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Sol Man Chapter 4 Consolidated Fs Part 1 Acctg For Bus Combinations
Sol Man Chapter 4 Consolidated Fs Part 1 Acctg For Bus Combinations
Sol Man Chapter 4 Consolidated Fs Part 1 Acctg For Bus Combinations
1. A 6. B
2. D 7. D
3. C 8. A
4. A 9. C
5. B 10. C
11. A
1
2
Sunny Group
Consolidation Worksheet
4
2. Solutions:
(a)
6
)
Consolidated profit 81,000 32,000 113,000
(b)
The shares in the depreciation of fair value adjustments (FVA) are
computed as follows:
Total subsequent depreciation of fair value (Step 2) 30,000
Allocation:
Parent’s share in depreciation of fair value (30,000 x 60%) 18,000
NCI’s share in depreciation of fair value (30,000 x 40%) 12,000
As allocated 30,000
(c)
The shares in Axion’s profit before FVA are computed as follows:
Profit of Axion before fair value adjustments (Step 6) 20,000
Allocation:
Joy’s share (20,000 x 60%) 12,000
NCI’s share (20,000 x 40%) 8,000
As allocated: 20,000
Joy Group
Consolidated statement of financial position
As of December 31, 20x1
ASSETS
Cash (143,000 + 60,000) 203,000
Inventory (440,000 + 160,000 – 40K FVA + 40K
600,000
depn)
Building – net (560K + 160K + 50K FVA – 10K
760,000
depn)
120,00
Goodwill (Step 3)
0
TOTAL ASSETS 1,683,000
LIABILITIES AND EQUITY
Accounts payable (200,000 + 70,000) 270,000
Joy Group
Statement of profit or loss
For the year ended December 31, 20x1
a
This represents the depreciation of the fair value adjustment to the
inventory.
PROBLEM 3: EXERCISES
1. Solutions:
Requirement (a):
Goodwill is computed as follows:
Consideration transferred 360,000
NCI in the acquiree 240,000
Previously held equity interest in the acquire -
Total 600,000
Fair value of net identifiable assets acquired (310,000)
Goodwill 290,000
8
Inventory (144K – 96K) 48,000
Investment in subsidiary 360,000
Non-controlling interest 240,000
to adjust the subsidiary’s assets to
acquisition-date fair values, to eliminate
the investment in subsidiary and
subsidiary’s pre-combination equity, and
to recognize goodwill and non-controlling
interest in the consolidated financial
statements
9
Jeep Group
Consolidation Worksheet
10
TOTAL LIABILITES & 648,00
1,656,000 444,000 648,000 1,992,000
EQUITY 0
11
2. Solutions:
12
116,00
Goodwill attributable to NCI – Jan. 1, 20x1 0
Less: NCI’s share goodwill impairment -
116,00
Goodwill attributable to NCI – Dec. 31, 20x1 0
290,00
Goodwill, net – Dec. 31, 20x1 0
(a)
13
)
Dividend income from ( -
subsidiary ) N/A ( - )
Gain or loss on extinguishment ( -
of bonds ) ( - ) ( - )
Net consolidation ( -
adjustments ) ( - ) ( - )
100,00
Profits before FVA 0 70,000 170,000
Depreciation of FVA (b) 28,050 18,700 46,750
( -
Impairment loss on goodwill ) ( - ) ( - )
Consolidated profit 128,050 88,700 216,750
(b)
The shares in the depreciation of fair value adjustments (FVA) are
computed as follows:
Total subsequent depreciation of fair value (Step 2) 46,750
Allocation:
Parent’s share in depreciation of fair value (46,750 x 60%) 28,050
NCI’s share in depreciation of fair value (46,750 x 40%) 18,700
As allocated 46,750
(c)
The shares in Pirated’s profit before FVA are computed as follows:
Profit of Pirated before fair value adjustments (Step 6) 70,000
Allocation:
Original’s share (70,000 x 60%) 42,000
NCI’s share (70,000 x 40%) 28,000
As allocated: 70,000
Original Group
Consolidated statement of financial position
As of December 31, 20x1
ASSETS
Cash (120,000 + 160,000) 280,000
Inventory (440,000 + 180,000 – 48K FVA + 48K 620,000
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depn)
Building – net (630K + 210K + 10K FVA – 1,250 depn) 848,750
290,00
Goodwill (Step 3)
0
TOTAL ASSETS 2,038,750
LIABILITIES AND EQUITY
Accounts payable (34,000 + 132,000) 166,000
Original Group
Statement of profit or loss
For the year ended December 31, 20x1
a
This represents the depreciation of the fair value adjustment to the
inventory.
