Free Study Notes - FM

(35%)
Consolidated
Statement of Financial
Position
Investment in several Subsidiaries
The statements of financial position of H and two entities in which it holds
investment are shown below for year ended 31 December 2009
H S A
$ 000 $ 000 $ 000
Investments 37,500 - -
Property, Plant & Equipments 20,000 32,000 25,000
Net Current Assets 8,000 6,000 5,000
65,500 38,000 30,000
Issued Share Capital ($1

shares) 20,000 15,000 10,000
Retained Earnings 45,500 23,000 20,000
65,500 38,000 30,000
1. On 31st December 2008 when the retained earnings of S showed a balance of $11
million , H purchased 12 million shares in S for $23.5 million.
2. On 31st December 2007 when the retained earnings of A showed a balance of
$12million , H purchased 6 million shares in S for $ 14 million.
Required ;
Prepare Consolidated Statement of Financial Position as at 31 st December 2009 .
H
S 12/15 = 80% A 6/10 = 60%

NCI = 20% NCI = 40%
Workings
Goodwill calculations
S A
Fair value of Investment 23,500 14,000

Less- Fair value of Net
Assets
Share Capital of S 15,000 10,000

Pre acquisition Retained
Earnings 11,000 12,000
Book Value of Net Assets 26,000 22,000

Add - Fair Value
Adjustments - -
Fair Value of Net Assets 26,000 (20,800) 22,000 (13,200)
Goodwill on acquisition 2,700 800

Consolidated Retained Earnings
Parent's Reserves 45,500

Post Acquisition
Reserves
80% (23,000 -
11,000) 9,600
Post Acquisition
Reserves
60% (20,000 -
CSFP 59,900 12,000) 4,800
59,900 59,900
Non Controlling Interest - S
Share Capital 15,000
Retained Earnings 23,000
38,000
Fair Value
Adjustments -
38,000
CSFP 7,600 NCI % 20%
7,600 NCI 7,600

Non Controlling Interest -A
30,000
Fair Value Adjustments -
30,000
CSFP 12,000 NCI % 40%
12,000 NCI 12,000
H Group
Consolidated Statement of Financial Position
as at 31 / 12 /2009
$000
Goodwill (2,700 + 800) 3,500
Property, Plant & Equip (20,000+32,000+25,000) 77,000
Net Current Assets (8,000+6,000+5,000) 19,000
99,500
Issued Share Capital ($1 shares) 20,000

Consolidated Retained Earnings 59,900
Non Controlling Interest (7,600+12,000) 19,600
99,500
NCI @ Fair Value
The statements of financial position of H and A in which it holds investment are
shown below for year ended 31 December 2009
H A
$ 000 $ 000
Investments 37,500 -
Property, Plant & Equipments 20,000 25,000
Net Current Assets 8,000 5,000
65,500 30,000

shares) 20,000 10,000
Retained Earnings 45,500 20,000
65,500 30,000
On 31st December 2007 when the retained earnings of A showed a balance of $12million ,
H purchased 6 million shares in A for $ 14 million. Share price at the date of
acquisition is $2.25.
Required ;
H
A 6/10 = 60%
NCI = 40%
Workings
Goodwill on
Goodwill of NCI
Acquisition
$000
$000
Consideration
Fair value of NCI 9,000
transferred 14,000
Fair value of NCI 9,000
Share Capital of S 10,000
23,000 Pre acquisition
Share Capital of S 10,000 Book Value of Net
Pre acquisition Retained Assets 22,000
Earnings 12,000 Add - Fair Value
Adjustments -
Book Value of Net Assets 22,000 Fair Value of Net
Add - Fair Value Assets 22,000 (8,800)
Adjustments - Goodwill on
(22,000 acquisition 200
Fair Value of Net Assets 22,000 )

Post Acquisition
Reserves
60% (20,000 -
CSFP 50,300 12,000) 4,800
50,300 50,300
Non Controlling Interest - A

30,000
30,000
NCI % 40%
12,000
CSFP 12,200 NCI share of Goodwill 200
12,200 NCI 12,200

H Group
as at 31 / 12 /2009
$000
Goodwill 1,000
Property, Plant & Equip (20,000+25,000) 45,000
Net Current Assets (8,000+5,000) 13,000
Other investments (37,500 14,000) 23,500
82,500

Non Controlling Interest 12,200
82,500
Investment in a Subsidiary and an Associate
The statements of financial position of H Co and two entities in which it holds
H S A
$ 000 $ 000 $ 000
61,500 38,000 30,000

20,000 15,000 10,000
shares)
61,500 38,000 30,000
2. On 31st December 2007 when the retained earnings of A showed a balance of
$12million , H purchased 4 million shares in A for $ 10 million.
Required ;
H
S 12/15 = 80% A 4/10 = 40%

