UNIVERSITY OF CAPE COAST

COLLEGE OF HUMANITIES AND LEGAL STUDIES

SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING
ADVANCED FINANCIAL REPORTING
CONSOLIDATED FINANCIAL STATEMENTS: COMPLEX GROUP STRUCTURES
Question 1
P Plc acquired its shares in S Plc on 1st January 2018 when the income surplus balance of S was GH¢
80,000; and S acquired its in SS Plc on 1st January 2019 when the income surplus balance of SS was
GH¢100,000. The draft statement of financial position of P, S and SS are presented below.

P Plc (GH¢) S Plc (GH¢) SS Plc (GH¢)

Tangible Assets 210,000 250,000 360,000
Investment (160,000 shares in S Plc) 240,000 -
Investment (120,000 shares in SS Plc) - 220,000
Current Assets 160,000 140,000 120,000
610,000 610,000 480,000

Stated Capital (GH¢1 each) 160,000 200,000 200,000

Income Surplus 390,000 340,000 230,000
Payables 60,000 70,000 50,000
610,000 610,000 480,000

It is group policy to measure the non-controlling interest at acquisition at its proportionate share of the fair
value of the subsidiary's net assets.
Required: Prepare the draft consolidated statement of financial position of P Group at 31 December,
2021.

Question 2
Assume the figures in question one are the same, except the following:
• S acquired SS on 1 January, 2018 and P acquired S on 1 January, 2019.
• On the date P acquired S, the retained earnings in SS were GH¢120,000.
All other information remains the same.
Required: Prepare the draft consolidated statement of financial position of P Group at 31 December,
2021.

Question 3
Assume the figures in question one are the same, except that the policy of the group is to measure the non-
controlling interest at fair value at the date of acquisition. The fair value of non-controlling interest in S on 1

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January, 2018 was GH¢58,000 and the fair value of the effective interest of non-controlling interest in SS
on 1 January, 2019 was GH¢160,000.
Required:
Prepare the draft consolidated statement of financial position of P Group at 31 December, 2021.

Question 4
The draft statements of financial position of Daniel, Craig and James as at 31 December 2018 are as
follows:
Daniel (GH¢) Craig (GH¢) James (GH¢)
Sundry Assets 180,000 80,000 80,000
Shares in subsidiary 120,000 80,000

300,000 160,000 80,000

Stated Capital (GH¢1 each) 200,000 100,000 50,000

Income Surplus 100,000 60,000 30,000
300,000 160,000 80,000
• Craig acquired 40,000 GH¢1 shares in James on 1 January 2018 when the retained earnings of
James amounted to GH¢25,000.
• Daniel acquired 75,000 GH¢1 shares in Craig on 30 June 2018 when the retained earnings of
Craig amounted to GH¢40,000 and those of James amounted to GH¢30,000.
It is group policy to value the non-controlling interest using the proportion of net assets method.

Required: Prepare the draft consolidated statement of financial position of D Group at 31

December, 2018.
Question 5
The following are the summarised statements of financial position of T, S and R as at 31 December 2018.
T (GH¢) S (GH¢) R (GH¢)
Non-current Assets 140,000 61,000 170,000
Investments 200,000 65,000
Current Assets 30,000 28,000 15,000

370,000 154,000 185,000

Stated Capital (GH¢1 each) 200,000 80,000 100,000

Income Surplus 150,000 60,000 80,000
Other Components of equity 10,000 8,000
Liabilities 10,000 6,000 5,000
370,000 154,000 185,000

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 • On 1 January 2017 S acquired 35,000 ordinary shares in R at a cost of GH¢65,000 when the
retained earnings of R amounted GH¢40,000.

• On 1 January 2018 T acquired 64,000 shares in S at a cost of GH¢120,000 and 40,000 shares in R
at a cost of GH¢80,000. On this date, the retained earnings of S and R amounted to GH¢50,000
and GH¢60,000 respectively. S also had other components of equity of GH¢3,000. The fair value
of the NCI in S on 1 January 2018 was GH¢27,000. The fair value of the NCI (direct and indirect) in
R was GH¢56,000. The NCI is measured using the full goodwill method. At the date of reporting,
goodwill has not been impaired.
Required: Prepare the consolidated statement of financial position of T Group as at 31 December,
2018.

