ACCA FA · Guided practice (Show me how)
Chapter 22: Group Accounts – The Consolidated Statement of Financial Position (1)
M and N - consolidated statement of financial position with goodwill
M acquired 100% of the share capital of N on 1 October 2014 for $32,000. On 1 October 2014, the retained earnings of N were $4,000. The fair values of N's assets and liabilities at that date were the same as their carrying values.
At 30 September 2019 the companies' statements of financial position were as follows:
| M $ | N $ | |
|---|---|---|
| Non-current assets | 95,000 | 26,000 |
| Investment in N, at cost | 32,000 | |
| Inventory | 18,000 | 7,000 |
| Receivables | 13,000 | 5,000 |
| Cash | 2,000 | 1,000 |
| 160,000 | 39,000 | |
| Share capital - $1 shares | 70,000 | 10,000 |
| Retained earnings | 65,000 | 19,000 |
| Bank loan (repayable 2027) | 15,000 | 6,000 |
| Payables | 10,000 | 4,000 |
| 160,000 | 39,000 |
Prepare a consolidated statement of financial position as at 30 September 2019 for the M group.
(a) The two workings
Calculate the goodwill arising on the acquisition of N and the consolidated retained earnings of the M group at 30 September 2019.
(b) The consolidated statement
Prepare the consolidated statement of financial position at 30 September 2019.
Opening this exercise…