Practice Qn 1 - Hydan (Full set + NCI at fair value)

Hydan Group
Consolidated Income Statement for the year ended 31 Mar 20X6

£’000
Sales 103,200 [98,000 + 35,200 - 30,000]
Cost of Sales (77,200) [76,000 +31,000 - 30,000 + 200]
Gross profit 26,000
Operating expenses (20,475) [11,800 + 8,000 + 300 + 375]
Interest income 150 [350 - 200]
Finance costs (420) [420 + 200 - 200]
Profit before tax 5,255
Tax (3,200)
Profit after tax 2,055

Profit attributable to:

Equity shareholders 3,605
Non-controlling interests (1,550) [40% X (-3,000- 200 - 300)] - 150
2,055

Check
Profit after tax and NCI 3,605
Dividends (P only) -
Retained profit for the year 3,605
Retained profit brought forward 14,070 [P only as acq during the year]
Retained profit carried forward 17,675
Practice Qn 1 - Hydan (Full set + NCI at fair value)
Calculation of goodwill
$’000 $’000
Cost of control 10,800 (60% X 2m X $9)
Non-controlling interest 5,600 (40% X 2m X $7)
16,400
less: net assets acquired
Ordinary share capital 2,000
Share premium 500
Retained earnings 9,300 (6.3m + post-acq loss 3m)
Fair value adjustment: PPE 1,300
(13,100)
Goodwill 3,300
less: impairment charge
Hydan 225 (60% X 375,000)
NCI 150 (375) (40% X 375,000)
Goodwill balance - 31 Mar 20X6 2,925

Adjustments for retained earnings

P S
£’000 £’000
Unadjusted balance 20,000 6,300
Under-depreciation (300)
Unrealised profit (cl. stk) (200) [5% X 4m = 200k]
Goodwill impairment (225)
Retained earnings (adjusted) 19,775 5,800
less: pre-acq - (9,300)
Ending retained earnings 19,775 (3,500)
Share of net assets 100% 60% Conso RE
19,775 (2,100) 17,675
Hydan Group
Consolidated Balance Sheet as at 31 Mar 20X6
$’000 $’000
Non-current Assets
Property, plant & equipment 28,900 [18,400+9,500+1,300-300]
Investments 1,200 [16,000 - 10,800 - 4,000]
Goodwill 2,925
33,025
Current Assets 24,000
57,025

Equity & Reserves

Share capital 10,000
Share premium 5,000
Retained earnings 17,675
32,675
Non-controlling interests 4,050 pre 5,600 + post (40% X 2,100 = 1,550)
36,725

Non-current liabilities
7% bank loan 6,000

Current liabilities 14,300

57,025 -
Practice Qn 2 - Cachepot (Acq during FY/Interco/Goodwill Impairment)
Cachepot Plc
Consolidated Income Statement for the year ended 30 June 1998

Cachepot (£) Vase (£) (£)

Sales 22,400 9,900 32,300 [22,400 + (21kX6/12 - 600)]
Cost of Sales (14,200) (4,520) (18,720) [14,200 + (10kX6/12 - 600 + 120]
Gross profit 8,200 5,380 13,580
Selling and administrative expenses (5,100) (2,720) (7,820)
Impairment of goodwill (44) (44)
Profit before interest and tax 3,056 2,660 5,716
Interest payable (500) - (500)
Profit before tax 2,556 2,660 5,216
Tax (700) (800) (1,500) [700 + (1.6k x 6/12)]
Profit after tax 1,856 1,860 3,716
Non-controlling interests - (465) (465) [25% X (4kX6/12 -20-120)]
Profit after tax and NCI 1,856 1,395 3,251
Dividends payable (600) - (600) [P only]
Profit for the year 1,256 1,395 2,651
Retained profit brought forward 4,930 - 4,930 [(6,230-1,300)+75%X0)]
Retained profit carried forward 6,186 1,395 7,581
Practice Qn 2 - Cachepot (Acq during FY/Interco/Goodwill Impairment)

