- 10 Marks
FR – L2 – Q93 – Consolidated Financial Statements
Question
APEX LTD
The draft statements of financial position as at 31 December 20X4 of three companies are set out below.
| Apex Ltd GHS’000 | Nexus Ltd GHS’000 | Zephyr Ltd GHS’000 | |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 400 | 100 | 160 |
| Investments: | |||
| – shares in Nexus Ltd (60%) | 75 | ||
| – shares in Zephyr Ltd (30%) | 30 | ||
| Current assets | 445 | 160 | 80 |
| Total assets | 950 | 260 | 240 |
| Equity and liabilities | |||
| Share capital | 100 | 30 | 60 |
| Retained earnings | 650 | 180 | 100 |
| Non-current loans | 200 | 50 | 80 |
| Total equity and liabilities | 950 | 260 | 240 |
The reserves of Nexus Ltd and Zephyr Ltd when the investments were acquired were GHS’000 70 and GHS’000 30 respectively.
Required
Prepare the consolidated statement of financial position as at 31 December 20X4.
Answer
APEX LTD
Consolidated statement of financial position as at 31 December 20X4
| Assets | GHS’000 |
|---|---|
| Non-current assets | |
| Property, plant and equipment | 500 |
| Interest in associate (W6) | 51 |
| Goodwill | 15 |
| Current assets | 605 |
| Total assets | 1,171 |
| Equity and liabilities | |
| Capital and reserves | |
| Share capital | 100 |
| Retained earnings (W5) | 737 |
| 837 | |
| Non-controlling interest | 84 |
| Long-term liabilities | 250 |
| Total equity and liabilities | 1,171 |
Workings
(1) Group structure
- Apex Ltd owns 60% of Nexus Ltd (subsidiary).
- Apex Ltd owns 30% of Zephyr Ltd (associate).
(2) Net assets
| Nexus Ltd | Reporting date GHS’000 | Acquisition GHS’000 |
|---|---|---|
| Share capital | 30 | 30 |
| Retained earnings | 180 | 70 |
| 210 | 100 |
(3) Goodwill
| Nexus GHS’000 | Zephyr GHS’000 | |
|---|---|---|
| Cost of investment | 75 | 30 |
| Share of net assets acquired | (60% × 100 (W2)) | (30% × 90 (W2)) |
| (60) | (27) | |
| 15 | 3 |
(4) Non-controlling interest
| GHS’000 | |
|---|---|
| Nexus (40% × 210) | 84 |
(5) Retained earnings
| GHS’000 | |
|---|---|
| Apex | 650 |
| Nexus (60% × 110 (W2)) | 66 |
| Zephyr (30% × (100-30)) | 21 |
| 737 |
(6) Investment in associate
| GHS’000 | |
|---|---|
| Cost | 30 |
| Share of post-acquisition profit (30% × (100-30)) | 21 |
| 51 |
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