On 1 January 20X0 Hill plc purchased 70% of the ordinary shares of Valley plc for £1.3 million. The fair value of the non-controlling interest at that date was £0.5 million. At the date of acquisition, Valley’s retained earnings were £0.6 million.The statements of financial position of Hill and Valley at 31 December 20X0 were:Because of Valley’s loss in 20X0, the directors of Hill decided to write down the value of goodwill by £0.3 million. The directors of Hill propose to use Method 2 to calculate goodwill in the consolidated statement of financial position. The goodwill is to be written down in proportion to the respective holdings of Valley’s shares by Hill and the non-controlling interest.Required:(a) Calculate the goodwill of Valley relating to Hill plc and the non-controlling interest.(b) Show how the goodwill will be written down at 31 December 20X0, for both Hill plc and the non-controlling interest.(c) Comment on your answer to part(b).
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On 1 January 20X0 Hill plc purchased 70 of the