Calculation of goodwill Adjustments for retained earnings

£’000 £’000 P S
Cost of investment 11,000 £’000 £’000
less: net assets acquired Unadjusted balance 6,230 5,320
Share capital 6,000 Unrealised profit (cl. stk) (120)
Retained earnings 3,320 Under-depreciation (20)
Fair value adjustment: land & buildings 3,000 Goodwill impairment (44)
12,320 Retained earnings (adjusted) 6,186 5,180
Share of net assets 75% less: pre-acq - (3,320)
(9,240) Ending retained earnings 6,186 1,860
Goodwill 1,760 Share of net assets 100% 75% Conso RE
less: impairment charge (1,760X2.5%) (44) 6,186 1,395 7,581
Goodwill balance - 30 Jun 1998 1,716

£’000
Unrealised profit [25/125 X 600) 120
Cachepot Plc
Consolidated Balance Sheet as at 30 June 1998
£’000 £’000
Non-current Assets
Land and buildings 16,350
Fixtures and fittings 11,600
27,950
Intangible assets 3,500 [18,400+9,500+1,300-300]
Goodwill 1,716
33,166
Current assets
Inventory 4,800 exclude unrealised profit
Trade receivables 6,600
Cash 2,500
Current Assets 13,900
Total Assets 47,066

Equity & Reserves

Share capital 7,000
Retained earnings 7,581 [6,230-44] + [75% X (4k/2 - 120 -20)]
Revaluation surplus 5,000
19,581
Non-controlling interests 3,545 [25% X (6,000 + 5,180 + 3,000)]
23,126

Non-current liabilities
Debentures 5,900

Current liabilities
Trade payables 8,840 exclude interco 600
Other payables 9,200
18,040
47,066 -
Practice Qn 3 - Bob

Calculation of goodwill in subsidiary Adjustments for retained earnings

$'000 $'000 Bob Nate
Cost of investment 8,000 $'000 $'000
less: net assets acquired Unadjusted balance 7,000 4,500
Share capital 5,500 Unrealised profit (cl. stk) (90)
Retained earnings 3,500 Unrealised profit (plant) (40)
Fair value adjustment: freehold land 250 Over-depreciation 5
9,250 Management fee 25 (25)
Share of net assets 80% NCI Goodwill impairment (150)
(7,400) 1,850 Retained earnings (adjusted) 6,875 4,350
Goodwill 600 less: pre-acq - (3,500) Conso RE
less: impairment charge (150) Ending retained earnings 6,875 850 7,555
Goodwill balance - 31 Dec 2016 450 Share of net assets 100% 80%
6,875 680.0
NCI
170
Bob Ltd
Consolidated Statement of Financial Position as at 31 December 2016
$'000 $'000
Non-current Assets
Freehold land 9,960
Plant - cost 12,660
- accumulated depreciation (2,695)
19,925
Goodwill 450
20,375
Current assets
Inventory 3,910 exclude unrealised profit
Accounts receivables 900
Cash 550
5,360
Total Assets 25,735

Equity & Reserves

Share capital 15,000
Retained earnings 7,555
22,555
Non-controlling interests 2,020
24,575

Non-current liabilities
Loans 800

Current liabilities
Accounts payables 350 exclude interco 600
Other payables 10
360
25,735 -
Bob Ltd
Consolidated statement of profit or loss and other comprehensive income for the year ended 31 Dec 2016

$'000
Sales 6,460 [5,200 + 1,550 - 290]
Cost of Sales (3,280) [3,000 + 500 - 290 + 90 - 20]
Gross profit 3,180
Other income 190 [200 + 150 - 40 - (80% X 150)]
Operating expenses (745) [400 + 200 - 5 + 150]
Profit before tax 2,625
Tax (850) [500 + 350]
Profit for the year 1,775

Profit attributable to:

Equity shareholders 1,671 [1,500 + 25 - 150 - (80% X 150)] + [80% X (650 - 90 - 40 + 5 - 25 + 20)]
Non-controlling interests 104 [20% X (650 - 90 - 40 + 5 - 25 + 20)]
1,775 -

Check
Profit after tax and NCI 1,671
Dividends (P only) -
Retained profit for the year 1,671
Retained profit brought forward 5,884 [(7,000 - 1,500) + {80% X (4,000 - 20 - 3,500)}]
Retained profit carried forward 7,555 [match with BS] -