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CONSOLIDATION OF FINANCIAL ACCOUNTS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › CONSOLIDATION OF FINANCIAL ACCOUNTS

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • October 23, 2015 at 1:15 pm #278563
    azzad
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    HI sir,
    i want ask ques. that…

    HILTON CO SHREW CO
    $ $
    sundry assets 660,000 290,000
    investment in SHREW 280,000 –
    ———– ———–
    940,000 290,000
    ———— ———–
    Issued share capital 400,000 140,000
    share premium account 320,000 50,000
    retained earnings
    As at 1 Jan 20*3 140,000 60,000
    Profit for 20*3 80,000 40,000
    ———– ———–
    940,000 290,000
    ———— ————
    There have been no changes in the share capital or share premium account of either company since 1 Jan 20*3. The fair value of the non-controlling interest on acquisition was $65000.

    I’ve problem here that it is shown that pOST-acquisition is {(100000-60000)*80%} in this solution but here i wrote pOST-acquisition 40,000 ,,,,,I’ve problem this how it became 100,000 pls help me with solution……

    October 23, 2015 at 2:04 pm #278568
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    Since the retained earnings at 1.1.2013 were 60,000 and the profit for 2013 was 40,000, it means that the retained earnings at the end of 2013 were 100,000.

    So assuming that Hilton bought the shares on 1.1.2013, then the post-acquisition profit is 40,000 (you don’t need to write it the way the answer did!) and Hilton’s share of it is 80% (on the assumption that Hilton bought 80% of the shares).

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