ACCA paperanswers section 1 introduction the group statement of financial position

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Section 1 Introducing the group statement of financial position
Answer 1 Lion
W1 Group structure
One year ago

Parent

75% / 25% NCI

Subsidiary
W2 Net assets of the subsidiary

At acquisition
At year-end
$m
$m
Ordinary shares
100
100
Retained earnings
60
200
160
300
The rise in the net assets is $140m = post-acquisition profits and allocated 75% to the parent w5 and
25% to the NCI w4
W3 Goodwill
$m
300
100

(160)
240

Parent's investment in the subsidiary
NCI at acquisition
Less the net assets at acquisition
Goodwill
W4 NCI
Opening balance
Plus the NCI% in the subsidiary's post-acquisition profits
NCI at the year-end

$m
100
35
135

(25% x 140)

W5 Retained earnings
Parent retained earnings
Plus the parent's % in the subsidiary's post-acquisition profits
Group statement of financial position

(75% x 140)

w3
(500 + 400)
(150 + 100)

$m
240
900
250
1,390

Ordinary shares
Retained earnings
NCI
Equity

w5
w4

650
265
135
1,050

Liabilities

(140 + 200)

Goodwill
Tangible assets
Current assets

340
1,390

A student's guide to Group Accounts by Tom Clendon, Second Edition, published by Kaplan
Publishing

$m
160
105
265


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Section 1 Introducing the group statement of financial position
Answer 2 Tiger
W1 Group structure
One year ago

Parent

60% /40% NCI

Subsidiary
W2 Net assets of the subsidiary

At acquisition
At year-end
$m
$m
Ordinary shares
200
200
Retained earnings

100
300
300
500
The rise in the net assets is $200m = post-acquisition profits and allocated 60% to the parent w5 and
40% to the NCI w4
W3 Goodwill
$m
900
50
(300)
650

Parent's investment in the subsidiary
NCI at acquisition
Less the net assets at acquisition
Goodwill
W4 NCI
Opening balance
Plus the NCI% in the subsidiary's post-acquisition profits
NCI at the year-end

$m
50
80
130

(40% x 200)

W5 Retained earnings

Parent retained earnings
Plus the parent's % in the subsidiary's post-acquisition profits

(60% x 200)

Group statement of financial position
Goodwill
Tangible assets
Current assets

w3
(1,500 + 600)
(100 + 100)

$m
650
2,100
200
2,950

Ordinary shares
Retained earnings
NCI
Equity

w5
w4

1,000
520

130
1,650

Liabilities

(1,100 + 200)

1,300
2.950

A student's guide to Group Accounts by Tom Clendon, Second Edition, published by Kaplan
Publishing

$m
400
120
520