Assignment on

“Consolidated Financial Statements”

Course Code: AIS 5201
Course Title: Corporate Financial Reporting-II

Prepared For
Sujan Chandra Paul
Associate Professor
Department of Accounting and Information Systems,
University of Barishal

Prepared By:
Md Rashed Mahfuz
Id: 21 AIS 008
Session: 2020-2021
MBA 2nd Semester
Department of Accounting and Information Systems
University of Barishal
Date of submission:

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 Chapter 10
Group accounts: basic principles
CRAWFORD LTD PART
The balance sheets and income statements for Crawford Ltd and Dietrich Ltd are given below.
Balance sheets as at 30 June 20X0
Crawford Ltd Dietrich Ltd
CU CU
ASSETS
Non-current assets
Property, plant and equipment 52,000 33,000
Investments (2,125 CU1 shares in Dietrich Ltd at 2,125 –
cost)
32,125 13,000
Current assets 25,000 12,000
Total assets 79,125 45,000

EQUITY AND LIABILITIES

Capital
Ordinary share capital 23,000 2,500
Share premium account 6,000 –
Retained earnings 30,000 35,000
Total Equity 59,000 37,500
Non-current liabilities 13,125 –
Current liabilities 7,000 7,500
Total equity and liabilities 79,125 45,000

Crawford Ltd acquired its shares in Dietrich five years ago when Dietrich's earnings were nil. At
the start of the current year retained earnings were CU2, 000 and CU4, 000 respectively.

Income statement for the year ended 30 June 20X0

Crawford Ltd Dietrich Ltd
CU CU
Revenue 45,000 51,000
Cost of sales (9,000) (11,000)
Gross profit 36,000 40,000
Distribution costs (2,300) (1,300)
Administrative expenses (1,500) (2,700)
Profit from operations 32,200 36,000
Finance cost (1,200) –
Profit before tax 31,000 36,000
Tax (3,000) (5,000)
Profit for the period 28,000 31,000

Requirements

(a) Briefly explain the objectives of producing group accounts.

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(b) Briefly explain the following words/phrases.
(i) Single entity
(ii) Control
(iii) Equity
(c) Prepare, for Crawford Ltd, the consolidated income statement and the statement of changes in
equity (in so far as it relates to retained earnings and the minority interest) for the year ended 30
June 20X0 and the consolidated balance sheet at that date.

Solution
CRAWFORD LTD

(a) The objectives of producing group accounts

Group accounts aim to reflect substance, i.e. if one company controls another; they effectively
operate as a single economic entity.

Therefore, the parent, or controlling company, should provide information about the economic
activities of the group by preparing consolidated accounts. These will show the economic
resources controlled by the group, the obligations of the group and the results achieved with
those resources.
The overall aim is to present the results and state of affairs of the group as if they were those of a
single entity.

(b) Terms

(i) Single entity concept

The single entity concept focuses on the existence of the group as an economic unit (as discussed
above). This contrasts with legal form where each group company is actually a separate legal
person.

(ii) Control
Control is defined as:
i. Power
ii. Exposure or rights to variable returns from involvement with the investee
iii. Ability to use the power to affect the level of variable returns

In an individual company the assets are under the direct control of that company. However,
where a company becomes a subsidiary, the assets are under indirect control of the parent via its
control of the subsidiary.

Control can be achieved in a number of ways, the most obvious being a holding of over 50% of
the ordinary, i.e. vote-carrying, shares.

(iii) Equity

Equity is defined in IFRS Framework (Elements) as the residual amount found by deducting all
of the entity's liabilities from its assets. In an individual company those net assets are owned by

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one ownership interest – the company's shareholders. However, in consolidated accounts the
consolidated net assets will include 100% of the subsidiary even though some of those net assets
are not owned by the group. Therefore, the equity interest is split between

i. The parent company's shareholders

ii. The non- controlling shareholders in the subsidiary

(c) Consolidated balance sheet as at 30 June 20X0

CU
ASSETS
Non-current assets
Property, plant and machinery (52,000 + 33,000) 85,000
Current assets (25,000 + 12,000) 37,000
Total assets 122,000

EQUITY AND LIABILITIES

Equity attractable to owners of parent
Ordinary share capital 23,000
Share premium account 6,000
Retained earnings (30,000 + (85% × 35,000)) 59,750
88,750

Non-controlling interest (15% × 37,500) 5,625

Total Equity 94,375
Non-current liabilities 13,125
Current liabilities (7,000 + 7,500) 14,500
Total equity and liabilities 122,000

