Practice question P acquired 70% of S on 1 January 20X21 for Rs.450,000 The retained earnings of S were Rs. 50,000 at that date. Itis P's policy to recognise non-controlling interest at the date of acquisition as a proportionate share of net assets. The statements of financial position P and S as at 31 December 20X1 were as follows: Assets: P(Rs.) ‘S(Rs.) Investment in S, at cost 450,000 : Other assets 500,000 350,000 950,000 350,000 Equity Share capital 100,000 100,000 Retained earnings 650,000 100,000 750,000 200,000 Current liabilities 200,000 150,000 950,000 350,000 Required Prepare a consolidated statement of financial position as at 34. December 20X41.Solution P Group: Consolidated statement of financial position at 31 December 20X1. Assets Rs. Goodwill (W3) 345,000 Other assets (500 + 350) 850,000 Total assets 4,195,000 Equity Share capital (P only) 100,000 Consolidated retained earnings (W4) 685,000 785,000 Non-controlling interest (W2) 60,000 845,000 Current liabilities (200 + 150) 350,000 Total equity and liabilities 1,195,000 Workings: W1 Net assets summary At date of At date of Post- consolidation acquisition acquisition Share capital 100,000 100,000 Retained earnings 100,000 50,000 50,000 Net assets 150,000 W2 = Non-controlling interest Rs, NCI's share of net assets at the date of acquisition (30% x 150,000 (W4)) 45,000 NCI's share of the post-acquisition retained earnings of S (30% of 50,000 (W141) 15,000 NCI's share of net assets at the date of consolidation 60,000Ww3 wa Goodwill Cost of investment Non-controlling interest at acquisition (see W2) Net assets at acquisition (W1) Consolidated retained profits: All of P's retained earnings P’s share of the post-acquisition retained earnings of S (70% of 50,000 (W1)) Rs. 450,000 45,000 495,000 (150,000) 345,000 Rs. 650,000 35,000 685,000Practice question P acquired 70% of S on 1 January 20X41 for Rs.450,000 The retained earnings of S were Rs. 50,000 at that date. It is P’s policy to recognise non-controlling interest at the date of acquisition at fair value. The fair value of the non-controlling interest at the date of acquisition was Rs. 75,000. The statements of financial position P and S as at 31 December 20X41 were as follows: Assets: P(Rs) S(Rs.) Investment in S, at cost 450,000 - Other assets 500,000 350,000 950,000 350,000 Equity Share capital 400,000 400,000 Retained earnings 650,000 100,000 750,000 200,000 Current liabilities 200,000 150,000 950,000 350,000 Required Prepare a consolidated statement of financial position as at 31 December 20X41.Solution P Group: Consolidated statement of financial position at 31 December 20X1. Assets Goodwill (W3) Other assets (500 + 350) Total assets Equity Share capital (P only) Consolidated retained earnings (W4) Non-controlling interest (W2) Current liabilities (200 + 150) Total equity and liabilities Workings: W41 Net assets summary At date of consolidation Share capital 100,000 Retained earnings 100,000 Net assets '200,000* W2_ Non-controlling interest Fair value of NCI at the date of acquisition At date of acquisition 100,000 50,000 NCI’s share of the post-acquisition retained earnings of S (30% of 50,000 (W4)) NCI's share of net assets at the date of consolidation Rs, 375,000 850,000 100,000 685,000 785,000 90,000 875,000 350,000 1,225,000 Post- acquisition 50,000 150,000 75,000 15,000 90,000w3 w4 Goodwill Cost of investment Non-controlling interest at acquisition (given) Net assets at acquisition (W1) Consolidated retained profits: All of P’s retained earnings P's share of the post-acquisition retained earnings of S (70% of 50,000 (W4)) Rs. 450,000 75,000 525,000 (450,000) 375,000 Rs. 650,000 35,000 685,000Practice question P bought 80% of S 2 years ago. At the date of acquisition S's retained earnings stood at Rs. 600,000. The fair value of its net assets was not materially different from the book value except for the fact that it had a brand which was not recognised in S's accounts. This had a fair value of 100,000 at this date and an estimated useful life of 20 years. The statements of financial position P and S as at 31 December 20X1 were as follows: P(Rs.) S(Rs.) PP and E 1,800,000 1,000,000 Investment in S 1,000,000 Other assets 400,000 300,000 3,200,000 1,300,000 Share capital 100,000 00,000 Retained earnings 2,900,000 1,000,000 Liabilities 200,000 200,000 3,200,000 1,300,000 Required Prepare a consolidated statement of financial position as at 34. December 20X1.Solution 3 A consolidated statement of financial position as at 31 December 20X1 can be prepared as follows: P Group: Consolidated statement of financial position at 31 December 20X1. Rs, Assets Brand (see working) 90,000 Goodwill (see working) 360,000 Property, plant and equipment (1,800 + 1000) 2,800,000 Other assets (400 + 300) 700,000 Total assets 3,950,000 Equity Share capital (P only) 100,000 Consolidated retained earnings (see working) 3,242,000 3,312,000 Non-controlling interest 238,000 3,550,000 Current liabilities (200 + 200) 400,000 Total equity and liabilities 3,950,000Workings: Net assets summary of S Share capital Retained earnings Given in the question Extra depreciation on brand (400,000 x 292/20 years) Consolidation reserve on recognition of the brand Net assets Non-controlling interest NCr's share of net assets at the date of acquisition (20% x 800,000) NCI's share of the post-acquisition retained earnings of S (20% of 