Question

Question 1

The Parent Company PC acquired 80% of Subsidiary SA for 160. At the date of acquisition, 31 December 2014, the two individual statements of financial position are as follows:

PC

ASSETS		Equity & Liabilities
Equipment	240	Capital	300
Investment in SA	160	Net Income	20
		Liabilities	80
Total	400	Total	400

SA

ASSETS		Equity & Liabilities
Equipment	230	Capital	140
		Net Income	60
		Liabilities	30
Total	230	Total	230

On 31 December 2016, the two statements of financial position are as follows:

PC

ASSETS		Equity & Liabilities
Equipment	480	Capital	300
Investment in SA	160	Retained Earnings	60
Cash	110	Net Income	100
		Liabilities	290
Total	750	Total	750

SA

ASSETS		Equity & Liabilities
Equipment	390	Capital	140
Inventory	70	Retained Earnings	180
Accounts Receivables	60	Net Income	150
Cash	140	Liabilities	190
Total	660	Total	660

Required:

Prepare the consolidated statement of financial position at the date of acquisition and as of 31 December 2016.

Question 2

On September 2011, J shares Ltd paid £40,000 to acquire 60% of the ordinary shared and 25% of the preference shares of K Ltd. On that date, the retained earnings of K Ltd were £4,000 and all of its assets and liabilities were shown at fair values. The statements of financial position of J Ltd and K Ltd as at 30 September 2014 are as follows:

	J Ltd (£)	K Ltd (£)
Assets
Non-current Assets
Property, Plant and Equipment	438,000	52,000
Investment in K Ltd	40,000	-
	478,000
Current Assets	432,000	36,000
	910,000	88,000
Equity
Ordinary Share Capital	600,000	50,000
Preference Share Capital	-	10,000
Retained Earnings	119,000	9,000
	719,000	69,000
Liabilities
Total Liabilities	191,000	19,000
	910,000	88,000

K Ltd has issued no shares since being acquired by J Ltd. Goodwill has suffered an impairment loss of 20% since acquisition. Non-controlling interests are to be measured at the appropriate proportion of the subsidiary’s identifiable net assets.

Required:

Prepare the consolidated statement of financial position as at 30 September 2014.

Answer 1

Question 2::

In question 1, the solution is provided in the format mentioned in the question for easy understanding....and in question 2, the format mentioned in question is followed.....please ignore the lines and all....

In question 2 , preference share capital will not come in consolidated financial position, as the minority share goes in non controlling interest and Jltd share goes in setting off the investment of 40000.....hence it is shown as NIL...

Hope it helps,

Thank u.