NCI = 20%
Workings
S
Fair value of Investment 23,500
Assets
Share Capital of S 15,000
Earnings 11,000
Book Value of Net Assets 26,000
Add - Fair Value
Adjustments -
26,000 x
Fair Value of Net Assets 80% (20,800)
Goodwill on acquisition 2,700

Post Acquisition
Reserves
80% (23,000 -
11,000) 9,600
Post Acquisition
Reserves
40% (20,000 -
CSFP 54,300 12,000) 3,200
54,300 54,300

38,000
-
Fair Value Adjustments
38,000
CSFP 7,600 NCI % 20%
7,600 NCI 7,600
Investment in A
Investment 10,000

Post Acquisition Reserves
40% (20,000 -
12,000) 3,200 CSFP 13,200
13,200 13,200
H Group

as at 31 / 12 /2009
$ 000
Goodwill (2,700) 2,700
Investment in A 13,200
81,900

Non Controlling Interest - S 7,600
81,900
Investment in a Subsidiary and a Joint Venture
H S A
$ 000 $ 000 $ 000
65,500 38,000 30,000
Issued Share Capital ($1 shares) 20,000 15,000 10,000

65,500 38,000 30,000
2. On 31st December 2006 together with another investor entity acquired A. Each of the
investors owns one half of the ordinary shares of A. All managerial decisions relating
to A are made jointly by the two investors. The retained earnings were $12 million
and investment made was $ 14 million.
Required ;
H
S 12/15 = 80% A = 50%

NCI = 20%
Workings - Proportionate
Consolidation
S A

Less- Fair value of Net Assets

Earnings 11,000 12,000
Add - Fair Value Adjustments - -


Post Acquisition
Reserves
80% (23,000 - 11,000) 9,600

Investment in A
CSFP 59,100 50% (20,000 - 12,000) 4,000
59,100 59,100
38,000
38,000
CSFP 7,600 NCI % 20%
7,600 NCI 7,600
H Group
as at 31 / 12 /2009
000
Goodwill (2,700 +3,000) 5,700
Property, Plant & Equip (20,000+32,000+25,000/2) 64,500
Net Current Assets (8,000+6,000+5,000/2) 16,500
86,700

86,700
Equity Method
Investment in A
Investment 14,000

Post Acquisition Reserves
50% (20,000 - 12,000) 4,000 CSFP 18,000
18,000 18,000

Equity Method
H Group
as at 31 / 12 /2009
000
Goodwill (2,700) 2,700
Investment in A (14,000 + 50% x 8,000) 18,000
86,700

86,700
Investment in a Subsidiary and a Sub-subsidiary
H S A
$ 000 $ 000 $ 000
Investments 23,500 14,000 -
51,500 42,000 30,000

20,000 15,000 10,000
shares)
51,500 42,000 30,000
2. On 31st December 2007 when the retained earnings of A showed a balance of $11
million , S purchased 6 million shares in A for $ 14 million. Reserve at 31st
December 2008 was $12m
Required ;
Workings
S A

Assets

Earnings 11,000 12,000
Add - Fair Value Adjustments - -


Post Acquisition
Reserves
80% (27,000 - 11,000) 12,800

Post Acquisition
Reserves
CSFP 48,140 48% (20,000 - 12,000) 3,840
Non 48,140
Controlling Interest - S 48,140
42,000
42,000
Investment in sub
subsidiary (14,000)
28,000
CSFP 5,600 NCI % 20%
5,600 NCI 5,600
Non Controlling Interest -A
30,000
30,000
CSFP 15,600 NCI % 52%
15,600 NCI 15,600
H Group
as at 31 / 12 /2009
$000
Goodwill (2,700 + 640) 3,340
Property, Plant & Equip (20,000+22,000+25,000) 67,000
Net Current Assets (8,000+6,000+5,000) 19,000
89,340

