Advanced financial accounting - Lecture 38
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Advanced Financial Accounting
Lecture38
Question
Balance Sheet
as 31st December 2008
H (Rs)
S (Rs)
1,000
450
Investment in S.
550
Current assets
350
150
Total assets
1900
600
Share capital
1200
300
Reserves
600
200
Current liabilities
100
100
Total liabilities & equities
1900
600
Fixed assets
The Holding Co.(H) acquired 80% share of the Subsidiary Co. (S) on 31 st December 2008.
Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008.
Working
240 / 300 x 100 = 80%
Working
Cost of investment
550
Less Owner’s equity (500 x 80%)
400
Goodwill
150
Working
Holding Co. (Rs)
80%
(450 x 80%) 360
(150 x 80%) 120
480
(100 x 80%) (80)
400
Minority (Rs)
20%
(450 x 20%) 90
(150 x 20%) 30
120
(100 x 80%) (20)
100
Solution
Consolidate Balance Sheet
As 31st December 2008
Rs.
Fixed Assets
1450
Goodwill.
150
Current Assets
500
Total
2100
Share Capital
1200
Reserves
600
Minority Interest
100
Current Liabilities
200
2100
Balance Sheet
As 31st December 2008
H
S
Rs.
Rs.
1,000
450
Investment in S.
500
Current Assets
400
150
Total
1900
600
Share Capital
1200
300
Reserves
600
200
Current Liabilities
100
100
Total
1900
600
Fixed Assets
The Holding Co.(H) acquired 80% shares of the Subsidiary Co. (S) on 31 st January 2008 when it’s
reserves were worth Rs.120. Goodwill impaired up to Rs.33 during the year.
Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008.
Steps
1. Calculate holding and minority percentage
2. Identify pre and post acquisition elements in
owner’s equity of subsidiary Co.
3. Calculate goodwill
4. Calculate group reserve
5. Calculate minority interest
Steps1
Holding = 80%
Monitory = 20%
Steps2
Preacquisition
Postacquisition
Capital
300
0
Reserves
120
80
Total
420
80
Steps3
Goodwill
Cost of investment in subsidiary Co.
500
Less Preacquisition of OE of
subsidiary Co. (420x80%)
336
Goodwill
164
Less Goodwill impairment
33
131
Steps4
Group Reserves
All reserves of parent Co.
600
Post acquisition of subsidiary Co. (80x80%) 64
Impairment loss
(33 )
631
Working
Total
Owner’s 500
equity
Pre
acquisiti
on
420
Post
acquisiti
on
80
80%
(400)
(336)
(64)
20%
100
840
16
Solution
Consolidate Balance Sheet
As 31st December 2008
H
Rs.
Fixed Assets (1,000 +450)
1450
Goodwill.
131
Current Assets (400 + 150)
550
Total
2131
Share Capital
1200
Reserves
631
Minority Interest
100
Current Liabilities
200
2131
Question
Balance Sheet
As 31st December 2008
Fixed Assets
H
S
Rs.
Rs.
1,000
450
Investment in S.
500
Dividend Receivable
Other Current Liabilities
40
360
Total Current Assets
400
150
Total
1900
600
Share Capital
1200
300
Reserves
600
200
Dividend Payable
Other Current Liabilities
70
30
Current Liabilities
100
100
Total
1900
600
The Holding Co.(H) acquired 80% shares of the Subsidiary Co. (S) on 31 st January 2008 when it’s
reserves were worth Rs.120. Goodwill impaired upto Rs.33 during the year.
Required: Prepare the Consolidated Balance Sheet as at 31 st December 2008.
Consolidate Balance Sheet as 31st December 2008
H
Rs.
Fixed Assets (1000 + 450)
1450
Goodwill.
131
Current Assets (360+150)
510
Total
2091
Share Capital
1200
Reserves
631
Minority Interest
100
Other Current Liabilities
80
Dividend Payable by H
70
Dividend due to monitory
10
Current Liabilities
80
160
2091