Consolidated income statement for the year ended 30 June 20X0

CU
Revenue (45,000 + 51,000) 96,000
Cost of sales (9,000 + 11,000) (20,000)
Gross profit 76,000
Distribution costs (2,300 + 1,300) (3,600)
Administrative expenses (1,500 + 2,700) (4,200)
Profit from operations 68,200
Finance cost (1,200)
Profit before tax 67,000
Income tax (3,000 + 5,000) (8,000)
Profit for the year 59,000
Profit Attributable to
Owners of Crawford Ltd (ß) 54,350
Non-controlling interest (15% × 31,000) 4,650
59,000

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Consolidated statement of changes in equity for the year ended 30 June 20X0 (extract)

Attributable to owners No- Controlling

of Crawford Ltd Interest
Retained earnings
CU CU

Balance b/f (2,000 + (85%× 4,000));

(15% × (4,000+2,500)) 5,400 975
Comprehensive income for the year 54,350 4,650
Balance carried forward 59,750 5,625

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 Chapter 11
Consolidated statement of financial position
CLOSE LTD
The summarized balance sheets of Close Ltd and Steele Ltd as at 31 December 20X9 were as
follows.
Close Ltd Steele Ltd
CU CU CU CU
ASSETS
Non-current assets
Property, plant and equipment 80,000 58,200
Investments 73,500 –
153,500 58,200
Current assets
Inventories 18,000 12,000
Trade and other receivables 62,700 21,100
Investments – 2,500
Cash and cash equivalents 50,000 3,000
Current account – Close Ltd – 6,200
130,700 44,800
Total assets 284,200 103,000
EQUITY AND LIABILITIES
Equity
Ordinary share capital (CU1 shares) 120,000 60,000
Share premium account 18,000 –
Revaluation reserve 23,000 16,000
Retained earnings 56,000 13,000
Total Equity 217,000 89,000
Current liabilities
Trade and other payables 63,000 14,000
Current account – Steel Ltd 4,200 –
67,200 14,000
Total equity and liabilities 284,200 103,000

The following information is relevant.

(1) On 1 January 20X7 Close Ltd acquired 42,000 shares in Steele Ltd for CU73, 500 cash when
the retained earnings of Steele Ltd were CU 8,000 and the balance on the revaluation reserve was
CU16,000.
(2) The inventories of Close Ltd include CU 7,750 of goods from Steele Ltd invoiced to Close
Ltd at cost plus 25%.
(3) A cheque for CU 2,000 from Close Ltd to Steele Ltd, sent before 31 December 20X9, was
not received by the latter company until January 20Y0.
(4) An impairment review at 31 December 20X9 revealed that goodwill in respect of Steele Ltd
had fallen in value over the year by CU500. By 1 January 20X9 this goodwill had already
suffered impairments totaling CU 1,700.

Requirements

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(a) Prepare the consolidated balance sheet of Close Ltd and its subsidiary Steele Ltd as at 31
December 20X9.
(b) Explain the adjustments necessary in respect of intra-group sales when preparing the
consolidated balance sheet of the Close Ltd group.

CLOSE LTD
(a) Consolidated balance sheet as at 31 December 20X9
CU CU
ASSETS
Non-current assets
Property, plant and equipment (80,000 + 58,200)) 138,200
Intangibles (W3) 12,500
150,700
Current assets
Inventories (18,000 + 12,000 – 1,550) 28,450
Trade and other receivables (62,700 + 21,100) 83,800
Investments 2,500
Cash and cash equivalents (50,000 + 3,000 + 2,000) 55,000
169,750
Total assets 320,450
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Ordinary share capital 120,000
Share premium account 18,000
Revaluation reserve 23,000
Retained earnings (W5) 56,215
Non-controlling interest (W4) 26,235
Total Equity 243,450
Current liabilities
Trade and other payables (63,000 + 14,000)) 77,000
Total equity and liabilities 320,450

WORKINGS
(1) Group structure
Close Ltd

70%

Steele Ltd

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(2) Net assets of Steele Ltd
Year-end Acquisition Post
Date acquisition
CU CU CU CU
Share capital 60,000 60,000 –
Revaluation reserve 16,000 16,000 –
Retained earnings
Per question 13,000
Less: PURP (7,750 × 25/125) (1,550)
11,450 8,000 3,450
87,450 84,000
(3) Goodwill
CU
Consideration transferred 73,500
Non-controlling interest at acquisition (30% × 84,000 (W2)) 25,200
98,700
Less: Net asset at acquisition (W2) (84,000)
14,700
Impairment to date (500 + 1,700) (2,200)
Balance c/f 12,500