Non Controlling Interest (5,600+15,600) 21,200
89,340
Consolidated Income
Statement
Translation
Franc0 Rate $00
00 (Average) 0
Revenue 1,200 2.6 462
Cost of sales, other expenses (1,000) 2.6 385
and tax
Profit for the period 200 2.6 77
Consolidated Statement of Comprehensive
Income
$000
Revenue (3,600 + 4,062
462)
Cost of sales, other expenses (2800 + (3,18
and tax 385) 5)
Profit for the period 877
Attributable to
Equity holders of the parent 862
Non-controlling interest (77 * 20%) 15
877
Consolidated Statement of
Financial Position
1. Goodwill
Fair value of 50
investment
Fair value of net
assets
Share Capital 50
Pre-acquisition 8
reserves
58
80 46.
% 4
Goodwill 3.6
@ 1/11/03 2 1.8
@ 31/10/07 2.3 1.5
7
2. Translation
Franc0 Rat $00
00 e 0
Property 1,500 2.7 555.6
Current Asset 2,000 2.7 740.7
3,500 1296.
3
Share Capital 50 2 25
Retained
Earnings
Pre-Acquisition 8 2 4
Post-Acquisition 1,642 600.6
Current 1,800 2.7 666.7
Liabilities
3,500 1296.
3
3. Consolidated Reserve
Exchange loss 0.5 Parent 4825
on goodwill Company
5305 Share of Post 480.5
Acquisition
Profit
(600.6 * 0.8)
5305.5 5305.5
4. Non-Controlling Interest
Share Capital 25
Reserve 604.6
629.6
* 20%
125.9
Consolidated Statement of Financial
Position
Assets
Goodwill W1 1.3
Property (5000 + 5,555.
555.6) 6
Current Assets (4,400 + 5,140.
740.7) 7
10,697
.6
Equity and
Liabilities
Share Capital 1,000
Consolidated W3 5,305
Reserve
NCI W4 125.9
Consolidated Statement of
Changes in Equity
1. Consolidated Equity b/f
Exchange loss on 0.23 Parent Equity 5,225
goodwill b/f
5723.3 Post Acquisition 498.6
7 b/f
(80% * 623.2)
5,723. 5,723.
6 6
2. Post Acquisition b/f
Total Equity b/f 1500/2. 652.
3 2
Share Capital (25)
Pre-Acquisition (4)
Post Acquisition 623.
2
3. Exchange loss on
Networth
Networth @ 31/10/08 629.6
Networth @ 31/10/07 (652.
2)
Retained Profit for the (77)
Year
Exchange Loss 99.6
Consolidated Statement of Changes
in Equity
As @ 1/11/07 W1 5,723.
37
Retained Profit 862
Dividend (200)
Exchange loss
Networth (99.6 * (79.68)
80%)
Goodwill (.27)
6305
Consolidated Statement of Financial
Position
Assets
Goodwill W1 1.3
Property (5000 + 5,555.
555.6) 6
Current Assets (4,400 + 5,140.
740.7) 7
10,697
.6 6305
Equity and
Liabilities
Share Capital 1,000
Consolidated W3 5,305
Reserve
NCI W4 125.9
NCI-S
Share Capital 500
Reserves 800
1300
(-)inv in sub sub -600
BV of NA 700
FV of adj -
700
NCI% 30%
210
(+)NCI Goodwill(600-1000
SOFP 510*0.3) 300
510 510
NCI-S
Share Capital 200
Reserves 700
BV OF
NA 900
Consolidated statement of Financial position as at 31
March 2010
Non Current
Asset
PPE(2500+900+1100) 4500
Investments (3000+600-600-1750) 1250
Goodwill on acquisition
(W1) 1470

Current Assets (4500+2000+1400) 7900
Total Assets 15120

Equity and
Liability
Equity
Share Capital 1000
Consolidated Retained Earnings 4878
NCI
(W3) 942

Non current liabilities
(1500+800+500) 2800
Consolidated Income
Statement
Investment in Several Subsidiaries
The income statements of ST and two entities in which it holds investment
are shown below for year ended 31 January 2009
ST UV WX
Revenue 1,800 600

1,400
Cost of Sales (1,200) (450)
(850)
Gross Profit 600 150
550
Operating (450) (74)
Expenses (375)
Profit from 150 76
operations 175
Finance cost (16) (12) -
Interest Income 6 -
Note 1 -
Several years
Profit ago ST
before acquired 70% of the
tax issued ordinary share capital of UV. On
140 76 1st
February 2008 ST acquired 60% of the issued ordinary share capital
163 of WX.
Note 2
Income Tax (45) (53) (26)
During the Financial year ended 31 January 2009 UV paid the full amount of interest
Expense
due on its 6% debenture loan of $ 200,000. ST invested $ 100,000 in the debenture
when it wasFor
Profit the three years ago.
issued 95 50
period
Required 110
Prepare the consolidated Income statement of the ST group for the year ended 31
January 2009.
ST Group
Consolidated Statement of Comprehensive Income
for the year ended 31/12/2009
ST
$ '000
Revenue (1800+1400+600) 3,800
Cost of Sales (1200+850+450) (2,500)
Gross Profit 1,300
Operating
(450+375+74) (899)
Expenses
Profit from
(40+120+50) 401
operations
Finance cost (16+(12-6)) (22)
Interest Income (6-6 ) -
Profit before tax 379
Income Tax
(45+53+26) (124)
Expense
Profit For the
255
period
Attributable to
Equity holders of Parent 17
202
NCI (W1) 0
45
215
Workings (NCI)
UV 30% of 110 = 33
WX 40% of 50 = 20
less: NCI Share of URP
(40% of 20) (8)
12
45
Investment in a Subsidiary and an Associate
The Income statements of ST and two entities in which it holds investment
are shown below for year ended 31 January 2009
ST UV WX
Revenue 1,800 600