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1. A
Solution:
Consideration transferred (cost of investment) 430,000
80,00
NCI in the acquiree (400,000 x 20%) 0
Previously held equity interest in the acquire -
Total 510,000
Fair value of net identifiable assets acquired (400,000)*
Goodwill 110,000
2. B
Solution:
Total assets of parent 2,000,000
Total assets of subsidiary 750,000
Investment in subsidiary (430,000)
Fair value adjustments - net 50,000
Goodwill – net (See preceding question) 110,000
Effect of intercompany transactions -
Consolidated total assets 2,480,000
3. A
Solution:
Share capital of parent 1,000,000
Retained earnings or parent 250,000
Equity attributable to owners of the parent 1,250,000
Non-controlling interests (400,000 x 20%) 80,000
Consolidated total equity 1,330,000
5. A
Solution:
Consideration transferred 430,000
NCI in the acquiree -
Previously held equity interest in the acquire -
Total 430,000
Fair value of net identifiable assets acquired (400,000)*
Goodwill 30,000
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6. D
Solution:
Total assets of parent 2,000,000
Total assets of subsidiary 750,000
Investment in subsidiary (430,000)
Fair value adjustments - net 50,000
Goodwill – net (See preceding question) 30,000
Effect of intercompany transactions -
Consolidated total assets 2,400,000
7. C
Solution:
Total liabilities of parent 750,000
Total liabilities of subsidiary 400,000
Fair value adjustments - net -
Effect of intercompany transactions -
Consolidated total liabilities 1,150,000
8. D
Solution:
Share capital of parent 1,000,000
Retained earnings or parent 250,000
Equity attributable to owners of the parent 1,250,000
Non-controlling interests -
Consolidated total equity 1,250,000
9. A
Solution:
Consideration transferred (investment in subsidiary) 300,000
Non-controlling interest in the acquiree (360K x 20%) 72,000
Previously held equity interest in the acquire -
Total 372,000
Fair value of net identifiable assets acquired (360,000)
Goodwill 12,000
10. C
Solution:
1,672,00
Total assets of parent 0
Total assets of subsidiary 496,000
Investment in subsidiary (300,000)
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Fair value adjustments – net* 24,000
Goodwill – net** 12,000
Effect of intercompany transactions -
Consolidated total assets 1,904,000
11. B
Solution:
12. C
Solution:
Consolidated retained earnings
Square's retained earnings – Dec. 31, 20x1 440,000
Consolidation adjustments:
Square's share in the net change in Circle's 32,00
net assets (a) 0
Unrealized profits (Downstream only) -
Gain or loss on extinguishment of bonds -
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Impairment loss on goodwill attributable
-
to parent
Net consolidation adjustments 32,000
Consolidated ret. earnings – Dec. 31,
472,000
20x1
(a)
(40,000 net change in net assets x 80%) = 32,000
13. D
Solution:
14. B
Solution:
Subsidiar
Parent y Consolidated
400,00
Profits before adjustments 0 80,000 480,000
Consolidation adjustments:
Unrealized profits ( - ) ( - ) ( - )
Dividend income from
subsidiary ( - ) N/A ( - )
Gain or loss on extinguishment
of bonds ( - ) ( - ) ( - )
Net consolidation
adjustments ( - ) ( - ) ( - )
400,00
Profits before FVA 0 80,000 480,000
(18,200
Depreciation of FVA* ) (7,800) (26,000)
Impairment loss on goodwill ( - ) ( - ) ( - )
381,80
Consolidated profit 0 72,200 454,000
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Share of parent = 26,0000 x 70% = 18,200
Share of NCI = 26,000 x 30% = 7,800
15. C
Solution:
Owners Consoli-
of parent NCI dated
Parent's profit before FVA 400,000 N/A 400,000
Sh. in Sub.’s profit before FVA (c) 56,000 24,000 80,000
(7,800
Depreciation of FVA (18,200) ) (26,000)
Share in impairment loss on goodwill ( - ) ( - ) ( - )
Totals 437,800 16,200 454,000
(c)
The shares in Subsidiary’s profit before FVA are computed as
follows:
Profit of Subsidiary before fair value adjustments 80,000
Allocation:
Original’s share (80,000 x 70%) 56,000
NCI’s share (80,000 x 30%) 24,000
As allocated: 80,000
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