ACCA FR Syllabus D. Preparation Of Financial Statements - Basic groups - Question (NCI @ FV method) - Notes 7 / 8
Basic groups - Question (NCI @ FV method)
| P | S | |
| Non-Current Asset | 500 | 600 |
| Investment in S | 120 | |
| Current Assets | 100 | 200 |
| Share Capital | 100 | 100 |
| Reserves | 220 | 400 |
| Current Liabilities | 100 | 50 |
| Non-Current Liabilities | 300 | 250 |
P acquired 80% S when S’s Reserves were 40.
At that date the FV of S’s NA was 150.
Difference is due to Land.
There have been no issues of shares since acquisition.
P uses the FV of NCI method at acquisition, and at acquisition the FV of NCI was 35. No impairment of goodwill.
Prepare the consolidated set of accounts.
Step 1: Prepare S’s Equity Table
| Now | At Acquisition | Post-Acquisition | |
| Share Capital | 100 | 100 | 0 |
| Retained Earnings | 400 | 40 | 360 |
| Land | 10 | 10 | 0 |
| Total | 510 | 150 | 360 |
Now the extra 10 FV adjustment now must be added to the PPE when we come to do the SFP at the end.
Step 2: Goodwill
| Consideration | 120 |
| NCI | 35 (Given) |
| FV of Net Assets Acquired | (150) from S’s Equity table |
| Goodwill | 5 |
Step 3: Do any adjustments in the question
: NONE
Step 4: NCI
| NCI @ Acquisition | 35 | (given) |
| NCI % of S’s post acquisition profits | 72 | (20% x 360 (from S’s Equity table) |
| Impairment | (0) | (20% x 0) |
| NCI on the SFP | 107 |
Step 5: Reserves
| P | 220 | |
| S | 288 | (80% x 360 (from S’s equity table)) |
| Impairment | (0) | (80% x 0) |
| 508 |
Step 6: Prepare the final SFP (with all adjustments included)
| P | S | Group | |
| Non-Current Asset | 500 | 600 | 1,110 (including 10 from S’s equity table) |
| Investment in S | 120 | Goodwill | 5 |
| Current Assets | 100 | 200 | 300 |
| Share Capital | 100 | 100 | 100 |
| Reserves | 220 | 400 | 508 |
| NCI | 107 | ||
| Current Liabilities | 100 | 50 | 150 |
| Non-Current Liabilities | 300 | 250 | 550 |
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