1,400
Cost of Sales (1,200)
(850) (450)
Gross Profit 600 550 150
Operating
(450) (375)
Expenses 74
Profit from
150 175 76
operations
Interest Income 6 -
-
NoteProfit
1 before tax 140 163 76
Several yearsTax
Income ago ST acquired 70% of the issued ordinary share capital of UV. On 1st
February 2008 ST acquired 40% of the (45)
Expense
(53)
issued ordinary share capital of WX. 26
Note 2
Profit For the
95 2009 UV paid the
During the Financial year ended 31 January 110full amount of interest
period 50
due on its 6% debenture loan of $ 200,000. ST invested $ 100,000 in the debenture
when it was issued three years ago.
Required
ST Group
Consolidated Statement of Comprehensive Income for the year ended 31/12/2009
ST
$ '000
Revenue (1800+1400)
3,800
Cost of Sales (1200+850)
(2,500)
Gross Profit
1,300
Operating Expenses (450+375)
(825)
Profit from operations
475
Finance cost (16+(12-6))
(22)
Interest Income (6-6 )
-
Group Share of Associate (40% x 50 )
profit
Attributable to 20
Profit before tax
Equity holders of Parent (375-33) = 342
Non controlling Interest (30% x 110) = 33 473
Income Tax Expense (45+53)
Investment in a Subsidiary and a Joint Venture
The Income statements of ST and two entities in which it holds investment are
shown below for year ended 31 January 2009
ST UV WX
Revenue 1,800 1,400 600
Cost of Sales (1,200) (850) (450)
Gross Profit 600 550 150
Operating
(450)
Expenses (375) (74)
Profit from
150 175 76
operations
Interest Income 6 - -
Profit before tax 140 163 76
Income Tax
(45) (53) 26
Expense
Profit For the
95 110 50
period
Contd.
Note 1
Several years ago ST acquired 70% of the issued ordinary share capital of UV. On
1st February 2008 ST acquired 50% of the issued ordinary share capital of WX an
entity set up under a contractual arrangements as a Joint Venture between ST and
one of its suppliers. The Directors of ST have decided to adopt a policy of
proportionate consolidation wherever appropriate and permitted by International
Financial Reporting Standards.
Note 2
During the Financial year ended 31 January 2009 UV paid the full amount of
interest due on its 6% debenture loan of $ 200,000. ST invested $ 100,000 in the
debenture when it was issued three years ago.
Required
January 2009.

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(35%)

Issued Share Capital ($1

S 12/15 = 80% A 6/10 = 60%

Fair value of Investment 23,500 14,000

Share Capital of S 15,000 10,000

Book Value of Net Assets 26,000 22,000

Fair Value of Net Assets 26,000 (20,800) 22,000 (13,200)

Goodwill on acquisition 2,700 800

Parent's Reserves 45,500

7,600 NCI 7,600

Issued Share Capital ($1 shares) 20,000

Issued Share Capital ($1

Parent's Reserves 45,500

Non Controlling Interest - A

12,200 NCI 12,200

Issued Share Capital ($1 shares) 20,000

Issued Share Capital ($1

S 12/15 = 80% A 4/10 = 40%

Parent's Reserves 41,500

Non Controlling Interest - S

Issued Share Capital ($1 shares) 20,000

Issued Share Capital ($1 shares) 20,000 15,000 10,000

S 12/15 = 80% A = 50%

Fair value of Investment 23,500 14,000

Share Capital of S 15,000 10,000

Book Value of Net Assets 26,000 22,000

Add - Fair Value Adjustments - -

Fair Value of Net Assets 26,000 (20,800) 22,000 (11,000)

Parent's Reserves 41,500

80% (23,000 - 11,000) 9,600

CSFP 59,100 50% (20,000 - 12,000) 4,000

Issued Share Capital ($1 shares) 20,000

Issued Share Capital ($1 shares) 20,000

Issued Share Capital ($1

Fair value of Investment 23,500 14,000

Share Capital of S 15,000 10,000

Book Value of Net Assets 26,000 22,000

Add - Fair Value Adjustments - -

Fair Value of Net Assets 26,000 (20,800) 22,000 (13,200)

Parent's Reserves 31,500

80% (27,000 - 11,000) 12,800

CSFP 48,140 48% (20,000 - 12,000) 3,840

Issued Share Capital ($1 shares) 20,000

Share Capital 500

Revenue 1,800 600

Revenue 1,800 600

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