Question

L o questions Question 3 Statements ents of Financial Position as at 31 December 2016 Gary Ltd €'000 Paul Ltd €000 Assets Non-current Assets Property, plant and equipment Investments in Paul Ltd €'000 €'000 1,305 5,670 2,160 7,830 1,305 2,160 1,555 1,080 765 745 405 4.795 Current Assets Inventories Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Capital and Reserves Ordinary share capital Retained earnings 12,625 6,300 2,275 8,575 1.800 565 2,365 1,080 Non-current Liabilities Debenture loans Current Liabilities Trade payables Bank overdraft Total Equity and Liabilities 2,970 630 225 2,970 12,625 855 3,220 Additional Information: 1. Gary ple acquired 80% of Paul Ltd on 1" May 2016 and their policy is to value non-controlling interest at its proportionate share of the fair value of the subsidiary's identifiable net assets (Method 1 of IFRS 3 Business Combinations) 2. Gary Ltd and Paul Ltd have recently approved dividends payable for the year ended 31 December 2016 of € 375,000 and €150,000 respectively. These have not been reflected in the financial statements above. 3. Paul's profits for the year ended 31 December 2016 were € 360,000. 4. On 1 October 2016, Paul Ltd sold a piece of plant which it purchased 8 years ago to Gary Ltd for €300,000; the net book value of the plant at the time of sale was €200,000. Paul Ltd charge depreciation at 10% straight line and on a time apportioned basis. Gary Ltd are depreciating the asset over its remaining useful economic life. Requirement: (a) Prepare the consolidated Statement of Financial Position for Gary Group as at 31 December 2016, showing the following accounts: - Cost of Control - Non-Controlling Interests - Consolidated Reserves 45 mark

Answer 1

Ans. Calculation of Cost of control..     (in '000')

Total investment in Paul Ltd.                       :      2160

Less: Share of pre acquisition dividend of paul ltd :      120

        (150*.80)

Less: Pre acquisition profit(565-360-150)X.8          :       44

Less: Pre Share of current year profit (360X4/12).80:    96

Less: Share of capital                                          :   1440

Net                                                                     :    460

Goodwill is 460,000 that means Gary Ltd paid extra amount to paul which we will treat as goodwill..

II Calculation of minority Interest or non controlling share of paul ltd (value in '000')

Share in capital (1800X.2)           =   360

Share in profit (565-150)X.2         =   83

Total                                         =    443

III Calculation of Consolidated reserve of gary Ltd.. (in '000')

Total Retained earning of Gary ltd at 31-12-2016   :    2275

Less: Dividend payable amount                         : (375)

Less: Profit of plant sale to paul ltd (300-100)       :   (100)

Add: Profit share of paul ltd post period

        (565-150-120).8                                         :   236

Total consolidated reverse of gary ltd           :   2036

Minority interest amount                                     :    443

Total                                                                 :    2479