This week, you will review financial statements of various parent organisations and the subsidiaries that they acquired. You will be asked to develop consolidated financial statements for the groups under different scenarios
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International Financial Reporting and Analysis
Week 7: Assignment
This week, you will review financial statements of various parent organisations and
the subsidiaries that they acquired. You will be asked to develop consolidated
financial statements for the groups under different scenarios.
On January 1, 20X1, Company X acquired 80% of the 15,000 £1 common shares in
Company 123 for £1.50 per share in cash and gained control. The retained earnings
of Company 123 were £5,000 at that time. The fair values of the non-current assets
in Company 123 were £1000 above their book value as shown below. The
statements of financial position of each company on the December 31, 20X1 were as
follows (all figures in £?000):
Goodwill Company 123 £ Group £ 30,000 £ 14,000 -- ? -- ? Investment in 123 18,000 -- -- Net current assets 12,000 7,000 ? Total assets 60,000 21,000 ? Share capital 34,000 15,000 ? Retained earnings 26,000 6,000 ? Non-controlling interest -60,000 -21,000 ?
Prepare the statement of financial position for the group as of December 31,
20X1. This will require that you compute the goodwill, the non-controlling
interest, assets/liabilities, and consolidated share capital and reserves. Your
completed statement of financial position should include the amounts of each
separate organisation, with a third column for the group (essentially filling in the question marks in the above statement of financial position). You should
also provide supporting notes to the statement of financial position that
document your calculations.
You are given information for two organisations, Acme plc and Generic plc. Acme plc
had acquired 80% of the common shares of Generic plc on December 31, 20X8. The
individual income statements for each organisation on December 31, 20X9 were as
follows (all figure in £?000):
£ Generic plc
£ Sales 100,000 60,000 ? Cost of goods sold 30,000 30,000 ? Gross profit 70,000 30,000 ? Expenses 29,541 20,000 ? Impairment of goodwill - Profits from operations 40,459 Dividends received 3,200 Profit before tax 43,659 10,000
? 10,000 ? Income tax expense 7,002 3,000 ? Net profit 36,657 7,000 ? Apportionment of profit
Ordinary shareholders in Acme ? Non-controlling interest in Generic plc
Total ? Additional information: During the year 20X9, Acme plc sold Generic plc goods at a cost of £5000
plus 20% mark-up. Generic had 50% of these goods still in stock at the end of
the year. £1,500 of goodwill is to be written off as an impairment loss. Generic plc issued £4,000 worth of dividends on common stock. Required:
Prepare an income statement (in the same format provided in the text) for the
group for the year ended December 31, 20X9. The income statement should
show the items for each organisation separately with a third column for the
group. You should also have supporting notes to the income statement that
document your calculations.
Use the Turnitin link below to submit your Assignment by Day 7.
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