CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1. At 1 January 20Xl Woft acquired 75% of the share capital of Barco under a share exchange
of 4 shares in Woft for 5 shares in Barco. At that date the share capital of Barco consisted of
300,000 $1 ordinary shares. At acquisition date, the market value of 1 share of Woft is $1.5
per share.
What is the amount of consolidation transferred for the acquisition?

2. At 1 January 20X1 Galow acquired 60% of the share capital of Bary for $40,000. At that
date the share capital of Bary consisted of 40,000 ordinary shares of 0.5 cent each and its
reserves were $20,000. At 31 December 20X4 the reserves of Galow and Bary were as
follows:
The reserves at 31 December 20X4
Galow Co: $50,000
Bary Co: $25,000
At the date of acquisition the fair value of the non-controlling interest was valued at $35,000.
In the consolidated statement of financial position of Galow group at 31 December 20X4,
what amount should appear for non-controlling interest?

3. Median Co has owned 80% of Binz Co since incorporation. At 31 March 20X1 extracts from
their individual statement s of financial position were as follows:
Median Co: Share capital: $110,000; Retained earnings: $460,000
Binz Co: Share capital: $60,000; Retained earnings: $130,000
During the year ended 31 March 20X1, Binz Co had sold goods to Median Co for $60,000.
Median Co still had 30% of these goods in inventory at the year end. Binz Co uses a 25%
mark up on all goods.

4. Witch Co acquired 70% of the 200,000 equity shares of Wizard Co, its only subsidiary, on 1
April 20X8 when the retained earnings of Wizard Co were $450,000. The carrying amounts of
Wizard Co's net assets at the date of acquisition were equal to their fair values.
Witch Co measures non-controlling interest at fair value, based on share price. The market
value of Wizard Co shares at the date of acquisition was $1.75.
At 31 March 20X9 the retained earnings of Wizard Co were $750,000. At what amount
should the non-controlling interest appear in the consolidated statement of financial
position of Witch Co at 31 March 20X9?

5. On 1 July 20X5, Pull Co acquired 80% of the equity of Sat Co. At the date of acquisition,
goodwill was calculated as $10,000 and the non-controlling interest was measured at fair
value. In conducting the fair value exercise on Sat Co's net assets at acquisition; Pull Co
concluded that property, plant and equipment with a remaining life of ten years had a fair
value of $300,000 in excess of its carrying amount. Sat Co had not incorporated this fair value
adjustment into its individual financial statements.
At the reporting date of 31 December 20X5, the goodwill was fully impaired. For the year
ended 31 December 20X5, Sat Co reported a profit for the year of $200,000.
What is the Pull Group profit for the year ended 31 December 20X5 that is attributable to
non-controlling interests?
6. Boat Co acquired 60% of Anchor Co on 1 January 20X4. At the date of acquisition, the
carrying amount of Anchor Co's net assets were the same as their fair values, with the
exception of an item of machinery which had a carrying amount of $90,000, a fair value of
$160,000 and a remaining useful life of five years. Non-controlling interests are valued at fair
value.
What is the journal entry required to reflect this fair value adjustment in the consolidated
statement of financial position of Boat Co as at 31 December 20X6?

7. Hard acquired 80% of the ordinary share capital of Work on 1 Jan 20X9. The extract of
statement of profit or loss for the year-ended 31 March 20X9 is as follows:
Hard Work
$000 $000
Revenue 120,000 48,000
Cost of sales 84,000 40,000
After acquisition, Work sold goods to Hard for $3,000 at a markup of 50%. At 31 March 20X9,
20% of these goods are still in the warehouse of Hard.
What were the consolidated Revenue, COGS of Hard Group for the year ended 31 March
20X9?

8. At 1 January 20X4 Yogi acquired 80% of the share capital of Bear for $900,000. At that date
the share capital of Bear consisted of 1,000,000 ordinary shares of 50c each and its reserves
were $150,000. At acquisition date, the fair value of Net asset of Bear is $100,000 higher
than its carrying value. The fair value of the non-controlling interest was valued at $225,000
at the date of acquisition.
In the consolidated SOFP of Yogi Group at 31 December 20X8, what amount should appear
for goodwill?

9. At 1 January 20X6 Gary acquired 60% of the share capital of Barlow when its reserve is
$10,000. At 31 December 20X9 the reserves of Gary and Barlow were as follows:
Gary $40,000
Barlow $15,000
During the year, Gary sold inventories to Barlow for $30,000 at a margin of 20%. At 31 Dec
20X9, 30% of these goods are still in the warehouse of Barlow
In the consolidated SOFP of Gary Group at 31 December 20X9, what amount should appear
for group Retained earnings?

