F7 Group Accounts: Comprehensive Example

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F7 Group Accounts: Comprehensive Example

Agne acquired 72% of the equity shares of Dace on 30 June 2009 for $250,000.

On 31 August 2009, the Statements of Financial Position were:

1. At the date of acquisition, some of Dace’s inventory had a fair value $16,000 in excess of its carrying value. All had been sold before the year end.
2. On 31 July 2009, Dace had sold an item of property, plant and equipment to Agne realising a profit on sale of $20,000. Agne was depreciating this item over its remaining useful life of 4 years. It is group policy to charge a full year’s depreciation in the year of purchase, and none in the year of sale.
3. On 29 August, Agne had despatched goods to Dace at a transfer value of $26,000. Agne sells goods at a mark up of 30%. Dace had sold a quarter of these goods by the Statement of Financial Position date.
4. The current accounts did not reconcile at the year end because Dace had sent a payment of $5,000 to Agne, but Agne only received it on 3 September 2009. Before any necessary adjustment, the intra group balance in Dace’s records showed an amount owing to Agne of $12,000.
5. Goodwill is impaired by 25%.
6. Both entities have declared but not yet accounted for a dividend of 5c per $1 share.
7. The directors valued the nci at $87,667 at date of acquisition

Prepare a Consolidated Statement of Financial Position for the Agne Group as at 31 August 2009.


  1. avatar says

    Thanks for the nice lecture, dear tutor!
    What I find confusing is the fact that 4 000 post acq is divided again by 10 and 2 months. I consider they relate to
    the 2 months post acq period and there is no need to apportion them again on a time basis.
    I understand FV adjustment of 20 000 and 16 000.
    Thank you!

  2. avatar says

    Good Morning

    You indicated that the new thinking is that we cannot assume that dividends accrued proportionately/evenly throughout the year and the logic seems sound however in the question above we apportioned the earnings pre and pos acqui so we new how the profits occured. Why then didnt we apportion base on a percentage?

    Im refering to the dividends receivable W3

    • Profile photo of MikeLittle says

      @EDR, Hi

      We HAVE to apportion the profits for the year in a mid-year acquisition situation and, unless directed otherwise, we sensibly will do it on a time basis.

      However, ( apparently! ) that is not sufficient justification to treat the dividends as accruing on the same basis. It USED to be the case that dividends were treated as accruing on an even basis over time – but that principle has changed.

      Whether you understand / accept the thinking behind the change …. it really doesn’t matter – sorry! Just accept it! I’ve had to!

    • Profile photo of MikeLittle says

      @haidernchd, It was. The 40,000 brought forward was entirely pre-acquisition, so not time apportioned. The 24,000 this year is time-apportioned in the workings – 19,333 pre-acquisition and 4,667 post-acquisition

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