Please do show all your workings as well as the consolidated statement of financial position on the paper provided On 1 January 2014 Parent plc acquired 100% of the equity shares in Subsid plc for £72,000 to gain control. The retained earnings of the Subsid plc at 1 January 2014 were £9,600. The fair value of the land in Subsid plc was £3,000 above book value. During the year Parent plc sold some of its inventory to Subsid plc for £8,400, which represented cost plus a mark-up of 40%. Some of these goods, 80%, are still in the inventory of Subsid plc at 31 December 2014. The statements of financial position of the two companies as at 31 December 2014 are shown below. Parent plc Subsid plc 63,000 Non-Current Assets 50,000 Investment in Subsid plc 72,000 Current Assets Inventories 3,800 9,600 Parent Current Account 19,200 Other Current Assets 9,600 32,400 Current Liabilities Subsid. Current Account 19,200 15.000 7,800 Other Current Liabilities 25.000 7,600 Net Current Assets Net Assets 129.600 70,800 Equity Share Capital Retained Earnings 57,600 50,400 72,000 20,400 129.600 70.800 Required: Prepare a consolidated statement of financial position for Parent plc as at 31 December 2014.
Please do show all your workings as well as the consolidated statement of financial position on the paper provided On 1 January 2014 Parent plc acquired 100% of the equity shares in Subsid plc for £72,000 to gain control. The retained earnings of the Subsid plc at 1 January 2014 were £9,600. The fair value of the land in Subsid plc was £3,000 above book value. During the year Parent plc sold some of its inventory to Subsid plc for £8,400, which represented cost plus a mark-up of 40%. Some of these goods, 80%, are still in the inventory of Subsid plc at 31 December 2014. The statements of financial position of the two companies as at 31 December 2014 are shown below. Parent plc Subsid plc 63,000 Non-Current Assets 50,000 Investment in Subsid plc 72,000 Current Assets Inventories 3,800 9,600 Parent Current Account 19,200 Other Current Assets 9,600 32,400 Current Liabilities Subsid. Current Account 19,200 15.000 7,800 Other Current Liabilities 25.000 7,600 Net Current Assets Net Assets 129.600 70,800 Equity Share Capital Retained Earnings 57,600 50,400 72,000 20,400 129.600 70.800 Required: Prepare a consolidated statement of financial position for Parent plc as at 31 December 2014.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter8: Investing Activities
Section: Chapter Questions
Problem 23PC
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Question
Be sure to also add parent and subs columns aswell
Transcribed Image Text:Please do show all your workings as well as the consolidated statement of financial
position on the paper provided
On 1 January 2014 Parent plc acquired 100% of the equity shares in Subsid plc for £72,000
to gain control. The retained earnings of the Subsid plc at 1 January 2014 were £9,600. The
fair value of the land in Subsid plc was £3,000 above book value.
During the year Parent plc sold some of its inventory to Subsid plc for £8,400, which
represented cost plus a mark-up of 40%. Some of these goods, 80%, are still in the
inventory of Subsid plc at 31 December 2014.
The statements of financial position of the two companies as at 31 December 2014 are
shown below.
Parent plc
Subsid plc
Non-Current Assets
50,000
63,000
Investment in Subsid plc
72,000
Current Assets
Inventories
3,800
9,600
Parent Current Account
19,200
Other Current Assets
9,600
32,400
Current Liabilities
Subsid. Current Account
19,200
Other Current Liabilities
25,000
7,600
15,000
7,800
Net Current Assets
Net Assets
129.600
70.800
Equity
Share Capital
Retained Earnings
57,600
50,400
72,000
20,400
129.600
Ζ0.800
Required:
Prepare a consolidated statement of financial position for Parent plc as at 31 December
2014.
Expert Solution
Consolidation
Consolidation refers to combining the financial statement of subsidiary company in the financial statement of holding company.
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