Preparing simple consolidated financial statement

Question 1

How to find goodwill

Answer 1

Cost of investment + NCI - Fair Value

Question 2

Fair value

Answer 2

(Shares x their price each)+reserves

Question 3

What to equity account in consolidated financial statement

Answer 3

Associate is accounted in equity, it is an associate not only by more than 20% & less than 50%, it will give significant influence is it has 2 from 5 board members on the board.

Question 4

Equity accounting will not always be used even if the company has more than 20% & less than 50%

Answer 4

because this does not mean that it has significant influence over the other company

Question 5

to find consolidated gross profit

Answer 5

you just add both profits together, do not include the controlling % at any time
- take notice of the months until year end, it will not always include a full year

Question 6

to find consolidated revenue

Answer 6

add both revenues together.
do not include any %
do not forget about the months till year end
do not forget to deduct the intra-group sales

Question 7

to find consolidated COS

Answer 7

Add both COS’s together and do not include the %
Take notice of the months
Deduct intra group sales
Unrealised profit - profit% x amount not sold

Question 8

Consolidated goodwill

Answer 8

• amount paid for acquisition - (amount x % x per share)
• Shares issued - (amount x % x exchange of shares x fair value of parent company.
• NCI at acquisition
• Deduct Net Assets ;
  
  • Equity share capital
  • Share premium
  • Retained earnings

Question 9

Consolidated NCI of group profit after tax

Answer 9

• subsidiary profit after tax x months from acquisition till year end x % of NCI

Question 10

Fair value of consideration paid to gain control

Answer 10

• amount of shares issued by subsidiary x % x amount paid per share to acquire the subsidiary
  +
• amount of shares issued by subsidiary x % x the exchange of shares x fair value of an equity share from the parent

Question 11

if total debits 1000 & total credits is 1500

Answer 11

in suspense accounts we do - a debit balance of 500