Consolidation Plateau ACCA Decemer 2007 1 Step 1

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Consolidation Plateau ACCA Decemer 2007 1

Consolidation Plateau ACCA Decemer 2007 1

Step 1 Copy out the question P S PPE 18400 10400 Investments 13250 0

Step 1 Copy out the question P S PPE 18400 10400 Investments 13250 0 Fval Inv 6500 30 Inventory 6900 6200 Receivables 3200 1500 Bank 0 0 48250 18100 Adjustments 2 Consolidated

Step 1 Copy out the question P S Equity 10000 4000 Ret Earnings 7%

Step 1 Copy out the question P S Equity 10000 4000 Ret Earnings 7% Loan 16000 +9250 5000 6500+ 2400 1000 Payables 8000 4200 Overdraft 0 0 48250 18100 Adjustments Consolidated 3

Consolidation Format- Goodwill What did we pay? What did we get? Date 1 October

Consolidation Format- Goodwill What did we pay? What did we get? Date 1 October 2006 Acquired 3 m shares, =75% Paid 3 m x 0. 5 x 6= 9 m Cash 1. 25 x 3 m = 3. 75 m Total paid $12. 75 4

Consolidation Format- Goodwill Paid $12. 75 m + NCIs $3. 25 m = $16

Consolidation Format- Goodwill Paid $12. 75 m + NCIs $3. 25 m = $16 m Received Shares 4 m Retained earnings = 6. 5 m Fair value adjustments = $(0. 5)m (note 1) Goodwill = 16 - 10= 6 m on acquisition 5

Consolidation Format- S Retained Earnings On Acquisition 30 September 2007 Share Capital 4000 Retained

Consolidation Format- S Retained Earnings On Acquisition 30 September 2007 Share Capital 4000 Retained Earnings 6500 8900 Fair value adjustment (500) Interco Profit Total (300) 10000 12600 6

Consolidation Format- Retained Earnings P = 25250 Acquisition costs (500) Fair V investments 2500

Consolidation Format- Retained Earnings P = 25250 Acquisition costs (500) Fair V investments 2500 S post acq 2600 x 75%= 1950 Axle 1500 Total 30700 7

Consolidation Format- NCI Value at acq 3250 Post acq Res (2600 x 25%) 650

Consolidation Format- NCI Value at acq 3250 Post acq Res (2600 x 25%) 650 Total 3900 8

P S PPE 18400 10400 Investments 13250 0 Adjustments Consolidated 28800 (13250) 0 Goodwill

P S PPE 18400 10400 Investments 13250 0 Adjustments Consolidated 28800 (13250) 0 Goodwill 6000 Axle 9000+1500 10500 2500 9000 (300) 12800 Fval Inv 6500 Inventory 6900 6200 Receivables 3200 1500 Bank 0 0 48250 18100 4700 9 71800

Equity P S 10000 4000 Share Premium Ret Earnings 16000 +9250 7% Loan 5000

Equity P S 10000 4000 Share Premium Ret Earnings 16000 +9250 7% Loan 5000 Payables 8000 NCI Overdraft 0 48250 Adjustment Consolidated s -4000 +1500 11500 7500(1. 5 mx 5) 6500+ 2400 1000 4200 0 18100 7500 30700 6000 12200 3900 10 71800