(4) Non-controlling interest

CU
Steele Ltd- NCI at acquisition (30% of 84,000 (W3)) 25,200
Share of post-acquisition reserve (30% × 3,450 (W2)) 1,035
26,235

(5) Retained earnings

CU
Close Ltd 56,000
Steele Ltd (70% * 3,450 (W2)) 2,415
Less Goodwill impairment to date (W3) (2,200)
56,215

(b) Adjustments
When group companies have been trading with each other two separate adjustments may be
required in the consolidated statement of financial position.

(i) Elimination of unrealised profits

If one company holds inventories at the year-end which have been acquired from
another group company, this will include a profit element that is unrealised from a
group perspective.

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 Here Steele Ltd has sold goods to Close Ltd at cost plus 25%. The mark-up of 25%
will only become realised when the goods are sold to a third party. Therefore if any
intra-group inventory is still held at the year end, it must be eliminated from the
consolidated accounts.

This will require an adjustment of CU 1,550 (7,750 x 25/125) which is always made
against the selling company’s retained earnings, i.e.
DR CR
CU CU
Steele Ltd’s retained earnings (W2) 1,550
Consolidated inventory 1,550

As well as eliminating the unrealised profit, this reduces inventory back to its original
Cost to the group.

(ii) Eliminate intra-group balances

As group companies are effectively treated as one entity, any intra-group balances
must be eliminated on consolidation. Here, intra-group current accounts have arisen
as a result of the intra-group trading and these must be cancelled out. Before this can
be done the current accounts must be brought into agreement by adjusting the
accounts of the 'receiving' company (here Steele Ltd) for the cheque in-transit, i.e.

DR CR
CU CU
Cash 2,000
Current account 2,000

This will reduce the current account receivable to CU2, 700, which means that it now
agrees with the payable balance shown in the accounts of Close Ltd. The balance can
then be cancelled out, i.e.

DR CR
CU CU
Current account in Close Ltd 4,200
Current account in Steele Ltd 4,200

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 Chapter 12
Consolidated statements of financial performance
ETHOS LTD

The following draft income statements and statements of changes in equity were prepared for the
year ended 31 March 20X9.
Statements of profit or loss Ethos Ltd Pathos Ltd
CU CU
Revenue 303,000 215,000
Cost of sales (143,800) (102,200)
Gross profit 159,200 112,800
Operating costs (71,200) (51,300)
Profit from operations 88,000 61,500
Investment income 2,800 1,200
Profit before tax 90,800 62,700
Income tax expense (46,200) (32,600)
Profit after tax 44,600 30,100

Statements of changes in equity (extracts)

Ethos Ltd Pathos Ltd
General Retained General Retained
reserve earnings reserve earnings
CU CU CU CU
Balance brought forward – 79,300 – 38,650
Total comprehensive income for the year – 46,000 – 30,100
Transfer between reserves 15,000 (15,000) 5,000 (5,000)
Dividends on ordinary shares – (30,000) – –
Balance carried forward 15,000 80,300 5,000 63,750

On 30 November 20X8 Ethos Ltd acquired 75% of the issued ordinary capital of Pathos Ltd for
CU 130,000. Pathos Ltd has in issue 100,000 CU1 ordinary shares. Ethos Ltd has 500,000 CU1
ordinary shares in issue.

Ethos Ltd measures non-controlling interest at fair value. The fair value of the non- controlling
interest in Pathos Ltd at the date of acquisition was CU 40000.

Profits of both companies accrue evenly over the year.

Requirements
(a) Prepare the consolidated statement of profit or loss and consolidated statement of changes in
equity for the year ended 31 March 20X9.
(b) Explain why only four months of Pathos Ltd’s profit or loss should be included in the
consolidated statement of profit or loss.

