do so, but as of control date this had not been done.
Belinda has an intangible copyright asset which is not recognised by Belinda but has a fair value of $80 000.
The question refers to the consolidation worksheet prepared at control date.
-With regard to the copyright asset, the correct consolidation data adjustment entry is:

Accepted Answer

A)  Dr copyright $80 000; Credit asset revaluation reserve
B)  Dr copyright $80 000; Credit fair value reserve
C)  No entry required
D)  None of the above

Question 9

Goodwill does not result in recognition of DTA or DTL.

Accepted Answer

A) True 
 B)False

Question 10

Rose Ltd acquired all the equity of Jeannie Ltd on 1 July 20X3.At that time the fair value/financial position of Jeannie was as follows:
$$\begin{array} { l r } 
\text { Capital } & \$ 500000 \
\text { Reserves } & \$ 100000 \
\text { Retained profits } & \$ 150000 \
\text { Liabilities } & \$ 50000
\end{array}$$
Suppose that Rose paid $850 000 for the shares in Jeanie, which of the following correctly describes the accounting procedures that will arise as a result of the business combination? Assume that the difference between the fair value of the consideration paid for Jeannie shares and the fair value of the net assets is due to the directors of Rose having overestimated the fair value of Jeannie assets.

Accepted Answer

A)  The Rose Group will record a goodwill asset of $100 000 on its consolidation worksheet if prepared as at 1 July 20X3
B)  Rose Ltd will record a goodwill asset of $100 000 in its ledger
C)  The Rose Group will record a goodwill impairment expense of $100 000 on its consolidation worksheet if prepared as at 1 July 20X3
D)  None of the above are appropriate

Question 11

Eagle Ltd acquired all the issued share capital of Rock Ltd on 1 May 20X1.Rock Ltd's shareholders equity (all at fair value) at that date was as follows:
$\begin{array}{llcc}
  &\text {  000s} &  \
 \text { Paid up capital } &\$3000\
 \text {General reserve  } &\$1000\
 \text { 
Retained profits } &\$500\
\end{array}$

What was the cost of acquisition incurred by Eagle Ltd, if the bargain purchase gain was $250 000?

Accepted Answer

A)  $4 750 000
B)  $3 750 000
C)  $3 250 000
D)  $4 250 000

Question 12

Petroni Ltd acquired all the issued share capital of Wallace Ltd on 1 April 20X1.Wallace Ltd's shareholders equity (all at fair value) at that date was as follows:
$\begin{array}{llcc}
  &\text {  000s} &  \
 \text { Paid up capital } &\$3000\
 \text {General reserve  } &\$1000\
 \text { 
Retained profits } &\$500\
\end{array}$

What was the cost of acquisition (that is, the control date fair value of the consideration provided) to Petroni Ltd, if consolidation goodwill resulting from the business combination (purchased goodwill) of $500 000 was recognised in the consolidated financial statements prepared on 1 April 20X1?

Accepted Answer

A)  $500 000
B)  $5 000 000
C)  $4 000 000
D)  $4 500 000

Question 13

Fiona Ltd obtained control of Belinda Ltd on 1 January 20X2.The following items may require attention for group data adjustments:
Belinda had shipped $50 000 of inventory to Fiona.As at control date Fiona had not received or recognised this shipment.
Fiona had made a $10 000 payment to Belinda for interest payment on an inter-company loan, but as of 1 January 20X2 Belinda had not received the payment.
The loan made from Fiona to Belinda was $100 000 and has a maturity date of 20X7.
The Fiona Group uses the revaluation model for property.Belinda's property needs to be revalued upwards $30 000, and Belinda has agreed to do so, but as of control date this had not been done.
Belinda has an intangible copyright asset which is not recognised by Belinda but has a fair value of $80 000.
The question refers to the consolidation worksheet prepared at control date.
-With regard to property, the correct consolidation data adjustment entry would be:

Accepted Answer

A)  Dr property $30 000; Credit asset revaluation reserve.
B)  Dr property $30 000; Credit fair value reserve.
C)  No entry required.
D)  None of the above.