Question 10:

At the year end 31 December 20X7, Pat and Slap have the following statements of financial
position:

Pat Slap
$'000 $'000
Investment in Slap 3,500 –
PPE 5,000 2,000
Inventory 2,500 800
A/R 1,000 400
Other assets 2,000 2,800
 14,000 6,000

Share capital
5,500 1,000
($1 shares)
Share premium – 500
Retained earnings
1 Jan 20X7 4,000 1,000
Profit for 20X7 2,000 1,500
6,000 2,500
11,500 4,000
A/P 2,500 2,000
14,000 6,000

Notes:

1) Pat acquired 80% of the issued share capital of Slap on 1 Jan 20X7. The share price for
each of the non-controlling interest shares in Slap was $4 at the acquisition date. Acquisition-
date fair value of PPE of Slap is higher than its book value by $500,000. At acquisition, the
remaining useful life of the PPE was 20 years.

2) Slap Co sells plant with a remaining useful life of four years and a carrying amount of
$120,000 to Pat Co for $200,000 on 1 October 20X7.

3) After acquisition, Slap Co sold goods to Pat Co for $1,500,000 at a mark-up of 50%. 30% of
these goods were still unsold by Pat Co at the end of the year.

4) On 31 Dec 20X7, Pat Co owed Slap Co $800,000 for goods bought and this debt is included
in the trade payables of Pat Co and the trade receivables of Slap Co.

5) On 31 Dec 20X7, goodwill impairment showed that it is impaired by $20,000.

Requirements: Prepare consolidated statement of financial position for Pat group for the
year ended 31 Dec 20X7.

Question 11: The SOPLOCI of Portus Co and its subsidiary Sanus Co for the year ended 31
December 20X4 are as follows:

Portus Sanus
$’000 $’000

Revenue 28,500 11,800

Cost of sales (17,100) (7,000)
Gross profit 11,400 4,800
Gain on disposal 1,000
Expenses (5,400) (2,200)
 Interest income 90
Interest expense (490) (200)
PBT 6,600 2,400
Income tax expense (2,100) (800)
Profit for the year 4,500 1,600
OCI
Gain on property revaluation 900 400
TCI 5,400 2,000
Notes.

1) On 1 Jan 20X4 Portus Co purchased an 80% holding in Sanus Co for $13.8 million in cash.
Sanus's total comprehensive income for the year ended 31 December 20X4 was $2.0 million,
accruing evenly over the year.

2) At the date of acquisition, the fair value of Sanus's assets were equal to their carrying
amounts with the exception of one PE which has fair value higher than its carrying amount
by $1,200,000. The remaining useful life of the PE is 20 years at that Sanus Co has not
adjusted the carrying amounts as a result of the fair value exercise. Depreciation expense is
recorded as expenses line item in SOFP.

3) The NCI in Sanus Co is to be valued at its fair value of $3.2 million at the date of
acquisition. An impairment test conducted at the year-end revealed that the consolidated
goodwill of Sanus Co was impaired by $150,000.

4) After acquisition, Sanus Co sold goods to Portus Co for $200,000 at a gross profit margin of
40%. Half of the goods were still in Portus Co's inventories at the year end.

5) On 1 Oct 20X4, Portus sold a machine to Sanus. This machine has carrying amount of
$5,000,000 and is sold for $6,000,000. At that date, the remaining useful life of the machine
is 5 years.

(6) On 1 Apr 20X4 , Portus lend Sanus $1,200,000. As the result, in Portus separate financial
statement recorded an interest income of $90,000 from Sanus and in Sanus separate
financial statements recorded an interest expense of $90,000 to Portus.

Required: Prepare consolidated SOPLOCI and explain how the statement would differ if
Portus Co had sold the goods in Note (4) to Sanus.

Question 12: The following statements of profit or loss relate to Plate and its subsidiary
Saucer for the year ended 31 Dec 20X5:

Plate Saucer Plate Saucer

$'000 $'000 $'000 $'000
NCA 190 179 Revenue 1,500 700
 Investment in Saucer 175 COGS 775 370
Inventory 70 50 Gross profit 725 330
A/R 60 80 Gain on disposal 5
Cash 0 51 Distribution costs 220 120
Total assets 495 360 Admin expense 317 171
Share capital
Operating profit
(1$/share) 80 80 188 44
Share premium 70 20 Tax expense 37.6 8
Retained earnings PAT 150.4 36
- Opening RE 120 64
- This period RE 45 36
Loan note 120 110
Bank overdraft 12 0
A/P 48 50
Total liab + equity 495 360

The following notes are relevant to the preparation of the consolidated financial statements:

(i) Plate acquired 75% of the equity shares in Saucer on 1st Jan 20X4 when pre-acq RE of
Saucer is $30,000. Plate paid a total of $175,000 to acquire the shares. At acquisition date,
fair value of a machine of Saucer is $20,000 higher than it’s carrying value. At that time, the
machine has remaining useful life of 5 years. Depreciation expenses is recorded in COGS.

(ii) It is group accounting policy to account for NCI at its fair value. At the date of acquisition,
the market value of Saucer’s share is 2 $/share.

(iii) During the post-acquisition period, Saucer sold goods to Plate for $100,000 at a markup
of 25%. At 31 Dec 20X5, Plate still had half of these goods within its inventory.

