Ham plc acquired 100% of the common shares of Burg plc on 1 January 20X0 and gained control. At that date the statements of financial position of the two companies were as follows:
1 The fair value is the same as the book value.
2 £15,000 of the negative goodwill arises because the net assets have been acquired at below their fair value and the remainder covers expected losses of £3,000 in the year ended 31/12/20X0 and £2,000 in the following year.
(a) Prepare a consolidated statement of financial position for Ham plc as at 1 January 20X0.
(b) Explain how the negative goodwill will be treated.
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