On 1 June 20X6, Santander acquired 70% of the equity of Madrid in exchange for CU760,000 cash and
100,000 Santander shares. At this date the fair value of the identifiable net assets of Madrid was
CU850,000 and the market value of Santander shares was CU2.50.
On 31 December 20X8, Santander acquired a further 10% of the equity of Madrid at a cost of
CU105,000. On this date the identifiable net assets of Madrid were CU970,000.
Santander measures the non-controlling interest using the proportion of net assets method.
Requirement
(a) What goodwill is recorded in the consolidated statement of financial position at 31 December 20X8,
assuming that there is no impairment?
(b) What journal adjustment is required on the acquisition of the further 10% of shares?