- October 15, 2022 at 6:15 am #668665MelodyCParticipant
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- Replies: 17
Below are the summarised draft financial statements of Push and Shove:
Statement of profit or loss for the year ended 30 September 20X8 (extract)
Revenue 85,000 42,000
Less: Cost of sales 63,000 32,000
Gross profit 22,000 10,000
Less: Distribution and admin expenses 12,000 4,500
Less: Finance costs 600 400
Profit before tax 9,400 5,100
Less: Income tax expense 2,162 1,000
Profit for the year 7,238 4,100
Statements of financial position as at 30 September 20X8
Property, plant and equipment 40,600 22,600
Current assets 16,000 6,600
Total assets 56,600 29,200
Equity and liabilities
Equity shares of $1 each 10,000 4,000
Retained earnings 35,400 16,500
10% loan notes 3,000 4,000
Current liabilities 8,200 4,700
Total equity and liabilities 56,600 29,200
The following information is relevant to the preparation of the consolidated financial
statements of Push for the year ended 30 September 20X8:
(i) On 1 October 20X7, Push acquired 60% of the equity share capital of Shove in a share
exchange of five shares in Push for six shares in Shove. The issue of shares has not yet
been recorded by Push. At the date of acquisition shares in Push had a fair value of $6
(ii) At the date of acquisition, the fair values of Shove’s net assets were approximately
equal to their carrying amounts.
(iii) Push has a policy of accounting for any non?controlling interest at fair value. The fair
value of a $1 share in Shove at the date of acquisition was $3.50. Consolidated goodwill
was not impaired at 30 September 20X8.
(iv) Sales by Shove to Push during the year ended 30 September 20X8 were $6 million.
Shove made a mark?up on cost of 20% on these sales. One quarter of these goods
remained in the inventory of Push at the year?end.
(v) At 30 September 20X8, Shove had a receivable due from Push of $1 million. This agreed
with the amount payable to Shove in Push’s financial statements.
I got all other questions right except this one below:
Calculate the following figures for inclusion in the consolidated statement of financial
(i) Non-current assets
I think the figure of non-current assets included in the consolidated statement of financial position in this case is 40,600 + 22,600 + 1,200 = 64,400 where 1,200 should be add up as goodwill.
But the answer is 40,600 + 22,600. Could you tell me why they exclude goodwill here?
Thanks in advance!October 15, 2022 at 11:49 am #668684John MoffatKeymaster
- Topics: 56
- Replies: 53174
Goodwill os shown separately in the consolidated SOFP.
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