FAC2602 Learning Unit 5 2022.

FAC2602 Learning Unit 5 2022. The following represent the abridged financial statements of X Ltd and its subsidiary, Y Ltd: STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 20.9 X Ltd Y Ltd R R ASSETS Property, plant and equipment Investment in Y Ltd – 30 000 ordinary shares at fair value (cost price: R152 500) 152 500 – Trade and other receivables Bank 3 EQUITY AND LIABILITIES Share capital – ordinary shares (50 000/40 000 shares) Retained earnings Trade and other payables X Ltd acquired its interest in Y Ltd on 1 January 20.7, on which date Y Ltd's retained earnings amounted to R110 000. Consider the carrying amount of the assets and liabilities of Y Ltd to be equal to the fair value thereof at the date of acquisition. STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20.9 X Ltd Y Ltd R R Gross profit Dividends received from subsidiary 7 500 - Profit before tax Income tax expense (34 500) (35 000) PROFIT FOR THE YEAR Other comprehensive income for the year - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 20.9 Share capital Retained earnings Total X Ltd Y Ltd X Ltd Y Ltd X Ltd Y Ltd R R R R R R Balance at 1 January 20.9 Changes in equity for 20.9 Total comprehensive income for the year Profit for the year Dividend paid: ordinary (20 000) (10 000) (20 000) (10 000) Balance at 31 December 20.9 370 000 270 000 4 To draft the consolidated financial statements of the X Ltd Group for the year ended 31 December 20.9 we would proceed as follows: SOLUTION 1 1. Analysis of owner's equity of Y Ltd At acquisition Share capital Retained earnings Equity represented by goodwill - parent Consideration and NCI Since acquisition • To beginning of current year Retained earnings () • Current year Profit for the year Dividends paid Total X Ltd 75%* NCI 25% At Since R 80 000 110 000 R 60 000 82 500 R R 20 000 27 500 190 000 10 000 142 500 10 000 15 000(2) 52 500 (7 500) 47 500(a) - 200 000 20 000 70 000 (10 000) 5 000(a) 17 500(1)/(b) (2 500)(c) 500(3)/(d) * 30 000 shares ÷ 40 000 shares = 75% interest