Goodwill or capital reserve on consolidation: Big Bull Limited acquired 70% of equity shares of Small Cow Limited for a total consideration of ₹ 435.45 million. At the time of acquisition the equity share capital of Small Cow Limited stood at 20 million equity shares of ₹ 10 each and the other equity balance at ₹ 320 million.
1. Compute the amount at which the goodwill or capital reserve will be recognized in the consolidated balance sheet.
2. What will be the goodwill or capital reserve if the consideration was ₹ 235.45 million?
3. How will the investment appear in the consolidated balance sheet in the above two situations?
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