Chapter 17 Consolidated Fs Part 1 Afar Part 2
Chapter 17 Consolidated Fs Part 1 Afar Part 2
Chapter 17
Consolidated Financial Statements (Part 1)
1. A 6. B
2. D 7. D
3. C 8. A
4. A 9. C
5. B 10. C
11. A
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Sunny Group
Consolidation Worksheet
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2. Solutions:
(a)
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)
Consolidated profit 81,000 32,000 113,000
(b)
The shares in the depreciation of fair value adjustments (FVA) are
computed as follows:
Total subsequent depreciation of fair value (Step 2) 30,000
Allocation:
Parent’s share in depreciation of fair value (30,000 x 60%) 18,000
NCI’s share in depreciation of fair value (30,000 x 40%) 12,000
As allocated 30,000
(c)
The shares in Axion’s profit before FVA are computed as follows:
Profit of Axion before fair value adjustments (Step 6) 20,000
Allocation:
Joy’s share (20,000 x 60%) 12,000
NCI’s share (20,000 x 40%) 8,000
As allocated: 20,000
Joy Group
Consolidated statement of financial position
As of December 31, 20x1
ASSETS
Cash (143,000 + 60,000) 203,000
Inventory (440,000 + 160,000 – 40K FVA + 40K
600,000
depn)
Building – net (560K + 160K + 50K FVA – 10K
760,000
depn)
120,00
Goodwill (Step 3)
0
TOTAL ASSETS 1,683,000
Joy Group
Statement of profit or loss
For the year ended December 31, 20x1
Sales (300,000 + 120,000) 420,000
Cost of goods sold (165,000 + 72,000 – 40K depn of
FVAa) (197,000)
Gross profit 223,000
Depreciation expense (40,000 + 10,000 + 10K depn of
FVA) (60,000)
Distribution costs (32,000 + 18,000) (50,000)
Profit for the year 113,000
Profit attributable to:
Owners of the parent (Step 7) 93,000
Non-controlling interests (Step 7) 20,000
113,000
a
This represents the depreciation of the fair value adjustment to the
inventory.
2. B
Solution:
Total assets of parent 2,000,000
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3. A
Solution:
Share capital of parent 1,000,000
Retained earnings or parent 250,000
Equity attributable to owners of the parent 1,250,000
Non-controlling interests (400,000 x 20%) 80,000
Consolidated total equity 1,330,000
5. A
Solution:
Consideration transferred 430,000
NCI in the acquiree -
Previously held equity interest in the acquire -
Total 430,000
Fair value of net identifiable assets acquired (400,000)*
Goodwill 30,000
6. D
Solution:
Total assets of parent 2,000,000
Total assets of subsidiary 750,000
Investment in subsidiary (430,000)
Fair value adjustments - net 50,000
Goodwill – net (See preceding question) 30,000
Effect of intercompany transactions -
Consolidated total assets 2,400,000
7. C
Solution:
Total liabilities of parent 750,000
Total liabilities of subsidiary 400,000
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8. D
Solution:
Share capital of parent 1,000,000
Retained earnings or parent 250,000
Equity attributable to owners of the parent 1,250,000
Non-controlling interests -
Consolidated total equity 1,250,000
9. A
Solution:
Consideration transferred (investment in subsidiary) 300,000
Non-controlling interest in the acquiree (360K x 20%) 72,000
Previously held equity interest in the acquire -
Total 372,000
Fair value of net identifiable assets acquired (360,000)
Goodwill 12,000
10. C
Solution:
1,672,00
Total assets of parent 0
Total assets of subsidiary 496,000
Investment in subsidiary (300,000)
Fair value adjustments – net* 24,000
Goodwill – net** 12,000
Effect of intercompany transactions -
Consolidated total assets 1,904,000
11. B
Solution:
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12. C
Solution:
Consolidated retained earnings
Square's retained earnings – Dec. 31, 20x1 440,000
Consolidation adjustments:
Square's share in the net change in Circle's 32,00
net assets (a) 0
Unrealized profits (Downstream only) -
Gain or loss on extinguishment of bonds -
Impairment loss on goodwill attributable
-
to parent
Net consolidation adjustments 32,000
Consolidated ret. earnings – Dec. 31,
472,000
20x1
(a)
(40,000 net change in net assets x 80%) = 32,000
13. D
Solution:
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14. B
Solution:
Subsidiar
Parent y Consolidated
400,00
Profits before adjustments 0 80,000 480,000
Consolidation adjustments:
Unrealized profits ( - ) ( - ) ( - )
Dividend income from
subsidiary ( - ) N/A ( - )
Gain or loss on extinguishment
of bonds ( - ) ( - ) ( - )
Net consolidation
adjustments ( - ) ( - ) ( - )
400,00
Profits before FVA 0 80,000 480,000
(18,200
Depreciation of FVA* ) (7,800) (26,000)
Impairment loss on goodwill ( - ) ( - ) ( - )
381,80
Consolidated profit 0 72,200 454,000
15. C
Solution:
Owners Consoli-
of parent NCI dated
Parent's profit before FVA 400,000 N/A 400,000
Sh. in Sub.’s profit before FVA (c) 56,000 24,000 80,000
Depreciation of FVA (18,200) (7,800) (26,000)
Share in impairment loss on goodwill ( - ) ( - ) ( - )
Totals 437,800 16,200 454,000
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(c)
