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Hi Mr. MikeLittle
Can you explain me only this adjustment ? why PPE are reduces by the amount of 9 (12-9) and get a 3milyon at the end of the year. because of share premium is 3 at the end of period?
Section C
156 Laurel 39 mins
Laurel acquired 80% of the ordinary share capital of Hardy for $160m and 40% of the ordinary share capital of Comic
for $70m on 1 January 20X7 when the retained earnings balances were $64m in Hardy and $24m in Comic. Laurel,
Comic and Hardy are public limited companies.
The statements of financial position of the three companies at 31 December 20X9 are set out below:
Laurel Hardy Comic
$m $m $m
Non-current assets
Property, plant and equipment 220 160 78
Investments 230 – –
450 160 78
Current assets
Inventories 384 234 122
Trade receivables 275 166 67
Cash at bank 42 10 34
701 410 223
1,151 570 301
Equity
Share capital – $1 ordinary shares 400 96 80
Share premium 16 3 –
Retained earnings 278 128 97
694 227 177
Current liabilities
Trade payables 457 343 124
1,151 570 301
You are also given the following information:
1 On 30 November 20X9 Laurel sold some goods to Hardy for cash for $32m. These goods had originally cost
$22m and none had been sold by the year end. On the same date Laurel also sold goods to Comic for cash for
$22m. These goods originally cost $10m and Comic had sold half by the year end.
2 On 1 January 20X7 Hardy owned some items of equipment with a book value of $45m that had a fair value of
$57m. These assets were originally purchased by Hardy on 1 January 20X5 and are being depreciated over six
years.
3 Group policy is to measure non-controlling interests at acquisition at fair value. The fair value of the noncontrolling
interests in Hardy on 1 January 20X7 was calculated as $39m.
4 Cumulative impairment losses on recognised goodwill amounted to $15m at 31 December 20X9. No
impairment losses have been necessary to date relating to the investment in the associate.
Required
Prepare a consolidated statement of financial position for Laurel and its subsidiary as at 31 December 20X9,
incorporating its associate in accordance with IAS 28.is that a answer?
because equipment is purchased in 2005 and in 2007 it was depreciated and although it was a 6 years useful life we depreciate 12million amount over the 4 year and depreciated expense will be 3 . and at the end of 31 dec 2009 ac dep will be 9. and 12-9=3 million should be remain at the end. Bingo?? 🙂
What the question tells us is that those assets were originally purchased and now depreciated for 2 years and they have a carrying value of $45 as at date of acquisition and a fair value of $57 with a 4 year remaining useful life
So, for the goodwill calculation, there is a fair value adjustment of $12 and that figure will be written off over the remaining 4 year useful life at the rate of $12 / 4 = $3 each year
Is that OK for you?
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