Consolidated Statement of Financial Position

Practice Questions
Example 1

H owns all of the shares issued by S.

The statements of financial position of H and S as at 31 December 20X8 were as follows.

H S
$ $
Non-current assets:

Property, plant & equipment 85,000 18,000

Investments:
Shares in S 60,000
145,000
Current assets 160,000 84,000
305,000 102,000
Equity:
Equity shares @ $1 each 65,000 20,000
Share premium 35,000 10,000
Retained earnings 70,000 25,000
170,000 55,000
Current liabilities 135,000 47,000
305,000 102,000

H acquired a 100% holding in S on 1 January 20X8. At that date S's retained earnings were $15,000.

Required:

Prepare the consolidated statement of financial position for the H group as at 31 December 20X8.

Example 2

Daniel acquired 80% of the equity share capital of Craig on 31 December 20X6 for $78,000. At this date
the fair value of the net assets of Craig were $85,000. NCI is valued using the fair value method and the
fair value of the NCI at the acquisition date was $19,000.

Required:

What goodwill arises on the acquisition?

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Example 3

Hoe acquired a 75% interest in the equity share capital of Spade on 1 January 20X6. The consideration
consisted of an immediate cash payment of $1.80 per share acquired plus Hoe agreed to issue 2 shares
in exchange for every 3 acquired. At the date of acquisition, Spade had 2 million equity shares of $1
nominal value each in issue. The market or fair value of a $1 Hoe share at 1 January 20X6 was $3.

Required:

Calculate the fair value of consideration paid by Hoe to acquire control of Spade and state the accounting
entries required to account for the increase in share capital and share premium.

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