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consolidated statements of financial position bpp

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › consolidated statements of financial position bpp

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 3, 2020 at 2:58 pm #560519
    safashaikh19
    Member
    • Topics: 18
    • Replies: 24
    • ☆

    On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co’s retained earnings amounted to $90,000 and the fair values of Beta Co’s assets at acquisition were equal to their book values. Three years later, on 31 December 20X2, the statements of financial position of the two companies were:

    Alpha Co Beta Co
    $ $
    Sundry net assets 230,000 260,000
    Shares in Beta 180,000 –
    = 410,000 260,000

    Share capital
    Ordinary shares of $1 each 200,000 100,000
    Retained earnings 210,000 160,000
    = 410,000 260,000

    The share capital of Beta Co has remained unchanged since 1 January 20X0. The fair value of the noncontrolling interest at acquisition was $42,000.

    What amount should appear in the group’s consolidated statement of financial position at 31 December 20X2 for non-controlling interest?

    Ans)
    Non-controlling interest $
    Fair value of NCI at acquisition 42,000
    Plus NCI’s share of post-acq’n retained earnings (10% ? (160 – 90)) 7,000
    = NCI at reporting date 49,000

    I’ve understood the answer, sir. But what i do not understand is how we have used 10% (in the answer) when there has been no mention whatsoever of either 90% or 10%. Can you please help me out with this?

    February 3, 2020 at 4:48 pm #560523
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    If you look at the share capital of Beta, there are 100,000 shares.

    According to the question, Alpha had purchased 90,000 shares. So Alpha owned 90% (and therefore the non-controlling interest owned the other 10%) 🙂

    I have the current edition of the BPP Revision Kit, so if you have more questions you do not need to type it all out – just say which question it is 🙂

    February 3, 2020 at 5:24 pm #560533
    safashaikh19
    Member
    • Topics: 18
    • Replies: 24
    • ☆

    Oh! Thank you very much sir! On a side note, I do not have to type out the question. Instead i just use copy-paste. But i will keep in mind that!

    February 4, 2020 at 7:47 am #560606
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    You are welcome.

    (However another reason for asking you to just state the number of the question rather than copying it all, is that strictly we are in breach of copyright allowing the whole question to be posted here 🙂 )

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Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘consolidated statements of financial position bpp’ is closed to new replies.

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