Sebastian co acquired 80% of the share capital of Derwent co on 1 june 20X5 .The summarised draft statements of profit or loss for Sebastian co and Derwent co for the year ended 31 may 20X6 are shown below:
Sebastian co Derwent co
Revenue 8,400 3,200
Cost of sales (4,600) (1,700)
Gross profit 3,800 1,500
Operating expenses (2,200) ( 960)
Profit before tax 1,600 540
Tax (600) (140)
Profit of the year 1000 400
During the year Sebastian co sold goods costing $1,000,000 to Derwent co for $1,500,000.At 31 may 20X6, 30% of these goods remained in Derwent co's inventory.
(a) Prepare the Sebastian group consolidated statement of profit and loss for the year ended 31 may 20X6 (7)
(b) which formula best describes the amount to be entered in the consolidated statement of profit and loss as 'profit attributable to :equity owners of Sebastian co'? (2)
(c) what amount should be shown in the consolidated statement of profit and loss for the non-controlling interest? (2)
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Consolidated statement of financial position
12y ago#1Is this a test for me?
I am not going to answer the whole question here (and presumably you have an answer anyway).
If you say which part is giving you a problem then I will try and help.
Part (a), the first question.
12y ago#3Yes, but what exactly is your problem?
I am not prepared to write up a full answer here - that would be silly. If you found the question in a book or on the ACCA website, then you will already have the answer.
I assume that you have watched my free lecture on here on how to prepare a consolidated statement of profit or loss, and that therefore you are happy with most of part (a).
If you say which part of the answer is causing the problem then I will help.
Please how do i determine the Non-controlling interest of a subsidiary in a question if the percentage bought was not mentioned?
For Example
Boe Ltd acquired Joe Ltd on 1 Jan 20x1. Boe Purchased 40,000 ordinary shares of $1 each for $90,000. The consideration was paid in cash. The retained earnings and total share capital of Joe on 1 Jan 20x1 were $45,000 and $50,000 respectively. The fair value of non-controlling interest at the acquisition date is $15,000.
Boe Joe
Net Assets: 115,000 130,000
Shares in Joe: 90,000 -
Total Assets 205,000 130,000
Share Capital 100,000 50,000
Retained Earnings 105,000 80,000
I have been able to work out goodwill to be $10,000. How do i work out the amount or retained earnings and the non controlling interest for the group?
Thanks in anticipation of your response.
12y ago#5But you can calculate the %.
Joe has 50000 $1 shares. Boe bought 40000, and so they own 80% and the NCI own 20%.
Does that sort out your problem? :-)
Yes it does, percentage difference.
Thanks alot!
12y ago#7You are welcome :-)
Please how do I determine the consideration paid without it being specified in order to calculate goodwill in a question.
For example:
Alice bought 90% of equity share capital of Bertha who two years ago on 1 July 2012 when the retained earnings of Bertha stood at 12,000.
Share Capital: Alice 36,000; Bertha 12,000
Retained Earnings: Alice 189,000; Bertha 72,000
The exam is tomorrow, Im trying hard not to start panicking. Please help.
12y ago#9You can't - there is not enough information in this question.
If you found it in a book somewhere, then either there is more information that you have not typed, or it is a stupid question!! :-)
Do not worry about tomorrow - panicking only makes things worse.
I am sure you will be OK.
Good luck anyway :-)
err.. It is a long question with different aspects and sub-questions to it. I don't know if you have access, it is question 36 in the section B part of the mock exam on open tuition.
12y ago#11Alice's Statement of financial position shows the investment at $85,000 - so this is what they paid for their 90% holding.
The fair value of the NCI at the date of acquisition was $10,000 (given in the questions).
So silly of me, How could I have missed something so obvious.
Thanks a lot, I feel a bit relieved now.
Sorry if I seem like a pain in the neck, but please can I ask 2 or 3 more questions then you will be rid of me?
1. Please how do I handle the the issue of shares made by the company on the 1st of April in this question?
On Jan 1 2013, the capital structure of Q company, a limited liability company is
Share Capital: (1,000,000 shares of 50c each): 500,000
Share Premium: 300,000
On April 1st, 2013, the company made 200,000 50c share at $1.30 each and 1 July made a bonus issue of 1 for every 4 in issue at that time using the share premium account. What are the balances on the accounts after the bonus issue?
Do i use only the 200,000 shares issued on 1st April? or 1,000,000 or a deduction or addition of both. I have tried different approaches but still not getting it.
2. During the month ended 31st March 2012, Chad had taxable Sales, net of sales tax of 90,000 and taxable purchase, net sales tax of 72,000. If the rate of tax is 10%, how much sales tax was due?
How was the answer of 1,800 receivable gotten?
Thanks in anticipation of your response.
12y ago#151
In April they issued 200,000 shares. 200000 x 0.50 = 100,000 goes to share capital. 200000 x (1.30 - 0.50) = 160,000 goes to share premium.
So the total number of shares is 1,200,000. Share capital is 600,000. Share premium is 460,000.
In July the have bonus issue of 1/4 x 1200000 = 300,000 shares. So 300000 x 0.50 = 150,000 goes to share capital, and 150,000 is subtracted from share premium.
So share capital is 750,000 and share premium is 310,000
2
The tax owing is 90,000 x 10% = 9,000.
The tax suffered is 72,000 x 10% = 7,200.
So the tax payable (not receivable) is 9,000 - 7,200 = 1,800.
Got it now.
Thanks a lot Mr Moffat.
12y ago#17You are welcome :-)
Hi Moffat
In the above question why is it given as net of sales tax ("Chad had taxable Sales, net of sales tax of 90,000"). Does'nt it mean that this 90000 is given after deducting for the sales tax due?
11y ago#19It means it is the price before adding sales tax.
You should watch the free lecture on sales tax (and not post this as a comment on a lecture on consolidations )
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