Question 6
ELA acquired its shareholding in Jay on 1 January 2018 and Jay acquired its shareholding in Joy on 1 January
2019. The following financial statements relate to the three entities.
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 19
ELA JAY JOY
GH¢'000 GH¢'000 GH¢'000
Investment in Jay (70%) 40,000
Investment in Joy (60%) 20,000
Other Assets 35,000 15,000 20,000
75,000 35,000 20,000

Equity Capital 40,000 25,000 10,000

Retained Earnings 22,000 7,000 6,000
Liabilities 13,000 3,000 4,000
75,000 35,000 20,000

STATEMENT OF PROFIT OR LOSS FOR THE YEAR 31 DECEMBER 19

ELA JAY JOY
GH¢'000 GH¢'000 GH¢'000
Revenue 350,000 50,000 85,000
Cost of Sales - 345,000 - 45,000 - 83,000
Gross Profit 5,000 5,000 2,000
Tax - 3,000 - 2,000 - 1,000
Profit for the year 2,000 3,000 1,000
The following information is relevant to the preparation of the group financial statements.
i) The retained earnings and fair values of non-controlling interest based on effective shareholdings were:

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 JAY JOY
GH¢'000 GH¢'000
Retained earnings-1 January 2019 4,000 5,000
Retained earnings-1 January 2018 2,000 3,000

Fair value-1 January 2019 10,000 12,000

Fair value-1 January 2018 6,000 8,000

ii) During the year, Joy sold goods to Jay for GH¢5 million. By the end of the year, Jay sold all the goods to
third parties.
iii) The goodwill of Jay is impaired at the year-end by GH¢2 million. There were no impairment losses prior
to this date. The ELA measures non-controlling interest at fair value.
Required:
Prepare the consolidated statement of financial position and consolidated statement of profit or loss for
ELA group at 31 December 2019.

Question 7
AMY purchased 480 million shares in EVY on 1 January 2019 and EVY acquired 300 million shares in ANDY
on 1 January 2018. The following financial statements relate to the three entities.
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 19
AMY EVY ANDY
GH¢'000 GH¢'000 GH¢'000
Investment in EVY 1,600,000
Investment in ANDY 800,000
Other Assets 2,400,000 1,000,000 1,200,000
4,000,000 1,800,000 1,200,000

Equity Capital (GH¢1) 800,000 600,000 400,000

Retained Earnings 1,100,000 1,100,000 500,000
Liabilities 2,100,000 100,000 300,000
4,000,000 1,800,000 1,200,000

The following information is relevant to the preparation of the group financial statements.
i) The retained earnings and fair values of non-controlling interest based on effective shareholdings were:

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 EVY ANDY
GH¢'000 GH¢'000
Retained earnings-1 January 2019 300,000 240,000
Retained earnings-1 January 2018 280,000 190,000

Fair value-1 January 2019 240,000 280,000

Fair value-1 January 2018 200,000 160,000
ii) At the date of acquisition, the carrying values of assets and liabilities were the same as their fair values
with two exceptions. ANDY’s land had a fair value in excess of its carrying value of GH¢40 million. The
fair value of EVY’s investment in ANDY at 1 January 2019 was GH¢820 million.
iii) Non-controlling interest is measured at fair value. There are no impairment losses to recognise.
Required: Prepare the consolidated statement of financial position for AMY group as at 31 December 2019.

Question 8
The statement of financial position of three entities are as follows:
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 19
ALPHA BETA GAMMA
GH¢'000 GH¢'000 GH¢'000
Investment in EVY 400 120
Other Assets 1,000 680 350
1,400 800 350

Equity Capital (GH¢1) 200 100 50

Retained Earnings 800 500 200
Liabilities 400 200 100
1,400 800 350
The following information is available
• Alpha acquired an 80% shareholding in Beta for consideration of GH¢350,000.
• Beta acquired a 60% shareholding in Gamma for consideration of GH¢120,000.
• Alpha acquired 20% shareholding in Gamma for a consideration of GH¢50,000.
• All investments were made at the same date and the carrying values of assets and liabilities were
same as their fair values.
• The retained earnings and fair values of non-controlling interest based on effective shareholdings
were:
BETA GAMMA
GH¢'000 GH¢'000
Retained earnings 200 75
Fair values of NCI 90 50

• Non-controlling interest is measured at fair value and there were no impairment losses.
Required:
Prepare the consolidated statement of financial position for AMY group as at 31 December 2019.

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