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Consolidated SOFP With Associate Question & Solution

A business combination with associates

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18 views

Consolidated SOFP With Associate Question & Solution

A business combination with associates

Uploaded by

Joanna??
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ADVANCED FINANCIAL ACCOUNTING: INVESTMENTS IN ASSOCIATES: IAS 28

CONSOLIDATED STATEMENT OF FINANCIAL POSITION WITH ASSOCIATE

The statements of financial position of P Co, S Co and A Co, at 31 December 2022 are shown below.

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2022


P Co S Co A Co
ASSETS $'000 $'000 $'000
Non-Current Assets
Freehold Property 1,950 1,250 500
Plant and Machinery 795 375 285
Investments 1,500 – –
Total Non-Current Assets 4,245 1,625 785
Current Assets
Inventory 575 300 265
Trade Receivables 330 290 370
Cash 50 120 20
Total Current Assets 955 710 655
Total Assets 5,200 2,335 1,440
EQUITY AND LIABILITIES
Equity
Share Capital – $1 shares 2,000 1,000 750
Retained Earnings 1,460 885 390
3,460 1,885 1,140
Non-Current Liabilities
12% Loan Stock 500 100 -- –
Current Liabilities
Trade Payables 680 350 300
Bank Overdraft 560 – –
1,240 350 300
Total Equity and Liabilities 5,200 2,335 1,440
Additional Information:
1. P Co acquired 600,000 ordinary shares in S Co on 1 January 2017 for $1,100,000 when the retained earnings
of S Co were $200,000. Non-controlling interest is valued at full fair value. S Co shares were trading at $1.80 just
prior to the acquisition by P Co. P Co acquired 225,000 ordinary shares in A Co on 1 January 2021 for $500,000
when the retained earnings of A Co were $150,000.
2. At the date of acquisition of S Co, the fair value of its freehold property was considered to be $400,000 greater
than its value in S Co's statement of financial position. S Co had acquired the property in January 2007 and the
buildings element (comprising 50% of the total value) is depreciated on cost over 50 years.
3. S Co manufactures a component used by P Co. Transfers are made by S Co at cost plus 25%. P Co held $100,000
inventory of these components at 31 December 2022.
4. The goodwill in S Co is impaired and should be written off by 50%. An impairment loss of $92,000 is to be
recognized on the investment in A Co.

REQUIRED: Prepare the Consolidated Statement of Financial Position as at 31 December 2022.


1
ADVANCED FINANCIAL ACCOUNTING: INVESTMENTS IN ASSOCIATES: IAS 28

ANALYSIS OF EQUITY OF S Co. AS AT 31/12/22


Total At Acq Since Acq NCI
100% 60% 60% 40%
$'000 $'000 $'000 $'000
Equity Share Capital 1000 600 400
Retained Earnings 200 120 80
Fair Value Adjustment (FVA) 400 240 160
Total Equity 1600 960 640
Goodwill 120 40 80
Consideration & NCI 1720 1000 720
Post-acq Retained Earnings 685 411 274
FVA Depreciation (200/40 x 6) (30) (18) (12)
PUP in Inventory (20% x $100,000) (20) (12) (8)
Goodwill Impairment (50% x $120,000) (60) (36) (24)
575 345 950

INVESTMENT IN ASSOCIATE $'000


Investment at cost 500
Post acq Retained Earnings (390- 150) x 30% 72
Impairment Loss (92)
Closing Balance 480

GROUP RETAINED EARNINGS $'000


Parent 1460
Parent's share in S Co 345
Parent's share in Associate 72
Impairment Loss in Associate (92)
Closing Balance 1785

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