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  • Worksheet 2

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    Shavasha
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    The document contains information related to the consolidation of financial statements of Preston group which has acquired a subsidiary. It provides details of the working sheets for computation of goodwill, non-controlling interest, group retained earnings, provision for unrealized profits and the consolidated income statement and statement of financial position.

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    The document contains information related to the consolidation of financial statements of Preston group which has acquired a subsidiary. It provides details of the working sheets for computation of goodwill, non-controlling interest, group retained earnings, provision for unrealized profits and the consolidated income statement and statement of financial position.

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    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    7 views3 pages

    Worksheet 2

    Uploaded by

    Shavasha
    The document contains information related to the consolidation of financial statements of Preston group which has acquired a subsidiary. It provides details of the working sheets for computation of goodwill, non-controlling interest, group retained earnings, provision for unrealized profits and the consolidated income statement and statement of financial position.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    Working 1 group structure Preston 3yrs 70% Sanderson Working 2 Compute net asset of subsidiary Acquisition date Share

    capital Retained earnings Fair value of machine (120-100) Depreciation (20*3/10) Provision for unrealized profit (20/120*60=10) (40%*10) 150 430 20 Reporting date 150 700 20 (6) (4) 860

    600 Working 3 computation of goodwill Investment of fair value Non-controlling interest at acquisition 100% fair value of net asset at acquisition Impairment

    700 250 950 (600) 350 (105) 254

    Working 4 compute NCI for CSFP NCI at acquisition NCI share of post-acquisition profit (30%*250) NCI share of impairment (30%*105) NCI for consolidated income statement Profit after tax Depreciation (20*1/10) Provision for unrealized profit (PURP) NCI share (94*30%) Impairment (30%*35) 250 78 (31.5) 296.5 100 (2) (4) 94 28.2 (10.5) 17.7

    Working 5 compute group retained earnings Parent retained earnings Provision for unrealized profit Subsidiary post acquisition profit (70%*250) Impairment (70%*105) Working 6 compute PURP fixed asset Carrying value in books [15-(15*1/3)] Carrying value should be [12-(12*1/3years)] PURP Working 7 PURP Inventory Profit sales (20/120*60) Profit in inventory (40%*10)

    1,350 (2) 182 (73.2) 1456.5 10 (8) 2

    10 4

    Preston Consolidated income statement for period ending 31 March 2007 $000 Revenue [1000+260-60] 1,200 Cost of sales [750+80-60+2+4+2] (778) Gross profit 422 Operating Expense [60+35+35] (130) Profit from operations 292 Finance cost [25+15] (40) Investment income [20-(70%*20)] 6 Profit before tax 258 Tax expense [100+30] (130) 128 Attributable to: Non-controlling interest 17.7 Preston shareholders 110.3 128

    Preston Consolidated statement of financial position as at 31 March 2007 Non-current assets Goodwill Property, Plant and Equipment [900+400+20-6-2 (PURP)] Current asset [300+600-4(PURP)-6+5] $000 245 1312 895 2452

    Equity and liabilities: Equity: Share capital Share premium Retained earnings Non-controlling interest

    200 50 1456.5 269.5 2003 190 259 2452

    Non-current liabilities [100+90] Current liabilities [200+60-1] Total equity and liabilities

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