Consolidated financial statements

Not as far as the exam is concerned - no :-)

Thanks, but what about real life?

There is no need for double entry in real life either. The individual companies would obviously keep their own accounting records as usual. There are no accounting records for the group. Some people use t-accounts when they do the workings for the consolidation, but they are only workings (they are not proper double-entry records).

Many thanks!

You are very welcome :-)

John Ann aquired 450000 of 500000 $ share of john.. When we calculate goodvill In answer 500000 was deducted , but only 450000 share was acquired

What percentage was acquired is not relevant. The goodwill is the total 'worth' of the subsidiary at the date of acquisition less the total book value of the subsidiary at the date of acquisition. The total 'worth' is whatever the parent paid for their share plus the fair value of the NCI. The total book value is the total share capital + total reserves.

Thanks but one more qws please Ann com acquired 80 % of all share capital of beta co on 1 january. 1 january 2001.on 1 january the fair value of beta co net teangible assets are 450000 .at 31 dec 2001 the fair value of net tang assets of beta co are 600000. My qws is why we use 450000 not 600000 while calculating goodwill.

It is because we are calculating the goodwill at the date of acquisition. So it is only the value of the assets at the fat of acquisition that are relevant.

Sir, hi :) There is mock exam here. It was written in qws. The balance on current account beetween Ann and ben was 53000. Asks for reseivables. In answer reseivables of ann and ben added and deducted 53000. My qws is y 53000 deducted?

Pleasee, answer this one also In qws asks for Consolidated cogs 2 companies cogs added - intragroup cogs-unrealised profit Why unrealised profit is deducted? Reason?

Patience co has a subsidiry. Ben co.during 2001ben sold goods to patience for 40000 which was cost plus 25 %. At 31 december 2001 20000 of these goods remained unsold.. What will profit be reduced by in the consolidated income sta. Answer 4000

First question: I assume it is a consolidation question! We only want to show receivables and payables from/to outside the group. So amounts owing between the two companies are removed from total receivables and removed from total payables.

Second question: In the consolidated accounts we only show profit made on sales outside the group. Any goods left in inventory that were sold from one company to the other contain a profit element than must be removed from the profit (and from the value of the inventory on the Statement of financial position). It is the PURP.

Oh, understand. Ok please answer remain qws.s

Third question: The answer is the same as the answer to your second question. The profit element in the selling price of 20,000 is 4,000. This is the PURP that must be removed. I assume that you have studied consolidations - either in a text book or by watching the free lectures on consolidations?? Because these are very standard adjustments!

Why on earth must 20,000 be removed??? 20,000 is the selling price - it is the profit that we need to remove.

How did u come to4000????

Because 20000 is cost plus 25%. So the profit must be 25/125 x 20000 = 4000

This is very diffucult for me to understand. Cost plus 25%. It is mark up then.

Yes. The profit is 25% of cost. You did not answer my question. Where are you studying from - a Study Text or by watching the lectures?

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