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Please help me find the Goodwill and how to make a CSoFP

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Please help me find the Goodwill and how to make a CSoFP

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 7, 2020 at 5:53 am #566701
    Anonymous
    Inactive
    • Topics: 3
    • Replies: 0
    • ☆

    The statement of financial position as at 31 December 2016 and income statements for the year ended 31 December 2016 for ALPHA Ltd and Beta Ltd are set out below:
    Statement of Financial Position as at 31 December 2016
    ALPHA LTD
    £ BETA LTD
    £
    Non-current assets
    Property, plant and equipment 185,000 39,000
    Investment in Beta Ltd 60,000

    245,000 39,000

    Current assets
    Inventory 57,500 8,000
    Trade receivables 31,600 12,825
    Cash and Bank 27,150 6,200
    116,250 27,025

    Current liabilities
    Trade payables 67,300 9,275

    Long-term liabilities
    Debentures 25,000 4,000

    Net Assets 268,950 52,750

    Capital and reserves
    Share capital 35,000 10,000
    Share premium 20,000
    Retained profits 213,950
    42,750

    268,950
    52,750

    Income Statements for the year ended 31 December 2016
    ALPHA LTD
    £ BETA LTD
    £
    Sales 322,500 38,750
    Cost of sales 182,000
    21,600

    Gross profit 140,500 17,150
    Operating expenses (60,050)
    (10,030)

    Profit before interest and tax 80,450 7,120

    Interest (2,000)
    (320)

    Profit before tax 78,450 6,800
    Tax (25,950)
    (2,200)

    Profit after tax 52,500
    4,600

    The following information is relevant to the preparation of the consolidated accounts:
    (i) Alpha Ltd acquired 70% of the ordinary £1 shares of Beta Ltd on 1 January 2016 for £60,000 in cash. The balance of the retained profit in Beta Ltd was £38,150 at acquisition. The fair value of Beta Ltd.’s non-current assets (i.e. land) at the date of acquisition was £15,000 higher than their book value. Beta Ltd does not account for this amount in Ltd own accounts.

    (ii) Alpha Ltd sold goods to Beta Ltd for £15,000 during 2016. The original cost of these goods was £12,000. Half of these goods were included in Beta Ltd.’s closing inventory on 31 December 2015.

    (iii) Goodwill arising on acquisition is subjected to an impairment review. For the year ended 31 December 2016, goodwill impairment on acquisition of Beta Ltd was £5,000.

    (iv) Non-controlling interest (NCI) is determined using the partial goodwill method.

    April 7, 2020 at 8:08 am #566714
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54705
    • ☆☆☆☆☆

    There is no point in simply typing out a full question and expecting us to provide a full answer.

    You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about – then I will explain.

    Everything needed for Paper FA is covered in detail in my free lectures – they are a complete free course.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Please help me find the Goodwill and how to make a CSoFP’ is closed to new replies.

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