3a Example Purchase with a minorityon-controlling interest PMAB acquires 50 percent of the shares (50 percent of the voting rights) in DB at SEK 600 M and one owner owns the other 50 percent of the shares. PMAB has an option to acquire the rest of the shares at a fixed price (SEK 600mn) within four years. The book value of equity is SEK 690mn. Purchase price Purchased equity Goodwill 3a-1 Example Purchase accounted for as a proportionate consolidation PMAB acquires 50 percent of the shares (50 percent of the voting rights) in DB at SEK 600 M and one owner owns the other 50 percent of the shares. PMAB has an option to acquire the rest of the shares at a fixed price (SEK 600mn) within four years. The book value of equity is SEK 690mn. Complete the consolidated balance sheet and the consolidated income statement below. Use the technique for proportionate consolidation. Purchase price Purchased equity Goodwill 1 3 Example Purchase with a minorityon-controlling interest (Proportionate consolidation) 2 3 Non-controlling/minority 4 Purchase price 5 Book value equity 6 Real estate 7 Other intangibles 8 Tax rate 50% 600.0 600.0 690.0 345 -577.5 255.0 -210.0 -37.5% 10 31/12 20x2 Adjustment PMAB DB Note Non-contr Amortisation CBS 11 12 GoodwillI 13 Other intangible 14 Real estate 255 A 420 210.0 1155.0 15 Other assets 577.5 16 Shares in DB 17 Cash 600 0.0 75.0 150 600 18 Total assets 1725.0 1117.5 20 Minority/NC-interest 21 Share capital* 22 Other equity 23 Deferred tax 0.0 C/E 600.0 600 450 75.0 D/E 390.0 67.5 135.0 0.0 24 Provision 25 Debt 375.0 750.0 600 1117.5 26 Total debt/EQ 1725.0 27 * 40 mn shares 28 DB Minority 50% Adjustment Amortisation CIS 29 20x2 PMAB 30 Sales 1582.5 791.3 -600.0 31 Operating costs 32 Depreciations 33 EBIT -1200.0 -45.0 -90.0 146.3 292.5 -52.5 34 Financial net -26.3 35 EBT 36 Deferred tax 37 Taxes paid 38 Net income 120.0 240 -45.0 -22.5 -45.0 -22.5 75.0 150.0 39 40 Profit distribution 41 Non-controlling intrest 42 Parent company 43 44 45 A Book goodwill 46 B eliminate shares in DB 47 C eliminate the share capital in DB (less minority adjustment) 48 D eliminate the acquired equity in DB less what has been eliminated in C) 49 E adjust for the non-controlling interest (50% of equity) 50 F calculate the non-constrolling interest (50%) of net earnings in DB 51 G Calculate the parent company share as net earnings in the group, less non-constrolling interests 52 53 3a Example Purchase with a minorityon-controlling interest PMAB acquires 50 percent of the shares (50 percent of the voting rights) in DB at SEK 600 M and one owner owns the other 50 percent of the shares. PMAB has an option to acquire the rest of the shares at a fixed price (SEK 600mn) within four years. The book value of equity is SEK 690mn. Purchase price Purchased equity Goodwill 3a-1 Example Purchase accounted for as a proportionate consolidation PMAB acquires 50 percent of the shares (50 percent of the voting rights) in DB at SEK 600 M and one owner owns the other 50 percent of the shares. PMAB has an option to acquire the rest of the shares at a fixed price (SEK 600mn) within four years. The book value of equity is SEK 690mn. Complete the consolidated balance sheet and the consolidated income statement below. Use the technique for proportionate consolidation. Purchase price Purchased equity Goodwill 1 3 Example Purchase with a minorityon-controlling interest (Proportionate consolidation) 2 3 Non-controlling/minority 4 Purchase price 5 Book value equity 6 Real estate 7 Other intangibles 8 Tax rate 50% 600.0 600.0 690.0 345 -577.5 255.0 -210.0 -37.5% 10 31/12 20x2 Adjustment PMAB DB Note Non-contr Amortisation CBS 11 12 GoodwillI 13 Other intangible 14 Real estate 255 A 420 210.0 1155.0 15 Other assets 577.5 16 Shares in DB 17 Cash 600 0.0 75.0 150 600 18 Total assets 1725.0 1117.5 20 Minority/NC-interest 21 Share capital* 22 Other equity 23 Deferred tax 0.0 C/E 600.0 600 450 75.0 D/E 390.0 67.5 135.0 0.0 24 Provision 25 Debt 375.0 750.0 600 1117.5 26 Total debt/EQ 1725.0 27 * 40 mn shares 28 DB Minority 50% Adjustment Amortisation CIS 29 20x2 PMAB 30 Sales 1582.5 791.3 -600.0 31 Operating costs 32 Depreciations 33 EBIT -1200.0 -45.0 -90.0 146.3 292.5 -52.5 34 Financial net -26.3 35 EBT 36 Deferred tax 37 Taxes paid 38 Net income 120.0 240 -45.0 -22.5 -45.0 -22.5 75.0 150.0 39 40 Profit distribution 41 Non-controlling intrest 42 Parent company 43 44 45 A Book goodwill 46 B eliminate shares in DB 47 C eliminate the share capital in DB (less minority adjustment) 48 D eliminate the acquired equity in DB less what has been eliminated in C) 49 E adjust for the non-controlling interest (50% of equity) 50 F calculate the non-constrolling interest (50%) of net earnings in DB 51 G Calculate the parent company share as net earnings in the group, less non-constrolling interests 52 53