Question 14

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant:
$\begin{array}{c}
\begin{array}{lll}
 \text { Recorded by Pamela }\
 \text {  Property}\
 \text {  }\
 \text {Intangible patent  }\
 \text { Accounts receivable }\
 \text {  }\
 \text { Vehicles }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text { Accum. depreciation }\
 \text { vehicles }\
 \text { Inventory }\
\end{array}
\begin{array}{lll}
 \$\
 \text {7500  } \
 \text {  }\
 \text { 0 }\
 \text {30000  }\
 \text {  }\
120000\
\
\
\
\
24000\
\
85000\
\end{array}
\begin{array}{lll}
 \text {  Comments}\
 \text { valued at cost, fair value is \( \$ 90000 $.  }\
 \text { Group policy is to use the revaluation model. }\
 \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\
 \text {estimated uncollectible debts are thought to be $ \$ 10000 $  }\
 \text {  higher than those recorded.}\
 \text { straight line depreciation is used by Pamela.  }\
 \text {Group policy is for reducing balance.   }\
 \text {However, no other group member has   }\
 \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\
 \text { Vehicles have ten year life.   }\
 \text { vehicles purchased two years ago, no scrap value. }\
 \text {  }\
 \text {discovered to be over-valued by $ \$ 10000 $, due to an erro  }\

\end{array}
\end{array}\)

-With regard to property, which is the correct consolidation adjustment entry at control date?

Accepted Answer

A)  Dr property $15 000; credit asset revaluation reserve
B)  Dr property $15 000; credit fair value reserve
C)  No adjustment entry required.
D)  Dr property $15 000; credit consolidated profit or loss

Question 15

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant:
$\begin{array}{c}
\begin{array}{lll}
 \text { Recorded by Pamela }\
 \text {  Property}\
 \text {  }\
 \text {Intangible patent  }\
 \text { Accounts receivable }\
 \text {  }\
 \text { Vehicles }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text {  }\
 \text { Accum. depreciation }\
 \text { vehicles }\
 \text { Inventory }\
\end{array}
\begin{array}{lll}
 \$\
 \text {7500  } \
 \text {  }\
 \text { 0 }\
 \text {30000  }\
 \text {  }\
120000\
\
\
\
\
24000\
\
85000\
\end{array}
\begin{array}{lll}
 \text {  Comments}\
 \text { valued at cost, fair value is \( \$ 90000 $.  }\
 \text { Group policy is to use the revaluation model. }\
 \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\
 \text {estimated uncollectible debts are thought to be $ \$ 10000 $  }\
 \text {  higher than those recorded.}\
 \text { straight line depreciation is used by Pamela.  }\
 \text {Group policy is for reducing balance.   }\
 \text {However, no other group member has   }\
 \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\
 \text { Vehicles have ten year life.   }\
 \text { vehicles purchased two years ago, no scrap value. }\
 \text {  }\
 \text {discovered to be over-valued by $ \$ 10000 $, due to an erro  }\

\end{array}
\end{array}\)

-With regard to vehicles, which is the correct consolidation adjustment entry at control date?

Accepted Answer

A)  Dr accumulated depreciation $1200; credit depreciation expense
B)  Dr accumulated depreciation $1200; credit fair value reserve
C)  Dr accumulated depreciation $24 000; credit vehicles
D)  No entry required

Question 16

Fiona Ltd obtained control of Belinda Ltd on 1 January 20X2.The following items may require attention for group data adjustments:
Belinda had shipped $50 000 of inventory to Fiona.As at control date Fiona had not received or recognised this shipment.
Fiona had made a $10 000 payment to Belinda for interest payment on an inter-company loan, but as of 1 January 20X2 Belinda had not received the payment.
The loan made from Fiona to Belinda was $100 000 and has a maturity date of 20X7.
The Fiona Group uses the revaluation model for property.Belinda's property needs to be revalued upwards $30 000, and Belinda has agreed to do so, but as of control date this had not been done.
Belinda has an intangible copyright asset which is not recognised by Belinda but has a fair value of $80 000.
The question refers to the consolidation worksheet prepared at control date.
-Assume that the worksheet uses both data adjustment and eliminations columns.The correct consolidation data adjustment entry in respect of all of these items is most likely:

