Alpha has an 80% owned subsidiary called Beta. Their financial statements for the year ended March 31, 2006 are provided. To prepare consolidated financial statements, intercompany transactions need to be eliminated from the individual company statements. This includes a sale from Alpha to Beta of Rs. 500, a purchase by Alpha from Beta of Rs. 500, and receivables/payables between the companies of Rs. 30 each. The consolidated income statement shows total sales of Rs. 3,800, total expenses of Rs. 2,200, and a post-tax profit of Rs. 938. The consolidated balance sheet lists total assets of Rs. 3,370, total liabilities of Rs. 3,370, and accounts for the
Alpha has an 80% owned subsidiary called Beta. Their financial statements for the year ended March 31, 2006 are provided. To prepare consolidated financial statements, intercompany transactions need to be eliminated from the individual company statements. This includes a sale from Alpha to Beta of Rs. 500, a purchase by Alpha from Beta of Rs. 500, and receivables/payables between the companies of Rs. 30 each. The consolidated income statement shows total sales of Rs. 3,800, total expenses of Rs. 2,200, and a post-tax profit of Rs. 938. The consolidated balance sheet lists total assets of Rs. 3,370, total liabilities of Rs. 3,370, and accounts for the
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Alpha has an 80% owned subsidiary called Beta. Their financial statements for the year ended March 31, 2006 are provided. To prepare consolidated financial statements, intercompany transactions need to be eliminated from the individual company statements. This includes a sale from Alpha to Beta of Rs. 500, a purchase by Alpha from Beta of Rs. 500, and receivables/payables between the companies of Rs. 30 each. The consolidated income statement shows total sales of Rs. 3,800, total expenses of Rs. 2,200, and a post-tax profit of Rs. 938. The consolidated balance sheet lists total assets of Rs. 3,370, total liabilities of Rs. 3,370, and accounts for the
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
Alpha has 80 percent-owned subsidiary called Beta. Their income statement and balance sheet for a given year are as follows:
Income Statement for the year ended on 31/3/2006
Particulars Alpha Beta
Sales 3300* 1000 Cost of goods sold 1800 900** Other expenses 200 50 Profit before tax 1300 50 Tax @ 30% 390 15 Profit after tax*** 910 35 * includes sale of 500 to Beta, ** includes 500 for purchase from Alpha with no closing inventory, *** Transfer to Reserves & Surplus
Balance Sheet as at 31st March 2006
Particulars Alpha Beta
Cash 50 120 Receivables 350* 40 Inventories 600 100 Plant & equipment 1000 500 Investments 1000** 40 TOTAL ASSETS 3000 800 Payables 290 130@ Long term debt 800 135 Share Capital 1000 500 Reserves and Surplus 910 35 TOTAL LIABILITIES 3100 800 * includes 30 from Beta, ** includes 400 in Beta, @ includes 30 to Alpha
Prepare consolidated income statement and balance sheet.
SOLUTION
Consolidated Income Statement
Particulars Alpha Beta Adjustments Consolidated
Sales 3300* 1000 -500 3800 Cost of goods sold 1800 900** -500 2200 Other expenses 200 50 250 Profit before tax 1300 50 1350 Tax @ 30% 390 15 405 Profit after tax 910 35 -35 Minority interest 7 7 Profit after tax of 910 28 938 consolidated entity * includes sale of 500 to Beta, ** includes payment of 500 to Alpha for purchase
Consolidated Balance Sheet
Particulars Alpha Beta Adjustments Consolidated
Cash 50 120 170 Receivables 350* 40 -30 360 Inventories 600 100 700 Plant & equipment 1000 500 1500 Investments 1000** 40 -400 640 TOTAL ASSETS 3000 800 -430 3370 Payables 290 130@ -30 390 Long term debt 800 135 935 Minority interest 100+7 107 Capital 1000 500 -500# 1000 Reserves & Surplus 910 35 -7 938*** TOTAL LIABILITIES 3000 800 -430 3370 * includes 30 from Beta, ** includes 400 in Beta, @ includes 30 to Alpha # 400 for parent’s investment and 100 transferred to minority interest *** includes parent’s share in reserves and surplus of subsidiary