(iv) After acquisition, on 1st Jan 20X5, Saucer sold a machine to Plate for $20,000. At that
date, carrying amount of the machine is $15,000 and its remaining useful life is 5 years.

(v) At 31 Dec 20X5, Plate has an account payable of $12,000 to Saucer.

(vi) At 31 Dec 20X5, Goodwill is tested for impairment and it is impaired by $10,000.

Required:
(1) Prepare the group’s consolidated statement of financial position as at 31 Dec 20X5
(2) Prepare the Group's consolidated statement of profit or loss as at 31 Dec 20X5

Question 13: The following statements of profit or loss relate to Potto and its subsidiary
Sotto for the year ended 31 Dec 20X1:

SOFP as at 31 Dec 20X1 SOPL for the year ended 31 Dec 20X1
Potto Sotto Potto Sotto
$'000 $'000 $'000 $'000
NCA 1427 460 Revenue 400 200
Acc depn -380 -80
 Investment in Sotto 225 COS 220 100
Inventory 196 95 GP 180 100
T/R 204 58 Gain on disposal 10
Cash 99 12 Distribution costs 40 20
Total 1771 545 Admin expense 90 30
Share capital 400 80 Operating profit 60 50
Share premium 212 55 Investment income from
Retained earnings Sotto 15
PBT 75 50
- opening RE 500 120
Tax 21 10
- this period RE 54 20 PAT 54 40
Loan 424 210
T/P 154 52
Interest accrual 6 3
Tax payable 21 5
Total 1771 545

The following notes are relevant to the preparation of the consolidated financial statements:

(i) Potto acquired 3 million of the equity shares of Sotto on 30 June 20X1 when Sotto had a
total of 4 million equity shares in issue. Potto paid a total of $225,000 to acquire the shares.
At acquisition date, fair value of non-current assets of Sotto is $10,000 higher than its
carrying value. The revalued NCA has remaining useful life of 5 years. Depn expense is
included in COGS

(ii) It is group accounting policy to account for NCI at its fair value. At the date of acquisition,
the fair value of the NCI in Sotto was $75,000

(iii) During the post-acquisition period, Sotto sold goods to Potto. The goods originally cost
$20,000 and they were sold to Potto at a mark-up of 25%. At 31 Dec 20X1, Potto still had 40%
of these goods within its inventory.

(iv) At 1 July 20X1, Potto sold a machine to Sotto. At that date, the machine has cost and
accumulated depreciation of $50,000 and $30,000 respectively and its remaining useful life is
5 years. The machine is sold at the price of $30,000. Depn expense is included in COGS

(v) At 31 Dec 20X1, Sotto has a trade payable of $5,000 to Potto.

(vi) At the year end, Sotto paid $20,000 of dividend to its shareholders including Potto.

Requirements:
(1) Prepare the group’s consolidated statement of profit or loss and OCI for the year ended
31 Dec 20X1
(2) Prepare the group's consolidated statement of financial position as at 31 Dec 20X1

Question 14: The following statements of profit or loss relate to Potto and its subsidiary
Sotto for the year ended 31 Dec 20X5:
 Potto Sotto Potto Sotto
$'00
$'000 $'000 $'000
0
NCA 2,133 886 Revenue 600 133
Acc depn -570 -160 COS 330 67
Investment in Sotto 408 0 Gross profit 270 66
Inventory 294 160 Distribution costs 60 13
A/R 306 96 Admin expense 120 20
Cash 149 24 Operating profit 90 33
Total 2,720 1,006 Investment income from Sotto 15 0
Share capital 600 160 PBT 105 33
Share premium 388 110 Tax 32 7
Retained earnings PAT 73 26
- Opening RE 750 190
- This period RE 73 6
Loan 636 420
A/P 231 104
Interest accrual 9 6
Tax payable 33 10
Total 2,720 1,006

The following notes are relevant to the preparation of the consolidated financial statements:

(i) Potto acquired 600,000 of the equity shares of Sotto on 30 June 20X5 when Sotto had a
total of 800,000 equity shares in issue. Potto paid a total of $408,000 to acquire the shares.
At acquisition date, fair value of a PPE of Sotto is $10,000 higher than its carrying value. The
remaining useful life of the PPE is 5 years. Depn expense is recorded in COS.

(ii) It is group accounting policy to account for NCI at its fair value. At the date of acquisition,
the market value of Sotto’s share is 0.52$/share.

(iii) During the post-acquisition period, Potto sold goods to Sotto for $30,000 at a profit
margin of 30%. At 31 Dec 20X5, Sotto still had 20% of these goods within its inventory.

(iv) At 31 Dec 20X5, Sotto has an account payable of $8,000 to Sotto.

(v) At 31 Dec 20X5, the goodwill is tested for impairment and it is impaired by $3,000.

Requirement:

(1) Prepare the group’s consolidated statement of financial position as at 31 Dec 20X5

(2) Prepare the Group's consolidated statement of profit or loss as at 31 Dec 20X5