Advanced financial accounting - Lecture 40. The main topics covered in this chapter include: the data will appear as row-wise and individual amount will be highlighted one by one; cost of investment in subsidiary Co.; less fair value of net assets; post acquisition of subsidiary Co.;... Please refer to the lecture for details!
Advanced Financial Accounting Lecture40 Question Balance Sheet as 31st December 2008 H (Rs) S (Rs) 1,000 550 Investment in S 750 Current assets 450 350 Total assets 2,150 900 Share capital 1,200 400 Reserves 700 300 Current liabilities 250 200 2,150 900 Fixed assets Total liabilities & equities The Holding Co.(H) acquired 80% share of the Subsidiary Co. (S) on 31 st December 2008 when it’s reserves were worth Rs. 200 and the fair value of net assets of S were Rs. 300 more tan the book value. Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008 Working1 Holding % = 80% Monitory % = 20% Working 2 Preacquisition Postacquisition Capital 400 Reserves 200 100 Fair value 300 900 100 Total Working 3 Goodwill Cost of investment in subsidiary Co. 750 Less Fair value of net assets (900 x 80%) 720 30 Working 4 Group Reserves All reserves of parent Co. 700 Post acquisition of subsidiary Co.(100x80%) 80 780 Working 5 Minority Interest Owner’s equity of S Co. . Add Fair value 700 300 1,000 Minority interest = 1,000 x 20% = 200 Working Preacquisition Postacquisition Share capital 400 Reserve 200 100 Required reserve 300 Total 900 100 Holding 80% Minority 20% 720 80 = 800 180 20 = 200 Solution Consolidate Balance Sheet As 31st December 2008 H Rs Fixed Assets (1,000 +550+300) 1,850 Goodwill. 30 Current Assets (400 + 350) 750 Total Assets 2,630 Owner’s Equity Share Capital 1,200 Reserves 780 Minority Interest 200 2,180 Current Liabilities 450 2,630 Question Balance Sheet as 31st December 2008 H (Rs) S (Rs) 1,000 550 Investment in S 750 Current assets 450 350 Total assets 2,150 900 Share capital 1,200 400 Reserves 700 300 Current liabilities 250 200 2,150 900 Fixed assets Total liabilities & equities The Holding Co.(H) acquired 80% share of the Subsidiary Co. (S) on 31 st December 2008 when it’s reserves were worth Rs. 200 and the fair value of net assets of S were Rs. 300 more tan the book value. The revaluation of assets of S were subject to application of Rs. 45 and goodwill impaired by Rs. 6. Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008 Working1 Holding % = 80% Monitory % = 20% Working 2 Preacquisition Postacquisition Capital 400 Reserves 200 100 Fair value 300 900 100 Total Working 3 Goodwill Cost of investment in subsidiary Co. 750 Less Fair value of net assets (900 x 80%) 720 30 Less Impaired 6 24 Working 4 Group Reserves 780 Less Impaired Less Depreciation 6 36 738 Working 5 Minority Interest Owner’s equity of S Co. . Add Fair value Less Depreciation 700 300 (45) 955 Minority interest = 955 x 20% = 191 Working 5 Minority Interest Owner’s equity of S Co. . Add Fair value 700 300 1,000 Less Depreciation 9 191 Working 45 Group Reserve Minority Interest 45 x 80% = 36 45 x 20% = 4 Solution Consolidate Balance Sheet As 31st December 2008 H Rs Fixed Assets (1,000 +550+30045) 1,805 Goodwill. 24 Current Assets (400 + 350) 750 Total Assets 2,579 Owner’s Equity Share Capital 1,200 Reserves 738 Minority Interest 191 2,129 Current Liabilities (250+200) 450 2,579 ... 550 Investment in S 750 Current assets 450 350 Total assets 2,150 900 Share capital 1,200 400 Reserves 700 300 Current liabilities 250 200 2,150 900 Fixed assets Total liabilities & equities ... Holding % = 80% Monitory % = 20% Working 2 Preacquisition Postacquisition Capital 400 Reserves 200 100 Fair value 300 900 100 Total Working 3 Goodwill Cost of investment in subsidiary Co. ... Minority interest = 1,000 x 20% = 200 Working Preacquisition Postacquisition Share capital 400 Reserve 200 100 Required reserve 300 Total 900 100 Holding 80% Minority 20% 720 80 = 800