Chapter 18 Consolidated Statement of Financial Position

Answer – Exercise 1 W1 Shareholdings in S Ltd. Group Non-controlling interest % 80 20 100 W2 Net asset of S Ltd At date of acquisition Share capital Share pre"iu" #etained earnings Net assets W% &alculation of Good'ill (arent holding )in*est"ent+ at fair *alue N&- *alue at acquisition )per question+ Less/ 0air *alue of net assets at acquisition )W2+ Good'ill on acquisition W1 Non-controlling interest N&- *alue at acquisition )W%+ N&- share of post acquisition reser*es 220% 3 )2$!000 4 20!000+5 12!$00 1!000 1%!$00 W$ Group retained earnings 6 Ltd S Ltd/ 80% 3 )2$!000 4 20!000)W2++
A18-1

At the reporting date 20!000 10!000 2$!000 $$!000

20!000 10!000 20!000 $0!000

,0!000 12!$00 .2!$00 )$0!000+ 22!$00

.0!000 1!000

!$00 Share capital #etained earnings (lant fair *alue ad<ust"ent 7epreciation ad<.1!000 1%!$00 18.$!000 %$!000 ..!000+ Total e uit! and lia"ilities Answer – Exercise ( W1 Shareholdings in S Ltd.1!000 1.0!000 : 81!000+ Total assets E uit! and lia"ilities E uit! Share capital Share pre"iu" #etained earnings )W$+ Non-controllin# interest $%&' Current lia"ilities )1%$!000 : 1. Group Non-controlling interest % 80 20 100 W2 Net asset of S Ltd At date of acquisition 000 $00 12$ 200 2$0 At the reporting date 000 $00 %00 200 )80+ 2$0 12$!$00 211!000 %..!$00 182!000 %.1!000 &onsolidated state"ent of financial position as at %1 7ece"8er 2010 Non-current assets Good'ill )W%+ 22!$00 (ropert9! plant and equip"ent )8$!000 : 18!000+ 10%!000 Current assets )1..!$00 . )200=$ 9ears 3 2 9ears+ >rand fair *alue ad<ust"ent A18-2 .

&r 7eferred consideration %.0 &r Share capital 200 &r Share pre"iu" 1.. the cash consideration paid! 6 Ltd has/ " 7r -n*est"ent 1 &r >an@ 1 6 Ltd has not 9et recorded the share consideration or the deferred consideration...e..share of post acquisition reser*es 220% 3 )1!120 4 000 %80 A18-% . )1!0. )2$0=10 9ears 3 2 9ears+ 1!0.*alue at acquisition )W%+ N&. W1 Non-controlling interest N&.$1+ N&.$ W% &alculation of Good'ill )$0+ 1!120 000 (arent holding )in*est"ent+ at fair *alue &ash paid Share e3change )200 3 1.80+ 7eferred consideration )$00 3 0.%.0 And 7r -n*est"ent %.0 %.*alue at acquisition Less/ 0air *alue of net assets at acquisition )W2+ Good'ill on acquisition -"pair"ent &arr9ing good'ill 1!000 %.$+ 1!011 )2$8+ .8% Note/ the cost of the in*est"ent in 6 Ltd?s S0( is 1 "illion! i. 1!.A"ortisation ad<. Ahe <ournals required to record these are/ 000 7r -n*est"ent %. %80 2!11.

! 8eing the present *alue of the future cash flo' at that date.. &onsolidated state"ent of financial position as at %1 7ece"8er 2010 Non-current assets Good'ill )W%+ . At acquisition! 6 Ltd should record a lia8ilit9 of %. .!120 8!10% A18-1 .+ 1!1$1 W.... )$2+ %%.. %8. W$ Group retained earnings 6 Ltd Bn'ind discount )W.+ S Ltd/ 280% 3 )1!120 4 1!0. So! 6 Ltd needs to/ 7r -nco"e state"ent 4 finance cost &r 7eferred consideration lia8ilit9 000 . 1$$ .share of i"pair"ent )2$8 3 20%+ . )20. Ahe reporting date is t'o 9ears? lia8ilit9 and there is onl9 one 9ear to go until the deferred consideration 'ill 8e paid.+ %. Aherefore the lia8ilit9 in 6 Ltd?s S0( at this date is %.$+5 -"pair"ent of good'ill )W%+ )80% 3 2$8+ 000 1!100 )...$+ )W2+5 N&. Bn'inding of discount (resent *alue of deferred consideration at acquisition (resent *alue of deferred consideration at reporting date 000 %.8% >rand na"e )W2+ 200 (ropert9! plant and equip"ent )$!$00 : 1!$00 : 200 4 80+ .1!0. 3 102.

+ . : .$0+ 7eferred consideration )%..!.$0 .0+ #etained earnings )W$+ Non-controlling interest )W1+ Non-current lia8ilities )%!000 : 100+ &urrent lia8ilities )1!2$0 : .Current assets -n*entor9 )$$0 : 100+ #ecei*a8les )100 : 200+ &ash )200 : $0+ Total assets E uit! and lia"ilities E uit! Share capital )2!000 : 200+ Share pre"iu" )0 : 1.00 1$$ .0 1!1$1 %!$11 %%.00 2$0 .!.0% 2!200 1. %!818 %!100 1!.0% A18-$ ..