The shares in Subsidiary’s profit before FVA are computed as
follows:
Profit of Subsidiary before fair value adjustments 80,000
Allocation:
Original’s share (80,000 x 70%) 56,000
NCI’s share (80,000 x 30%) 24,000
As allocated: 80,000
18. A
Solution:
Consideration transferred (cost of investment in sub.) 300,000
Previously held equity interest in the acquiree -
Total 300,000
Less: Parent's proportionate share in the net assets of
subsidiary (360,000 x 75%) (270,000)
Goodwill attrib. to owners of parent - acquisition date 30,000
Less: Parent's share in goodwill impairment -
Goodwill attrib. to owners of parent 30,000
19. C
Solution:
1,672,00
Total assets of parent 0
Total assets of subsidiary 496,000
Investment in subsidiary (300,000)
Fair value adjustments – net* 50,000
Goodwill – net 40,000
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20. B
Solution:
Analysis of net assets
Consoli-
Acquisition Net
Subsidiary date
dation
change
date
Net assets at carrying amts. 300,000 376,000
FVA at acquisition 60,000 60,000
Subsequent depn. of FVA NIL (10,000)
Unrealized profits (Upstream
only)
NIL -
Net assets at fair value 360,000 426,000 66,000
21. A
Solution:
Consolidated retained earnings
Parent's retained earnings – Dec. 31, 20x1 440,000
Consolidation adjustments:
Parent's share in the net change in Sub.'s net 49,50
assets (a) 0
Unrealized profits (Downstream only) -
Gain or loss on extinguishment of bonds -
Impairment loss on goodwill attributable
-
to parent
Net consolidation adjustments 49,500
Consolidated ret. earnings – Dec. 31,
489,500
20x1
(a)
(66,000 net change in net assets x 75%) = 49,500
22. A
Solution:
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23. B
Solution:
Subsidiar
Parent y Consolidated
240,00
Profits before adjustments 0 80,000 320,000
Consolidation adjustments:
Unrealized profits ( - ) ( - ) ( - )
Dividend income from
subsidiary ( - ) N/A ( - )
Gain or loss on extinguishment
of bonds ( - ) ( - ) ( - )
Net consolidation
adjustments ( - ) ( - ) ( - )
240,00
Profits before FVA 0 80,000 320,000
Depreciation of FVA* (7,500) (2,500) (10,000)
Impairment loss on goodwill ( - ) ( - ) ( - )
232,50
Consolidated profit 0 77,500 310,000
24. A
Solution:
Owners Consoli-
of parent NCI dated
Parent's profit before FVA 240,000 N/A 240,000
Sh. in Sub.’s profit before FVA (c) 60,000 20,000 80,000
Depreciation of FVA (7,500) (2,500) (10,000)
Share in impairment loss on goodwill ( - ) ( - ) ( - )
Totals 292,500 17,500 310,000
(c)
The shares in Subsidiary’s profit before FVA are computed as
follows:
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1. Solutions:
Requirement (a):
Goodwill is computed as follows:
Consideration transferred 360,000
NCI in the acquiree 240,000
Previously held equity interest in the acquire -
Total 600,000
Fair value of net identifiable assets acquired (310,000)
Goodwill 290,000
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Jeep Group
Consolidation Worksheet
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2. Solutions:
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290,00
Goodwill, net – Dec. 31, 20x1 0
(a)
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subsidiary )
Gain or loss on extinguishment ( -
of bonds ) ( - ) ( - )
Net consolidation ( -
adjustments ) ( - ) ( - )
100,00
Profits before FVA 0 70,000 170,000
Depreciation of FVA (b) 28,050 18,700 46,750
( -
Impairment loss on goodwill ) ( - ) ( - )
Consolidated profit 128,050 88,700 216,750
(b)
The shares in the depreciation of fair value adjustments (FVA) are
computed as follows:
Total subsequent depreciation of fair value (Step 2) 46,750
Allocation:
Parent’s share in depreciation of fair value (46,750 x 60%) 28,050
NCI’s share in depreciation of fair value (46,750 x 40%) 18,700
As allocated 46,750
(c)
The shares in Pirated’s profit before FVA are computed as follows:
Profit of Pirated before fair value adjustments (Step 6) 70,000
Allocation:
Original’s share (70,000 x 60%) 42,000
NCI’s share (70,000 x 40%) 28,000
As allocated: 70,000
Original Group
Consolidated statement of financial position
As of December 31, 20x1
ASSETS
Cash (120,000 + 160,000) 280,000
Inventory (440,000 + 180,000 – 48K FVA + 48K
620,000
depn)
Building – net (630K + 210K + 10K FVA – 1,250 depn) 848,750
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290,00
Goodwill (Step 3)
0
TOTAL ASSETS 2,038,750
Original Group
Statement of profit or loss
For the year ended December 31, 20x1
Sales (300,000 + 120,000) 420,000
Cost of goods sold (165,000 + 72,000 – 40K depn of
FVAa) (197,000)
Gross profit 223,000
Depreciation expense (40,000 + 10,000 + 10K depn of
FVA) (60,000)
Distribution costs (32,000 + 18,000) (50,000)
Profit for the year 113,000
Profit attributable to:
Owners of the parent (Step 7) 93,000
Non-controlling interests (Step 7) 20,000
113,000
a
This represents the depreciation of the fair value adjustment to the
inventory.
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