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Solution: ETHOS LTD
(a) Consolidated income statement for the year ended 31 March 20X9
CU
Revenue (W2) 374,667
Cost of sales (W2) (177,867)
Gross profit 196,800
Operating costs (W2) (88,300)
Profit from operations 108,500
Investment income (W2) 3,200
Profit before tax 111,700
Income tax expense (W2) (57,067)
Profit after tax 54,633
Attributable to
Owners of Ethos Ltd 52,125
Minority interest (W3) 2,508
54,633

Consolidated statement of changes in equity for the year ended 31 March 20X9
Attributable to equity holders of Ethos Ltd
Ordinary Non-
share General Retained controlling
capital reserve earnings Total interest Total
CU CU CU CU CU CU
Balance brought
forward 500,000 – 79,300 579,300 – 579,300
Total
Comprehensive
Income for
the year – – 52,125 52,125 2,508 54,633
Transfer between
reserves (W4) – 16,250 (16,250) – – –
Added on
acquisition of
subsidiary – – – – 40,000 40,000
Dividend
on ordinary
shares – – (30,000) (30,000) – (30,000)
Balance carried
forward 500,000 16,250 85,175 601,425 42,508 643,933

(b) Time apportionment

The results of a subsidiary are included in the consolidated accounts only from the date control is
achieved.

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Ethos Ltd acquired 75% of the issued ordinary capital of Pathos Ltd on 30 November 20X8. This
is the date on which control passed and hence the date from which the results of Pathos Ltd
should be reflected in the consolidated income statement.

Therefore only profits earned by Pathos Ltd in the four months since that date are post-
acquisition profits.

The remaining previous eight months profit from 1 April 20X8 to 30 November 20X8 are all
pre-acquisition profits and will be included in the calculation of goodwill on consolidation.

WORKINGS
(1) Group structure
Ethos Ltd

75% (acq 30 November 20X8 ∆ 4/12 in)

Pathos Ltd
(2) Consolidation schedule 4/12
Ethos Ltd Pathos Lt Adj Consol
CU CU CU CU
Revenue 303,000 71,667 – 374,667
C of S (143,800) (34,067) – (177,867)
Op costs (71,200) ( (17,100) (88,300)
Inv income 2,800 400 3,200
Income tax (46,200) (10,867) (57,067)
PAT 10,033

(3) Non- controlling interest in profit for the year

CU
25% x 10,033 (W2) 2,508
(4) Transfer to general reserve
CU
Ethos Ltd 15,000
Pathos Ltd (75% × 5,000 × 4/12) 1,250
16,250
Point to note

1. The NCI in Pathos Ltd’s reserve transfer does not appear because the two entries are
cancelled out in the single NCI column
2. Alternative calculation for PAT of Pathos Ltd (W2)
CU
PAT per question 30,100 × 4/12 10,033

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 Chapter 13
Associates and joint ventures
MINNIE LTD
Minnie Ltd has a number of wholly-owned subsidiaries and a 50% interest in Mouse Ltd, an
entity set up and controlled jointly with a third party.
The statements of financial position of the entities as at 31 December 20x5 are as follows:

Minnie Group Mouse

CU’000 CU’ 000
Non-current assets
Property, plant and equipment 506 260
Investment in mouse Ltd 10
516 260
Current assets
Inventories 200 150
Others 200 110
916 520
Equity
Share Capital 300 120
Retained Earnings 366 180
666 300

Current Liabilities 250 220

916 520

Their respective statements of profit or loss for the year ended 31 December 20x5 are as follows:

Minnie Group Mouse

CU’000 CU’000
Revenue 590 412
Cost of sales and expenses (280) (200)
Dividend from Mouse Ltd 20 -
Profit before tax 330 212
Income tax expense (100) (32)
Profit for the year 230 180

Dividend recognized in the statement of changes in equity

During the period 60 40

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During December 20x5 Minnie Ltd transferred to mouse Ltd for CU 60,000. Minnie Ltd sells
goods at a mark-up of 25%. Mouse Ltd had not paid Minnie Ltd’s invoice or sold any of the
goods to third parties by the year end.
No dividends from Mouse Ltd are outstanding in Minnie Ltd’s books.

Requirement
Prepare a consolidated statement of financial position and statement of profit or loss for Minnie
Ltd and Its joint Venture as at 31 December 20x5 using equity accounting.

Solution
Consolidated statement of financial position as at 31 December 20x5:

CU’ 000
Non-current assets
Property, plant and equipment 506
Investment in joint venture (W4) 88
594
Current assets
Inventories 200
Others 200
Total assets 994

Equity attributable to owners of the parent

Share capital 300
Retained Earnings 444
744
Current Liabilities 250
994

Consolidated statement of profit or loss for the year ended 31 December 20x5:
CU’ 000
Revenue 590
Cost of sales and expenses (280+ (W3)12) (292)
Share of profit of joint venture (180* 50%) 90
Profit before tax 388
Income tax expense (100)
Profit for the year 288

Profit attributable to:

