DSC1630 GROUP FINANCIAL STATEMENT 3-Verified Q AND A.

1. The subsidiary paid or declared no dividends The following represent the abridged financial statements of A Ltd and its subsidiary, B Ltd: A Ltd B Ltd ASSETS Property, plant and equipment Investment in B Ltd – 80 000 shares at fair value 88 000 - (cost price: $88 000) Trade and other receivables Current account with B Ltd 10 000 - EQUITY AND LIABILITIES Share capital – ordinary shares (200 000/100 000 shares) Retained earnings Current account with A Ltd - 10 000 Trade and other payables Statement of profit or loss and other comprehensive income for the year ended 31 December 2019 A Ltd $ B Ltd $ Profit before tax Income tax expense (22 000) (10 000) PROFIT FOR THE YEAR Other comprehensive income for the year - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR Statement of changes in equity for the year ended 31 December 2019 Share capital A Ltd Share capital B Ltd Retained earnings A Ltd Retained earnings B Ltd Total A Ltd Total B Ltd Balance 1/1/2019 84 115 000 Profit for the year Dividend paidordinary (15 000) (15 000) Balance 31/12/2019 320 000 138 000 DSC1630 GROUP FINANCIAL STATEMENT 3-Verified Q AND A. A Ltd acquired its interest in B Ltd on 1 January 2017, on which date the retained earnings of B Ltd amounted to $10 000. Consider the carrying amount of the assets and liabilities of B Ltd to be equal to the fair value thereof on the date of acquisition. Required Prepare the consolidated financial statements. *Solution* Total At Since NCI 20% At acquisition $ $ $ $ Share capital 100 000 80 000 20 000 Retained earnings 000 110 000 88 000 22 000 - - - Consideration & NCI 110 000 88 000 22 000 Since acquisition To beginning of current year Retained earnings () 000 Current year Profit for the year 23 000 18 400 4 600 138 000 22 400 27 600 80 000/100 000*100% = 80% Pro forma journals Share capital 100 000 Retained earnings 10 000 Investment in B Ltd 88 000 Non-controlling interests 22 000 Elimination of owners' equity of B Ltd at acquisition Retained earnings 1 000 Non-controlling interests 1 000 Recording of non-controlling interests in B Ltd for the period ended 31 December 20.8 Non-controlling interests (SCI) 4 600 Non-controlling interests (SFP) 4 600 Recording of non-controlling interests in B Ltd for the current year Current account with A Ltd - B Ltd 10 000 Current account with B Ltd - A Ltd 10 000 Elimination of common items A LTD GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 20.9 $ ASSETS Non-current assets Property, plant and equipment (330 000 + 170 000) 500 000 Current assets Trade and other receivables (28 000 + 36 000) 64 000 Total assets 564 000