Ener The food producing company Bugarine purchase on 312x chers of Cocoa La sta price of 200 M Cocoast of ones. The wobe 50 Motor in time period The for sale of the PPE Cocoa 100 the cost of the inventores of Cocoa VC 10 M.Cower than a centuries Fotosing Francia nem LM Asset 4 20 he Duhou wiltintomination wichthod for good determination did you on the posted Women Parform the concato per 31.120 ingen and provide edades The negation Corporate comporte www.12 nyweler Lider PPE www.motorycted for than one month on soe Perform the concerto per 31.12.X4 using a consolation weet and provide to required retries Erra Using and a gol your hearing a cargo Od the contestato ented by some De which changes that company content in the nation of the plan pable informe cuero deifend Now Do not intention from bulan racons where The following information is for PS31.12.2005 His nainar 1 FLM EMOCITY ht Red . Pads of the shodyear when aning of . Pwd 5 hoboth dry oinary with a perf .heast you to had performed cremely well and the trend is not expedie Neda Posty 100 M code the cost considere boeta Mochie . of . The market price of share of them of SLU by PL 1306 is the group to the non controlling interesat e Prepare e grupamento no 3.12.20 Exercise 1 (20 Points) The food producing company Sugar Inc. purchases on 31.12.x3 80% of the shares of Cocoa Ltd at a price of 200 Mio. . Cocoa Ltd. has a valuable list of business customers. The value of this list is assessed to be 50 Mio. . This list will provide benefits for an indefinite time period. The fair value of the PP&E of Cocoa Inc. is 100 Mio. and the cost of the inventories of Cocoa Inc. is 10 Mio. lower than the current market value of these inventories. Following financial statement data for 31.12.X3 is available: 180 Single financial statement 31.12.X3 SInc CLtd Assets Goodwill Intangibles 15 PP&E 80 Investments 2001 Current assets 40 Sum 455 120 Liabilities and equity Share capital 1001 60 Retained eamings 105 20 Liabilities 250 40] Sum 455 120 60 a) Determine the amount of goodwill resulting from this transaction. Which method for goodwill determination did you use based on the provided information. b) Perform the consolidation per 31.12.X3 using a consolidation worksheet and provide the required adjustment entries. c) The integration of Cocoa Ltd. into the group was successful. Both companies report the same financial information per 31.12.X4 as one year earlier. Cocoa Ltd. depreciates PP&E over 2 years and uses FIFO to measure inventory and typically inventory is held for less than one month on stock. Perform the consolidation per 31.12.X4 using a consolidation worksheet and provide the required adjustment entries. Exercise 2 (20 points) Using an example of a group of your choice (e.g. an airline group, a car producer group etc.); a) Outline the typical types of intracompany transactions and balances that need to be eliminated by providing some examples. b) Discuss which challenges the parent company encounters in the elimination of the under a) identified transactions and balances. c) Explain possible solutions for the challenges identified under a). Note: Do not just list the transactions from my slides but explain typical cases with reference to your chosen examples! Explain your ideas and thought! You are getting 20 points!) Exercise 3 (20 Points) The following financial information is available for P Ltd. and S Ltd at 31.12.20x5: P Ltd S Ltd 1920 Single financial statement 31.12.X5 Assets PP&E Investments Inventories Receivables Cash Sum Liabilities and equity Share capital Retained earnings Long-term borrowings Payables Sum 8400 3200 3520 2320 1600 19040 1120 1680 32) 4752 2720 800 9600 3440 1600 4400 19040 1232) 4752 The following further information is available: P Ltd had acquired 80% of the shares of S Ltd 5 years ago, when retained earnings of S Ltd were 288 Mio. . P Ltd had paid 3,200 Mio. for its stake in S Ltd. P Ltd and S Ltd have both issued only ordinary shares with a par value of 1 . In the past 5 years S Ltd had performed extremely well and this trend is not expected to reverse in the future. At the date of acquisition PP&E of S Ltd was revalued upwards by 160 Mio. (this was not recorded in the accounts of S Ltd). Depreciation would have been 128 Mio. higher. S Ltd buys goods from P Ltd upon which P Ltd earns a margin of 20%. At 31.12.20x5 the inventories of S Ltd include 720 Mio of goods purchased from P Ltd. At 31.12.20x5 P Ltd has receivables of 560 Mio. owed by S Ltd and payables of 240 Mio. owed to S Ltd. The market price of shares of S Ltd just before the acquisition of S Ltd by P Ltd was 1.30 . It is the group's policy to value the non-controlling interest at fair value. Prepare the group consolidated statement of financial position as at 31.12.2005 (Hint: Determine the fair value of equity of S Ltd. and goodwill at acquisition first) Ener