Owners of the parent 288
Nom-controlling interests 0
288
WORKINGS

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(1) Group structure
Minnie

50%

Mouse pre acquisition retained earnings cu 0 (set up by Minnie Ltd)

(2) Consolidated retained earnings

Minnie Group Mouse
CU’000 CU’000
Per acquisition 366 180
PURP (w3) (12)
Pre-acquisition retained earnings (0)
180
Group share of post-acquisition retained earnings
Mouse ltd (180* 50%) 90
444
(3) Provision for unrealized profit on inventories

Investor’s share of unrealized profit in inventories:

CU’ 60,000*(25%/125%)*50%= CU 12,000
DR Cost of sales & Retained earnings CU 12,000
CR Investment in Mouse Ltd CU 12,000

(4) Investment in Mouse Ltd

CU’000
Cost of joint venture 10
Add: Post acquisition retained reserves (W2) 90
Less: PURP (W3) (12)
88

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 Chapter 14 Group accounts: disposal
ARBITRARY LTD
Arbitrary Ltd holds 80% of the ordinary shares of Contrary Ltd which it purchased five years
ago, on 1 July 20X0, for CU 175,000. On 1 July 20X5 Arbitrary Ltd sold all of these shares and
used the proceeds (CU210, 000) to purchase 65% of the ordinary shares of Enthusiast Ltd on the
same date. Share capital of Contrary Ltd and Enthusiast Ltd has remained constant for many
years at CU100, 000 and CU200, 000 respectively. Net assets of Contrary Ltd and Enthusiast Ltd
were as follows.

Contrary Ltd Enthusiast Ltd

At At At
acquisition 1 January 1 January
20X5 20X5
CU CU CU
Net assets 180,000 160,000 2,70,000

Income statements and statements of changes in equity for all three companies for the year ended
31 December 20X5 were as follows.

Statements of profit or loss

Arbitrary Contrary Enthusiast
Ltd Ltd Ltd
CU CU CU
Revenue 1,925,000 520,000 790,000
Cost of sales (1,207,200) (386,200) (405,900)
Gross profit 717,800 133,800 384,100
Distribution costs (207,500) (79,200) (198,200)
Administrative expenses (192,600) (26,100) (107,100)
Dividend received from Contrary Ltd 8,000 – –
Profit before tax 325,700 28,500 78,800
Income tax expense (110,000) (9,500) (27,500)
Profit after tax 215,700 19,000 51,300

Statements of changes in equity

Retained earnings
Arbitrary Contrary Enthusiast
Ltd Ltd Ltd
CU CU CU
Balance brought forward 671,300 50,000 80,000
Total comprehensive income for the year 215,700 19,000 51,300
Dividends paid on ordinary shares (50,000) (10,000) –
Balance carried forward 837,000 59,000 131,300

No entries have been made in Arbitrary Ltd's income statement relating to the sale of Contrary
Ltd.

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Contrarty Ltd’s dividends were paid prior to disposal
In an earlier accounting period an impairment loss of CU 12,700 was recognized in relation to
the goodwill arising on the acquisition of Contrary Ltd.

Requirements
(a) Prepare the consolidated income statement and the retained earnings and minority interest
columns for the statement of changes in equity for Arbitrary Ltd for the year ended 31
December 20X5 in so far as the information is available.
Note. You should assume that the disposal of Contrary Ltd constitutes a discontinued
operation in accordance with BFRS 5 Non-current assets held for sale and discontinued
operations.
(b) Calculate the profit on disposal that would be shown in the individual accounts of
Arbitrary Ltd and explain how and why this differs from group profit on disposal.
(c) Briefly discuss the concepts of control and ownership in the context of this disposal.

Solution

ARBITRARY LTD
(a) Consolidated income statement for the year ended 31 December 20X5
CU
Continuing operations
Revenue (W2) 2,320,000
Cost of sales (W2) (1,410,150)
Gross profit 909,850
Distribution costs (W2) (306,600)
Administrative expenses (W2) (246,150)
Profit before tax 357,100
Income tax expense (W2) (123,750)
Profit for the period from continuing operations 233,350
Discontinued operations
Profit for the period from discontinued operations (9,500 + 64,100) (W3 + W4) 73,600
Profit for the period 306,950
Attributable to
Equity holders of Arbitrary Ltd (B) 296,072.5
Non-controlling interest (W5) 10,877.5
306,950

