This must be treated as a pre-acquisition reserve and included in the fair value of net assets at acquisition.
The fair value of Y’s tangible assets on 1 April 2006 was USD126,000 more than book value.
The only exceptions to this are share capital, where you put in the parent entity’s share capital on its own, and retained earnings where you use the figure calculated in W5.
In the statements below the figures from the question are shown first, then the adjustments from the workings are shown with workings references.
The F1 examiner explains how to prepare basic consolidated financial statements for a group with one subsidiary.
Consolidated financial statements were not examined at the equivalent level in the old syllabus.
Assuming straight line depreciation with no residual value, that is, 126/21=6.