Advanced financial accounting - Lecture 38. The main topics covered in this chapter include: the data will appear as row-wise and individual amount will be highlighted one by one; solution consolidate balance sheet; calculate holding and minority percentage;... Please refer to the lecture for details!
Advanced Financial Accounting Lecture38 Question Balance Sheet as 31st December 2008 H (Rs) S (Rs) 1,000 450 Investment in S 550 Current assets 350 150 Total assets 1900 600 Share capital 1200 300 Reserves 600 200 Current liabilities 100 100 Total liabilities & equities 1900 600 Fixed assets The Holding Co.(H) acquired 80% share of the Subsidiary Co. (S) on 31 st December 2008 Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008 Working 240 / 300 x 100 = 80% Working Cost of investment 550 Less Owner’s equity (500 x 80%) 400 Goodwill 150 Working Holding Co. (Rs) 80% (450 x 80%) 360 (150 x 80%) 120 480 (100 x 80%) (80) 400 Minority (Rs) 20% (450 x 20%) 90 (150 x 20%) 30 120 (100 x 80%) (20) 100 Solution Consolidate Balance Sheet As 31st December 2008 Rs Fixed Assets 1450 Goodwill 150 Current Assets 500 Total 2100 Share Capital 1200 Reserves 600 Minority Interest 100 Current Liabilities 200 2100 Balance Sheet As 31st December 2008 H S Rs Rs 1,000 450 Investment in S 500 Current Assets 400 150 Total 1900 600 Share Capital 1200 300 Reserves 600 200 Current Liabilities 100 100 Total 1900 600 Fixed Assets The Holding Co.(H) acquired 80% shares of the Subsidiary Co. (S) on 31 st January 2008 when it’s reserves were worth Rs.120. Goodwill impaired up to Rs.33 during the year Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008 Steps Calculate holding and minority percentage Identify pre and post acquisition elements in owner’s equity of subsidiary Co Calculate goodwill Calculate group reserve Calculate minority interest Steps1 Holding = 80% Monitory = 20% Steps2 Preacquisition Postacquisition Capital 300 Reserves 120 80 Total 420 80 Steps3 Goodwill Cost of investment in subsidiary Co. 500 Less Preacquisition of OE of subsidiary Co. (420x80%) 336 Goodwill 164 Less Goodwill impairment 33 131 Steps4 Group Reserves All reserves of parent Co. 600 Post acquisition of subsidiary Co. (80x80%) 64 Impairment loss (33 ) 631 Working Total Owner’s 500 equity Pre acquisiti on 420 Post acquisiti on 80 80% (400) (336) (64) 20% 100 840 16 Solution Consolidate Balance Sheet As 31st December 2008 H Rs Fixed Assets (1,000 +450) 1450 Goodwill. 131 Current Assets (400 + 150) 550 Total 2131 Share Capital 1200 Reserves 631 Minority Interest 100 Current Liabilities 200 2131 Question Balance Sheet As 31st December 2008 Fixed Assets H S Rs Rs 1,000 450 Investment in S 500 Dividend Receivable Other Current Liabilities 40 360 Total Current Assets 400 150 Total 1900 600 Share Capital 1200 300 Reserves 600 200 Dividend Payable Other Current Liabilities 70 30 Current Liabilities 100 100 Total 1900 600 The Holding Co.(H) acquired 80% shares of the Subsidiary Co. (S) on 31 st January 2008 when it’s reserves were worth Rs.120. Goodwill impaired upto Rs.33 during the year Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008 Consolidate Balance Sheet as 31st December 2008 H Rs Fixed Assets (1000 + 450) 1450 Goodwill 131 Current Assets (360+150) 510 Total 2091 Share Capital 1200 Reserves 631 Minority Interest 100 Other Current Liabilities 80 Dividend Payable by H 70 Dividend due to monitory 10 Current Liabilities 80 160 2091