The food producing company Bugarine purchase on 312x chers of Cocoa La sta price of 200 M Cocoast of ones. The wobe 50 Motor in time period The for sale of the PPE Cocoa 100 the cost of the inventores of Cocoa VC 10 M.Cower than a centuries Fotosing Francia nem LM Asset 4 20 he Duhou wiltintomination wichthod for good determination did you on the posted Women Parform the concato per 31.120 ingen and provide edades The negation Corporate comporte www.12 nyweler Lider PPE www.motorycted for than one month on soe Perform the concerto per 31.12.X4 using a consolation weet and provide to required retries Erra Using and a gol your hearing a cargo Od the contestato ented by some De which changes that company content in the nation of the plan pable informe cuero deifend Now Do not intention from bulan racons where The following information is for PS31.12.2005 His nainar 1 FLM EMOCITY ht Red . Pads of the shodyear when aning of . Pwd 5 hoboth dry oinary with a perf .heast you to had performed cremely well and the trend is not expedie Neda Posty 100 M code the cost considere boeta Mochie . of . The market price of share of them of SLU by PL 1306 is the group to the non controlling interesat e Prepare e grupamento no 3.12.20 Exercise 1 (20 Points) The food producing company Sugar Inc. purchases on 31.12.x3 80% of the shares of Cocoa Ltd at a price of 200 Mio. . Cocoa Ltd. has a valuable list of business customers. The value of this list is assessed to be 50 Mio. . This list will provide benefits for an indefinite time period. The fair value of the PP&E of Cocoa Inc. is 100 Mio. and the cost of the inventories of Cocoa Inc. is 10 Mio. lower than the current market value of these inventories. Following financial statement data for 31.12.X3 is available: 180 Single financial statement 31.12.X3 SInc CLtd Assets Goodwill Intangibles 15 PP&E 80 Investments 2001 Current assets 40 Sum 455 120 Liabilities and equity Share capital 1001 60 Retained eamings 105 20 Liabilities 250 40] Sum 455 120 60 a) Determine the amount of goodwill resulting from this transaction. Which method for goodwill determination did you use based on the provided information. b) Perform the consolidation per 31.12.X3 using a consolidation worksheet and provide the required adjustment entries. c) The integration of Cocoa Ltd. into the group was successful. Both companies report the same financial information per 31.12.X4 as one year earlier. Cocoa Ltd. depreciates PP&E over 2 years and uses FIFO to measure inventory and typically inventory is held for less than one month on stock. Perform the consolidation per 31.12.X4 using a consolidation worksheet and provide the required adjustment entries. Exercise 2 (20 points) Using an example of a group of your choice (e.g. an airline group, a car producer group etc.); a) Outline the typical types of intracompany transactions and balances that need to be eliminated by providing some examples. b) Discuss which challenges the parent company encounters in the elimination of the under a) identified transactions and balances. c) Explain possible solutions for the challenges identified under a). Note: Do not just list the transactions from my slides but explain typical cases with reference to your chosen examples! Explain your ideas and thought! You are getting 20 points!) Exercise 3 (20 Points) The following financial information is available for P Ltd. and S Ltd at 31.12.20x5: P Ltd S Ltd 1920 Single financial statement 31.12.X5 Assets PP&E Investments Inventories Receivables Cash Sum Liabilities and equity Share capital Retained earnings Long-term borrowings Payables Sum 8400 3200 3520 2320 1600 19040 1120 1680 32) 4752 2720 800 9600 3440 1600 4400 19040 1232) 4752 The following further information is available: P Ltd had acquired 80% of the shares of S Ltd 5 years ago, when retained earnings of S Ltd were 288 Mio. . P Ltd had paid 3,200 Mio. for its stake in S Ltd. P Ltd and S Ltd have both issued only ordinary shares with a par value of 1 . In the past 5 years S Ltd had performed extremely well and this trend is not expected to reverse in the future. At the date of acquisition PP&E of S Ltd was revalued upwards by 160 Mio. (this was not recorded in the accounts of S Ltd). Depreciation would have been 128 Mio. higher. S Ltd buys goods from P Ltd upon which P Ltd earns a margin of 20%. At 31.12.20x5 the inventories of S Ltd include 720 Mio of goods purchased from P Ltd. At 31.12.20x5 P Ltd has receivables of 560 Mio. owed by S Ltd and payables of 240 Mio. owed to S Ltd. The market price of shares of S Ltd just before the acquisition of S Ltd by P Ltd was 1.30 . It is the group's policy to value the non-controlling interest at fair value. Prepare the group consolidated statement of financial position as at 31.12.2005 (Hint: Determine the fair value of equity of S Ltd. and goodwill at acquisition first)