ACCA FR · Guided practice (Show me how)
Chapter 23: Consolidated statement of financial position
Consolidated SFP - consideration, unrealised profit and fair values
Consider the following acquisitions: (a)(i) Harry, (a)(ii) Pembury and (b) James. Work in $000.
(a)(i) Harry acquired 80% of the 10 million ordinary $1 shares of Sally by offering a share exchange of one Harry share for every four shares acquired. Harry's shares have a nominal value of $1 each and a fair value of $3 per share.
(a)(ii) Pembury acquired 80% of the 30 million $1 equity shares of Stanwick on 1 January 20X5. The consideration was a share exchange of two Pembury shares for every three shares acquired, plus a cash payment of $1 per share acquired payable on 31 December 20X5. The fair value of Pembury's shares was $2 at 1 January 20X5. The present value of $1 receivable in one year's time at 10% is $0.91.
(b) James bought 80% of the equity shares in Molly for $800,000 when Molly's retained earnings were $150,000. The NCI is measured at fair value, which was $200,000 at acquisition. During the year Molly sold goods to James for $120,000, at a mark-up of 20% on cost; half of the goods remain in James's inventory at the year end. Statements of financial position at 31 December 20X5 ($000):
(a) Consideration: share exchanges and deferred cash
Calculate the cost of Harry's investment in Sally and the amount credited to share premium on its share issue, and the fair value of the shares issued, the deferred consideration and the total cost of Pembury's investment in Stanwick at 1 January 20X5.
(b) James: unrealised profit in the workings
Calculate the unrealised profit and the James group's goodwill, non-controlling interest, retained earnings and consolidated current assets at 31 December 20X5.
Opening this exercise…