P44 Consolidation and analytical check on non-controlling interests On 1 January 20x4, P Co acquired 90% of S Co. Details of S Co as at the date of acquisition are as follows: Share capital Retained earnings as at 1 January 20x4. $1.000.000 150.000 $1.150.000 Fair value was different from book value of the following assets of S Co: Fair value 3900 000 Book value $800.000 Foxed assets . Remaining useful life for the fixed assets as at acquisition date was five years and residual value of the fixed assets was zero. Fair value of non controlling interests as at acquisition date was $345,000. The financial statements of P Co and S Co for the year ended 31 December 2005 are shown below. Assume a tax rate of 20% throughout page 224 Income Statement and Partial Statement of Changes in Equity For Year Ended 31 December 20x5 Sales...... ...... Cost of sales .................. Gross profit Operating expenses.. Operating profit..................... Dividend income from S............. Interest income - Sand bank... Interest expense to P....... Profit before tax.. . Tax at 20%................ Profit after tax....... Dividends declared............ Profit retained........ ................... Retained earnings, 1 January...... ... Retained earnings, 31 December P COS Co $10,000,000 $3,500,000 (7,820,000) (1,200,000) $ 2,180,000 $2,300,000 (800,000) (560,000) $ 1,380,000 $1,740,000 54,000 100,000 (90,000) $ 1,534,000 $1,650,000 (306,800) (330,000) $ 1,227,200 $1,320,000 (120,000) (60,000) $ 1,107,200 $1,260,000 1,300,000 400,000 $ 2,407,200 2CM $1,660,000 ... .. ...... . Statement of Financial Position As at 31 December 20x5 SCO Investment in S Co......... $2,000,000 Fixed assets............. Loan receivable from S Co....... Inventory.. Accounts receivable.......... Other receivables............ Cash P Co $3,200,000 4,500,000 500,000 1,250,000 1,300,000 200,000 670,000 500,000 120,000 320,000 $11,270,000 $3,000,000 2,407,200 Share capital Retained earnings Loan payable to P Accounts payable... Other payables $3,290,000 $1,000,000 1,660,000 500,000 80,000 50,000 $3.290,000 5,742,800 120,000 $11,270,000 Required: 1. Prepare the consolidation adjustments for the year ended 31 December 20x5. 2. Prepare the consolidation worksheets for the year ended 31 December 20x5. 3. Reconcile the non-controlling interests balance as at 31 December 20x5. P44 Consolidation and analytical check on non-controlling interests On 1 January 20x4, P Co acquired 90% of S Co. Details of S Co as at the date of acquisition are as follows: Share capital Retained earnings as at 1 January 20x4. $1.000.000 150.000 $1.150.000 Fair value was different from book value of the following assets of S Co: Fair value 3900 000 Book value $800.000 Foxed assets . Remaining useful life for the fixed assets as at acquisition date was five years and residual value of the fixed assets was zero. Fair value of non controlling interests as at acquisition date was $345,000. The financial statements of P Co and S Co for the year ended 31 December 2005 are shown below. Assume a tax rate of 20% throughout page 224 Income Statement and Partial Statement of Changes in Equity For Year Ended 31 December 20x5 Sales...... ...... Cost of sales .................. Gross profit Operating expenses.. Operating profit..................... Dividend income from S............. Interest income - Sand bank... Interest expense to P....... Profit before tax.. . Tax at 20%................ Profit after tax....... Dividends declared............ Profit retained........ ................... Retained earnings, 1 January...... ... Retained earnings, 31 December P COS Co $10,000,000 $3,500,000 (7,820,000) (1,200,000) $ 2,180,000 $2,300,000 (800,000) (560,000) $ 1,380,000 $1,740,000 54,000 100,000 (90,000) $ 1,534,000 $1,650,000 (306,800) (330,000) $ 1,227,200 $1,320,000 (120,000) (60,000) $ 1,107,200 $1,260,000 1,300,000 400,000 $ 2,407,200 2CM $1,660,000 ... .. ...... . Statement of Financial Position As at 31 December 20x5 SCO Investment in S Co......... $2,000,000 Fixed assets............. Loan receivable from S Co....... Inventory.. Accounts receivable.......... Other receivables............ Cash P Co $3,200,000 4,500,000 500,000 1,250,000 1,300,000 200,000 670,000 500,000 120,000 320,000 $11,270,000 $3,000,000 2,407,200 Share capital Retained earnings Loan payable to P Accounts payable... Other payables $3,290,000 $1,000,000 1,660,000 500,000 80,000 50,000 $3.290,000 5,742,800 120,000 $11,270,000 Required: 1. Prepare the consolidation adjustments for the year ended 31 December 20x5. 2. Prepare the consolidation worksheets for the year ended 31 December 20x5. 3. Reconcile the non-controlling interests balance as at 31 December 20x5
