FR-Ch-18 (Consolidated ,SOFP)

HX acquired 80% of SA’s 100,000 equity shares on 1 July 20X0 for $140,000. On 1 July 20X0 the fair value of SA’s identifiable net assets was $126,000. The fair value of non-controlling interest on acquisition is based on SA’s share price, which was $1.70.

Which TWO of the following values for goodwill are acceptable valuations in accordance with IFRS 3 Business Combinations?

• $0

• 1. $14,000

• 1. $39,200

• 1. $48,000

At 1 January 20X1 Barley acquired 100% of the share capital of Corn for $1,400,000. At that date the share capital of Corn consisted of 600,000 ordinary shares of 50 cents each and its retained earnings were $50,000.

On acquisition Corn had some assets whose carrying amount was $230,000 but the fair value was $250,000.

What was goodwill on acquisition?

• $1,030,000.

• $1,020,000.

• $2,030,000.

• $1,030,001

Varsity acquired 80,000 ordinary shares in Weston some years ago. Extracts from the statements of financial position of the two companies as at 30 September 20X7 are as follows:
On acquisition the retained earnings of Weston showed a deficit of $10,000.

Goodwill has been impaired by $15,000 since acquisition. Non-controlling interest is measured at fair value on acquisition.

What were the consolidated retained earnings of Varsity on 30 September 20X7?

• 1. $102,000

• 1. $115,000

• 1. $118,000

• 1. $125,000

HW sold goods to SD, its 100% owned subsidiary on 1 February 20X1. The goods were sold to SD for $48,000. HW made a profit of 33.33% on the original cost of the goods.

At the year-end, 30 June 20X1, 40% of the goods had been sold by SD; the remainder was still in SD’s inventory and SD had not paid for any of the goods.

Use the amounts below to ensure that the following statement correctly represents the adjustments required in HW group’s consolidated statement of financial position at 30 June 20X1.
(1) Reduce inventory and retained earnings by
(2) Reduce payables and receivables by

• (1) $7,200
  (2) $48,000.

• (1) $7,300
  (2) $48,100.

• (1) $7,800
  (2) $48,300.

• (1) $8,200
  (2) $58,000.

Salt owns 100% of Pepper. During the year Salt sold goods to Pepper for a sales price of $1,044,000, generating a margin of 25%. 40% of these goods had been sold on by Pepper to external parties at the end of the reporting period.

What adjustment for unrealised profit should be made in preparing Salt’s consolidated financial statements? (Answer in $ in the Answer box)

• $156600

• $256600

• $256601

• $256603

Identify, by clicking on the relevant box in the table below, whether each of the following statements regarding the preparation of a consolidated statement of financial position is correct.
(1) All intra-group balances should be eliminated
(2) Intra-group profit in year-end inventory should be eliminated
(3) Closing inventory held by subsidiaries needs to be included at fair value

• (1) Correct
  (2) Correct
  (3) Incorrect

• (1) Correct
  (2) Correct
  (3) correct

• (1) InCorrect
  (2) Correct
  (3) Incorrect

• (1) Correct
  (2) InCorrect
  (3) Incorrect

Maxwell owns all the share capital of Knight. The following information is extracted from the individual company statements of financial position as at 31 December 20X1:
Included in Maxwell’s purchase ledger is a balance in respect of Knight of $20,000. The balance on Maxwell’s account in the sales ledger of Knight is $22,000. The difference between those figures is accounted for by cash in transit.

there are no other intra-group balances, what is the carrying amount of the net current assets in the consolidated statement of financial position of Maxwell?

• 1. $368,000

• 1. $370,000

• 1. $388,000

• 1. $390,000

A parent sold goods to its wholly owned subsidiary for $1,800 representing cost plus 20%. At the year-end two-thirds of the goods were still in inventory.

What is the amount of unrealised profit at the year end?

• 1. $360

• 1. $300

• 1. $240

• 1. $200

Bass acquired its 70% holding in Miller many years ago. At 31 December 20X7 Miller had inventory with a carrying amount of $15,000 purchased from Bass at cost plus 25%.

What are the effects on non-controlling interest and retained earnings in the consolidated statement of financial position after dealing with the consolidation adjustment required for inventory?

(Select your answer using the rectangular buttons)

• A

• B

• C

• D

Tazer, a parent, acquired Lowdown, an unincorporated entity, for $2.8m. A fair value exercise performed on Lowdown’s net assets at the date of purchase showed:
How should the purchase of Lowdown be reflected in Tazer’s consolidated statement of financial position?

• 1. Record the net assets at their values as shown above and credit profit or loss with $1.2m

• 1. Record the net assets at their values as shown above and credit Tazer’s consolidated goodwill with $1.2m

• 1. Write off the intangible asset ($0.5m), record the remaining net assets at their values as shown above and credit profit or loss with $0.7m

• 1. Record the purchase as a financial asset investment at $2.8m