Accepted Answer

A)    Dr. Inventory $50000 Dr. Property $30000 Dr. Copyright $80000 Cr. Asset revaluation reserve $30000 Cr. Accounts payable $50000 Cr. Fair value reserve $80000\begin{array} { l l l } 	ext { Dr. Inventory } & \$ 50000 & \	ext { Dr. Property } & \$ 30000 & \	ext { Dr. Copyright } & \$ 80000 & \	ext { Cr. Asset revaluation reserve } & & \$ 30000 \	ext { Cr. Accounts payable } & & \$ 50000 \	ext { Cr. Fair value reserve } & & \$ 80000\end{array} Dr. Inventory  Dr. Property  Dr. Copyright  Cr. Asset revaluation reserve  Cr. Accounts payable  Cr. Fair value reserve ​$50000$30000$80000​$30000$50000$80000​ 
B)    Dr. Inventory $50000 Dr. Property $30000 Dr. Copyright $80000 Cr. Asset revaluation reserve $30000 Cr. Fair value reserve $130000\begin{array} { l l r } 	ext { Dr. Inventory } & \$ 50000 & \	ext { Dr. Property } & \$ 30000 & \	ext { Dr. Copyright } & \$ 80000 & \	ext { Cr. Asset revaluation reserve } & & \$ 30000 \	ext { Cr. Fair value reserve } & & \$ 130000\end{array} Dr. Inventory  Dr. Property  Dr. Copyright  Cr. Asset revaluation reserve  Cr. Fair value reserve ​$50000$30000$80000​$30000$130000​ 
C)    Dr. Property $30000 Dr. Copyright $80000 Cr Fair value reserve $110000\begin{array} { l l r } 	ext { Dr. Property } & \$ 30000 & \	ext { Dr. Copyright } & \$ 80000 & \	ext { Cr Fair value reserve } & & \$ 110000\end{array} Dr. Property  Dr. Copyright  Cr Fair value reserve ​$30000$80000​$110000​ 
D)  None of the above

Question 17

Rod Ltd acquired 100% of Stewart Ltd on 1 October 20X0 by paying $80 million cash and incurring $5 million legal fees.At that date the fair value of Stewart Ltd's equity was $70 million.
The difference on acquisition is $10 million goodwill.

Accepted Answer

A) True 
 B)False

Question 18

The substitution elimination must only be made taking into account the subsidiary's equity amounts as at control date.

Accepted Answer

A) True 
 B)False

Question 19

Fiona Ltd obtained control of Belinda Ltd on 1 January 20X2.The following items may require attention for group data adjustments:
Belinda had shipped $50 000 of inventory to Fiona.As at control date Fiona had not received or recognised this shipment.
Fiona had made a $10 000 payment to Belinda for interest payment on an inter-company loan, but as of 1 January 20X2 Belinda had not received the payment.
The loan made from Fiona to Belinda was $100 000 and has a maturity date of 20X7.
The Fiona Group uses the revaluation model for property.Belinda's property needs to be revalued upwards $30 000, and Belinda has agreed to do so, but as of control date this had not been done.
Belinda has an intangible copyright asset which is not recognised by Belinda but has a fair value of $80 000.
The question refers to the consolidation worksheet prepared at control date.
-Assume that the worksheet uses both data adjustment and eliminations columns.With regard to the intra-group loan between Fiona and Belinda, the correct consolidation data adjustment entry would most likely be:

Accepted Answer

A)  Dr loan receivable $10 000; Credit loan.
B)  Dr loan $110 000; Cr loan $100 000, loan expense $10 000.
C)  Dr loan receivable $10 000; Credit loan revenue.
D)  No entry required.

Question 20

Rose Ltd acquired all the equity of Jeannie Ltd on 1 July 20X3.At that time the fair value/financial position of Jeannie was as follows:
$$\begin{array} { l r } 
\text { Capital } & \$ 500000 \
\text { Reserves } & \$ 100000 \
\text { Retained profits } & \$ 150000 \
\text { Liabilities } & \$ 50000
\end{array}$$
Suppose that Rose paid $850 000 for the shares in Jeanie, which of the following correctly describes the accounting procedures that will arise as a result of the business combination? Assume that the overpayment for Jeannie shares is due to the belief that Rose has created valuable internal synergies.

Accepted Answer

A)  The Rose Group will record a goodwill asset of $100 000 on its consolidation worksheet if prepared as at 1 July 20X3
B)  Rose Ltd will record a goodwill asset of $100 000 in its ledger
C)  The Rose Group will record a goodwill impairment expense of $100 000 on its consolidation worksheet if prepared as at 1 July 20X3
D)  None of the above are appropriate

Exam 17: Acquisition Method Introduction and Substitution

AASB 3 makes no attempt to explain the presence of goodwill when the share acquisition is first made.

Goodwill does not result in recognition of DTA or DTL.

Rod Ltd acquired 100% of Stewart Ltd on 1 October 20X0 by paying $80 million cash and incurring $5 million legal fees.At that date the fair value of Stewart Ltd's equity was $70 million. The difference on acquisition is $10 million goodwill.

The substitution elimination must only be made taking into account the subsidiary's equity amounts as at control date.