- 8 Marks
FR – L2 – Q77 – Consolidated Financial Statements
Question
Statements of financial position at 31 December 20X4
| Nexis Ltd | Vion Ltd | |
|---|---|---|
| GH¢ | GH¢ | |
| Investment in Vion Ltd | 60,000 | |
| Sundry assets | 247,500 | 226,600 |
| 307,500 | 226,600 | |
| Share capital | 120,000 | 50,000 |
| Retained earnings | 87,500 | 70,000 |
| Liabilities | 100,000 | 106,600 |
| 307,500 | 226,600 |
Nexis Ltd bought 80% of Vion Ltd when the balance on Vion Ltd’s retained profit was GH¢50,000.
Required
Prepare the consolidated statement of financial position at 31 December 20X4.
Answer
Nexis Ltd
Consolidated statement of financial position as at 31 December 20X4
| GH¢ | |
|---|---|
| Sundry net assets (207,500 + 226,600) | 434,100 |
| Goodwill (W3) | 8,800 |
| 442,900 | |
| Equity capital | 120,000 |
| Retained earnings (W5) | 92,300 |
| Non-controlling interests (W4) | 24,000 |
| Sundry liabilities (100,000 + 106,600) | 206,600 |
| 442,900 |
Workings
(1) Group structure
Nexis
80%
Vion
(2) Net assets of Vion
| Reporting date | Date of acquisition | Post acquisition | |
|---|---|---|---|
| GH¢ | GH¢ | GH¢ | |
| Share capital | 50,000 | 50,000 | |
| Retained earnings | 70,000 | 50,000 | 20,000 |
| 120,000 | 100,000 |
(3) Goodwill
| GH¢ | |
|---|---|
| Cost | 60,000 |
| Net assets acquired (80% × 100,000) (W2) | (80,000) |
| (20,000) |
(4) Non-controlling interest
| GH¢ | |
|---|---|
| 20% × 120,000 (W2) | 24,000 |
(5) Retained earnings
| GH¢ | |
|---|---|
| Nexis | 87,500 |
| Vion (80% × (70,000 – 50,000) (W2)) | 16,000 |
| “Negative goodwill” (W3) | 20,000 |
| 123,500 |
Institute of Chartered Accountants, Ghana
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