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On 1 January 2008, P acquired 100% of the ordinary shares of S, which was incorporated on that date.
On 31 December 2010, the Statements of Financial Position of each the two companies were as follows:
P S
Non-current assets 25,000 12,000
Investment in S, at cost 10,000
Current assets 8,000 9,000
43,000 21,000Share capital – $1 shares 25,000 10,000
Retained earnings 15,000 8,000
Current liabilities 3,000 3,000
43,000 21,000Prepare a Consolidated Statement of Financial Position at 31 December 2010 for the P group.
Sir, my question is that when preparing the Consolidated Statement of Financial Position at 31 December 2010 for the P group, why don’t we show the investment amount of 10000 in NCA and 10000 in share capital??
the answer was exclusive of these two!!
The purpose of preparing the consolidated statement of financial position is to treat it as one ‘big’ company, that is mainly owned by the shareholders of the parent company.
Instead of showing the share capital and reserves of the subsidiary, we are bring in all the assets and liabilities of the subsidiary.
I suggest that you watch my free lectures on consolidations on this website 🙂
In a consolidated statement of financial position why dont we add the subsidiary shares to the parents shares? we only include 100% parents shares. can you give me an explanation please?
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