Consolidated statement of financial position

Test your understanding 9

1 LPD buys goods from its 75% owned subsidiary QPR. QPR earns
a mark-up of 25% on such transactions. At the group’s year end,
30 June 20X1 LPD had not yet taken delivery of goods, at a sales
value of $100,000, which were despatched by QPR on 29 June
20X1.
What would be the net increase in inventory in the
consolidated statement of financial position of the LPD group
at 30 June 20X1?
$_________
2 STV owns 80% of the ordinary share capital of its subsidiary
TUW. At the group’s year end, 28 February 20X1, STV’s payables
include $3,600 in respect of inventories sold by TUW. TUW’s
receivables include $6,700 in respect of inventories sold to STV.
Two days before the year end STV sent a payment of $3,100 to
TUW that was not recorded by the latter until two days after the
year end.
Which of the following adjustments would be necessary to
adjust for the cash in transit?
A $2,325 to be added to cash
B $3,100 to be added to payables
C $3,100 to be added to inventories
D $3,100 to be added to cash
3 Where the purchase price of an acquisition is less than the
aggregate fair value of the net assets acquired, which ONE of
the following accounting treatments of the difference is
required by IFRS 3 Business Combinations?
A Deduction from goodwill in the consolidated statement of
financial position
B Immediate recognition as a gain in the statement of changes
in equity
C Recognition in the statement of comprehensive income over
its useful life
D Immediate recognition as a gain in profit or loss.

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 Chapter 18

4 On 30 September 20X1 GHI purchased 100% of the ordinary

share capital of JKL for $1.8 million. The carrying amount of JKL’s
net assets at the date of acquisition was $1.35 million. A valuation
exercise showed that the fair value of JKL’s property, plant and
equipment at that date was $100,000 greater than its carrying
amount.
What is the goodwill on acquisition?
$________
5 Paul acquired 75% of the share capital of Simon on 1 January
20X1. On this date, the net assets of Simon were $80,000. The
non-controlling interest was calculated using fair value, which was
calculated as $40,000 at the date of acquisition. At 1 January
20X3 the net assets of Simon were $120,000 and goodwill had
been impaired by $10,000.
What was the value of the non-controlling interest at
1 January 20X3?
A $50,000
B $47,500
C $107,500
D $87,500
6 Peter acquired 90% of the share capital of Saul on 1 January
20X2. At this date, the fair value of Saul's net assets was
$100,000 and goodwill was correctly calculated at $30,000. At
1 January 20X5, the fair value of the net assets of Saul was
$140,000 and goodwill had been impaired by $20,000. At the
same date, Peter's retained earnings were $70,000. The non-
controlling interest is valued using the fair value method.
What is the total group retained earnings at 1 January 20X5?
A $60,000
B $75,000
C $88,000
D $100,000

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