ICAP CFAP

Practice session

Al-Meezan Industries acquired a 30% equity interest in Tariq Dynamics on 1 January 2024 for PKR 40 million, accounting for it as an associate under IAS 28. On 1 January 2026, when the carrying value of the associate was PKR 45 million and its fair value was PKR 55 million, Al-Meezan acquired an additional 50% interest for PKR 100 million in cash, achieving control. On that date, the fair value of Tariq Dynamics' identifiable net assets was PKR 160 million, and the fair value of the 20% non-controlling interest was PKR 35 million. Under IFRS 3 (Business Combinations), what is the goodwill recognized at acquisition and the gain or loss recognized in profit or loss on the remeasurement of the previously held interest?

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