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Consolidated statement of changes in equity for the year ended 31 December 20X5
(extracts)
Attributable
To owners
Of Arbitrary
Ltd Non-
Retained controlling
Earnings interest
CU CU
Balance brought forward (W6) + (W7) 634,600.0 32,000.0
Total comprehensive income for the year 296,072.5 10,877.5
Added on acquisition of subsidiary (W8) – 103,477.5
Eliminated on disposal of subsidiary (W4) – (31,900.0)
Dividend paid on ordinary shares (20%*10,000) (50,000.0) 2,000.0
Balance carried forward 880,672.5 112,455.0

Non-controlling interest carried forward: proof

Enthusiast CU
Net assets at 1 January 20X5 270,000
Profit for the year ended 31 December 20X5 51,300
321,300
NCI 35% 112,455

(b) Calculation of profit in individual accounts of Arbitrary Ltd

CU
Sale proceeds 210,000
Less Cost (175,000)
Profit 35,000

The different calculations of profit on disposal reflect the different way in which the subsidiary
(Contrary Ltd) is accounted for in the individual and consolidated accounts.
In the individual balance sheet of Arbitrary Ltd Contrary Ltd is carried at cost of CU 175,000.
The profit on disposal is therefore the sale proceeds less this cost. In the consolidated financial
statements the cost of Contrary Ltd is replaced with its underlying net assets and with goodwill
acquired in the business combination. The profit on disposal is therefore based on sale proceeds
less the percentage of net assets being sold (here 80%) less the unimpaired goodwill which is
being sold in full (as it only ever related to the 80% share of net assets acquired).

(c) Application of control and ownership ideas

Control
Up to 1 July 20X5 Arbitrary Ltd owns 80% of Contrary Ltd and therefore controls it. So the
consolidated income statement should include 100% of Contrary Ltd's profits up to that date.

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After 1 July 20X5 Arbitrary Ltd no longer controls Contrary Ltd. Its results should be excluded
from the consolidated income statement for the last six months of the year and also from the
consolidated balance sheet. This treatment reflects the fact that once Contrary Ltd has been sold
its resources are no longer under group control.

Ownership
For the first six months of the year 100% of Contrary Ltd's profits are included in the
consolidated income statement. However, 20% of its profits are owned by the minority interest
and this has to be deducted in arriving at the group's share of profit (CU 20,600 x 6/12 x 20%).
When the disposal occurs the group is selling its ownership interest in the net assets and its
goodwill. Therefore the group profit on disposal is calculated from the point of view of
ownership.

WORKINGS
(1) Group structure

Arbitrary Ltd

80% 65%
(acq 1 July 20X5 (acq 1 july 20X5
6/12 in) 6/12 in)

Contrary Ltd Enthusiast Ltd

(2) Consolidation schedule

Arbitrary Enthusiast
Ltd Ltd Consol
6/12
CU CU CU
Revenue 1,925,000 395,000 2,320,000
C of S (1,207,200) (202,950) (1,410,150)
Distrib cost (207,500) (99,100) (306,600)
Admin exp (192,600) (53,550) (246,150)
Tax (110,000) (13,750) (123,750)
PAT 25,650

(3) Profit for year to disposal

CU
PAT of C Ltd 19,000
* 6/12 9,500

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(4) Profit on disposal of Contrary Ltd operations
CU CU
Sale proceeds 210,000
Less: Carrying amount of goodwill at date of disposal:
Consideration transferred on acquisition 175,000
NCI at acquisition (20% * 180,000) 36,000
Less: Net assets at acquisition 180,000
Goodwill at acquisition 31,000
Less: Impairment to date (12,700)
(18,300)
Less: Carrying amount of net assets at disposal:
Net assets at 1 January 20X5 160,000
Profit to 1 July 20X5 (W3) 9,500
Dividends paid (10,000)
(159,500)
Add back: NCI in net assets (159,500*20%) 31,900
Profit on disposal 64,100
(5) Non-controlling interest in year
CU
Contrary Ltd (20% x 9,500 (W3)) 1,900.0
Enthusiast Ltd (35% x 25,650 (W2)) 8,977.5
10,877.5
(6) Retained earnings b/f
CU
Arbitrary Ltd 671,300
Contrary Ltd (80% x (50,000 – (180,000 – 100,000)) (24,000)
Goodwill impairment to 31 December 20X4 (12,700)
634,600
(7) Non-controlling interest b/f
CU
Contrary Ltd (160,000 *20%) 32,000

(8) Minority interest added on acquisition of subsidiary

CU
Enthusiast Ltd ((270,000+ 25,650 (W2)) *35%) 103,477.5

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