Consolidation process

Acquisition analysis
Fair value of identifiable net assets:
Book values Share capital
General reserve
Asset revaluation surplus
Retained earnings (1/7/22)
Less: Previously recorded goodwill

Fair value adjustments Inventories

Land
Plant & equipment
Trademark

FVINA
parent share %
Parent share of FVINA

Consideration transferred
Goodwill
Note how previously recorded goodwill affects the acquisition analysis and the BCVR entries.

Worksheet

Isabel Ltd

Sales revenue 600,000

Other income 225,000
Cost of sales 486,000
Other expenses 159,000
Gains/losses from sales of non-current asets 30,000
Income tax expense 60,000
Profit for the period 150,000

Retained earnings (1/7/22) 90,000

Transfer from BCVR
Transfer from general reserve -
Interim dividend paid 36,000
Final dividend declared 18,000
Retained earnings (30/6/23) 186,000

Asset revaluation surplus (1/7/22)

Gain on revaluation of specialised plant
Asset revaluation surplus (30/6/23)

BCVR

Consolidated Financial Statements

Consolidated statement of comprehensive income
Sales revenue 1,092,000
Cost of sales 879,000
Gross profit 213,000

Other income 281,400

Other expenses 264,000
Operating profit 230,400

Gains/losses from sales of non-current asets -30,000

Profit before tax 200,400

Income tax expense 78,000

Profit for the period 122,400

Other comprehensive income

Gain on revaluation of specialised plant 15,000
Comprehensive income for the period 137,400

Profit attributable to:

Parent interest 121,200
NCI 1,200
Comprehensive income attributable to:
Parent interest 133,200
NCI 4,200

Consolidated statement of changes in equity

Group
Comprehensive income for the period 137,400

Profit for the period 122,400

Retained earnings (1/7/22) 96,000
Transfer from BCVR 12,600
Transfer from general reserve 4,800
Less: Interim dividend paid 42,000
Less: Final dividend declared 20,400
Retained earnings (30/6/23) 173,400

General reserve (1/7/22) 6,000

Transfer to retained earnings 4,800
General reserve (30/6/23) 1,200

Asset revaluation surplus (1/7/22) 9,000

Gain on revaluation of specialised plant 15,000
Asset revaluation surplus (30/6/23) 24,000
 BCVR
DR CR
750,000 Cost of sales 30,000
30,000 ITE 9,000
45,000 Transfer from BCVR 21,000
30,000
-75,000 Gain on sale of land 15,000
780,000 Loss on sale of land 45,000
ITE 18,000
21,000 Transfer from BCVR 42,000
42,000
42,000 Darcy Ltd Group
21,000 Gain/Loss on sale of land 15,000 -45,000
126,000
906,000 Accum dep'n 390,000
80% Equipment 390,000
724,800
Equipment 60,000
794,400 DTL 18,000
69,600 BCVR 42,000
d the BCVR entries.
Dep'n expense 12,000
Accum dep'n 12,000

DTL 3,600
ITE 3,600

Trademark 30,000
DTL 9,000
BCVR 21,000

BCVR 75,000
Goodwill 75,000

CONSOLIDATION
Darcy Ltd Isabel + Darcy
DR CR
516,000 1,116,000 24,000
90,000 315,000 33,600
384,000 870,000 30,000 21,000
 93,000 252,000 12,000
15,000 45,000 75,000
54,000 114,000 36,000
90,000

30,000 120,000 24,000

0 50,400 63,000
24,000 24,000 19,200
30,000 66,000 24,000
12,000 30,000 9,600
102,000

45,000 45,000 36,000

15,000 15,000
60,000

0 115,800 113,400
s in equity
Parent
133,200

121,200
90,000
-
-
36,000
18,000
157,200

Note we don't have parent's numbers for general reserve, so we assume zero here.

-
12,000
12,000
 Pre-acquisition entries NCI Allocation
DR CR DR
Share capital 600,000 Share capital 150,000
General reserve 24,000 General reserve 6,000
Asset revaluation surplus 36,000 Asset revaluation surplus 9,000
Retained earnings (1/7/22) 24,000 Retained earnings (1/7/22) 6,000
BCVR 40,800 BCVR 10,200
Goodwill 69,600 NCI
Investment in Darcy Ltd 794,400 (Step 1: Pre-acq equ

Transfer from BCVR 50,400 NCI share of profit 3,720

BCVR 50,400 NCI
Reported profit 90,000
Transfer from general res 19,200 Adjustments 71,400
General reserve 19,200 Adjusted profit 18,600
Note BCVR entries for fair value adjustments are not
affected by NCI: We still record adjustments for 100% of NCI 8,400
the difference between carrying amounts and fair values at Dividend paid
atcquisition date. Dividend declared

All equity accounts in pre-acquisitions entries must be

adjusted for the parent's percentage ownership. Gain on revaluation 3,000
NCI

Transfer from general res 4,800

General reserve

Transfer from BCVR 12,600

BCVR
(Step 2: Post-acq changes in equ
Note there are four types of post-acq changes in equity to
allocate:
1) profit/loss;
2) dividends;
3) gain on revaluation (OCI);
4) transfers

NCI Note the entries in green box

Group Parent boxes are posted to the blue
DR CR
1,092,000
281,400
879,000
 264,000
- 30,000
78,000
122,400 3,720 2,520 121,200

96,000 6,000 90,000

12,600 12,600 -
4,800 4,800 -
42,000 6,000 36,000
20,400 2,400 18,000
173,400 157,200

9,000 9,000 -
15,000 3,000 12,000
24,000 12,000

- 2,400 10,200 12,600 -

rve, so we assume zero here.
ation IGT elimination Effects of IGT on NCI alloc
CR DR CR
Dividend revenue 33,600
Dividend paid 24,000
Dividend declared 9,600

Dividend payable 9,600

181,200 Dividend receivable 9,600
(Step 1: Pre-acq equity)
Sales 24,000
COGS 21,000 NCI
3,720 Inventories 3,000 NCI share of profit

DTA 900
ITE 900

Gain on sale of plant 15,000

6,000 Inventories 15,000 NCI
2,400 NCI share of profit
DTA 4,500
ITE 4,500
3,000

4,800

12,600
2: Post-acq changes in equity)
acq changes in equity to

ote the entries in green boxes are to be posted to the green section, and those in blue
xes are posted to the blue section.
fects of IGT on NCI allocation
DR CR

420
420

2,100
2,100