390,000 (see above)) NCr's share of net assets at the date of consolidation At date of At date of Post- consolidation acquisition acquisition 100,000 100,000 1,000,000) 600,000 (40,000) - 990,000 600,000 390,000 100,000 100,000 1,190,000 ‘800,000 Rs. 160,000 78,000 238,000Goodwill Rs. Cost of investment 1,000,000 Non-controlling interest at acquisition (20% x 800,000) 160,000 1,160,000 Net assets at acquisition (see above) (800,000) 360,000 Consolidated retained profits: Rs. All of P's retained earnings 2,900,000 P's share of the post-acquisition retained earnings of S (80% of 390,000 (see above)) 312,000 212,000 Brand Rs. On initial recognition 100,000 Depreciation since acquisition (100,000 x 2="/20 years) (10,000) 90,000Practice question P bought 80% of S 2 years ago. At the date of acquisition S's retained earnings stood at Rs. 600,000 and the fair value of its net assets were Rs. 1,000,000. This was Rs. 300,000 above the book value of the net assets at this date. The revaluation was due to an asset that had a remaining useful economic life of 10 years as at the date of acquisition. The statements of financial position P and S as at 31 December 20X1 were as follows: Pp s Rs. Rs. PP and E 1,800,000 1,000,000 Investment in S 4,000,000 Other assets 400,000 300,000 3,200,000 1,300,000 Share capital 100,000 100,000 Retained earnings 2,900,000 1,000,000 Liabilities 200,000 200,000 3,200,000 1,300,000 Required Prepare a consolidated statement of financial position as at 34. December 20X1.Solution 4 P Group: Consolidated statement of financial position at 34 December 20X1. Rs. Assets Goodwill (see working) 200,000 PP and E (see working) 3,040,000 Other assets (400,000 + 300,000) 700,000 Total assets Equity Share capital (P only) 100,000 Consolidated retained earnings (see working) 3,172,000 3,272,000 Non-controlling interest 268,000 3,540,000 Current liabilities (200 + 200) 400,000 Total equity and liabilities 3,940,000 At date of At date of Post- consolidation acquisition acquisition Share capital 100,000 100,000 Retained earnings Given in the question 1,000,000 600,000 Extra depreciation on fair value adjustment (300 * 2 ye8"8/ 10 years) - SEG explanation on next page (60,000) - 940,000 600,000 340,000 Fair value reserve 300,000 300,000 Net assets 1,340,000 1,000,000 Non-controlling Interest Rs, NCI's share of net assets at the date of acquisition (20% x 4,000) 200,000 NCI's share of the post-acquisition retained earnings of S (20% of 340 (see above)) 68,000 NCr's share of net assets at the date of consolidation 268,000Goodwill Cost of investment Non-controlling interest at acquisition (20% x 1,000) Net assets at acquisition (see above) Consolidated retained profits: All of P's retained earnings P’s share of the post-acquisition retained earnings of S (80% of 340 (see above)) Property plant and equipment Parent's Subsidiary's Given in question Fair value adjustment Extra depreciation on fair value adjustment (800 * 2827/30 yeas) To statement of financial position Rs. 1,000,000 200,000 1,200,000 (4,000,000) 200,000 Rs, 2,900,000 272,000 3,172,000 Rs. 1,800 1,000 300 (60) 4,240 3,040Practice question P acquired 70% of S on 4 January 20X1 for Rs.1,000,000 The retained earnings of S were Rs. 50,000 at that date. Also, at the date of acquisition S held an item of plant with a carrying amount of 250,000 less than its fair value. This asset had a remaining useful life of 10 years as from that date. It is P's policy to recognise non-controlling interest at the date of acquisition as a proportionate share of net assets. The statements of financial position of P and S as at 31 December 20X1. were as follows: P(Rs.) S(Rs.) Assets: Investment in S, at cost 1,000,000 - Other non-current assets 400,000 200,000 Current assets 500,000 350,000 1,900,000 550,000 Equity Share capital 100,000 100,000 Retained earnings 1,600,000 300,000 1,700,000 400,000 Current liabilities 200,000 150,000 1,900,000 550,000 Required Prepare a consolidated statement of financial position as at 31. December 20X1.Solution P Group: Consolidated statement of financial position at 31 December 20X14. Assets Goodwill (W3) Other non-current assets (400 + (200 + 250 - 25)) Other assets (500 + 350) Total assets Equity Share capital (P only) Consolidated retained earnings (W4) Non-controlling interest (W2) Current liabilities (200 + 150) Total equity and liabilities Rs. 720,000 825,000 850,000 2,395,000 100,000 41,757,500 1,857,500 187,500 2,045,000 350,000Workings: wi ws Net assets summary At date of At date of Post- consolidation acquisition acquisition Share capital 100,000 100,000 Retained earnings Given in the question 300,000 50,000 Extra depreciation on fair value adjustment (250 x + 8/30 years) (25,000) - 275,000 50,000 225,000 Fair value reserve 250,000 250,000 Net assets 625,000 400,000 Non-controlling interest Rs, NCI's share of net assets at the date of acquisition (30% » 400) 120,000 NCI's share of the post-acquisition retained earnings of S (30% of 225 (W4)) 67,500 NCI's share of net assets at the date of consolidation 187,500 Goodwill Rs, Cost of investment 1,000,000 Non-controlling interest at acquisition (W2) 120,000 1,420,000 Net assets at acquisition (see above) (400,000) 720,000 Consolidated retained profits: Rs, All of P’s retained earnings 1,600,000 P's share of the post-acquisition retained earnings of S (70% of 225 (W1)) 157,500 1,757,500