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Additional information.
1)
At the date of acquisition all the assets and liabilities of XYZ PLC were reflected at fair value except
land which had a fair value of Rs.5,000,000 in excess of its carrying amount.
2)
The retained earnings at the date of acquisition was Rs. 10,000,000
3)
ABC Group measures the NCI at its proportionate share of the acquiree’s net identifiable assets.
4)
During the year ended 31 March 2018, XYZ PLC Purchased Rs.1,000,000 worth of goods from
ABC PLC. Out of these goods half (1/2) of them remained unsold in the premises of company XYZ.
The sales policy of ABC PLC is to add 25% of mark up to its cost.
5)
During the year ended 31 March 2018, ABC Purchased Rs.1,500,000 worth of goods from XYZ
PLC. Out of these goods one third (1/3) of them remained unsold in the premises of company ABC.
The sales policy of XYZ PLC is to keep 25% margin from sales price.
6)
On 1 April 2017, XYZ PLC sold a motor vehicle to ABC PLC for Rs.600,000, the carrying amount
of the motor vehicle at the date of sale stood at Rs.400,000. The remaining useful life of motor
vehicle at the date of sale was 4 years.
7)
As at 31 March 2018, the intra group receivables stood at Rs.1,000,000 and group payables stood at
Rs.800,000. The difference was due to the cash in transit.
8)
During the year company ABC PLC and XYZ PLC paid a dividend of Rs.300,000 and Rs.200,000
respectively.
9)
As at 31 March 2018, goodwill had been impaired by Rs.750,000.
Required:
Prepare the Consolidated Statement of Financial Position as at 31 March 2018.
Solution
Consolidation Procedure
(a)
Restate the assets and liabilities of the subsidiary at its fair value.
This requires the adjustments of Rs.5 million to the PPE and Fair value adjustments of reserve. (This
adjustment is indicated as A)
(b)
Parent's investment in the subsidiary and the parent's portion of net assets of the subsidiary are
eliminated against each other.
This require the elimination of Rs.50 million investment against the net assets of the subsidiary
(share capital Rs.40 x 75%, retained earnings Rs.10 x 75%, fair value adjustment Rs.5 x 75%)
(This adjustment is indicated as B)
(c)
Intra group transactions must be accounted for:
SLFRS 10- Consolidated Financial Statements
states
that all intragroup balances and transactions, and the resulting unrealized profits, should be
eliminated in full.
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