Question Case P Group is formed by P Ltd, $1 Ltd, and $2 Ltd. The current separate financial statements of P Ltd, $1 itd and 1 tad ars chrown halnw 11 fiourec are in f unlece ntharwice indliratad The fair value of identifiable net assets of $1 Ltd and $2 Ltd were close to book value at both date of acquisition, except for a fixed asset of $2Lt. The book value and fair value of the fixed asset were $600,000 and $700,000, respectively, as at 1 January 200, and were $500,000 and $800,000, respectively, as at 1 January 201. The estimated useful life of the fixed asset was 5 years at 1 January 201 with no residual value. Additional information: 1. P Ltd recognizes non-controlling interests ( NCI) at full fair value. Fair value of NCl of S1Ltd includes both direct NCl of S1Ltd and indirect NCl share of S2Ltd. Fair value of NCl of S2Ltd is direct NCI of S2 Ltd. 2. Assets and liabilities whose classification are not shown in the Statement of Financial Position should be included in "Other net assets". 3. Assume a tax rate of 20% and that dividends income are tax-exempt. Required: 1. Analyze the group structure of the companies involved at the year ended 20x2, comment on whether P Ltd has "control" or "significant influence" over S1 Ltd and S2 Ltd, and discuss the non-controlling interests ( NCI) involved. ( 25 marks) 2. Describe the available approaches to consolidate the subsidiaries of P Ltd and how they can be applied for the current situation. Comment on the differences between the approaches and the conditions that they are applicable. (25 marks) 3. Prepare the consolidation entries for the year ended 31 December 20x2. (20 marks) 4. Prepare the consolidated statement of profit or loss for the year ended 31 December 20x2 and the consolidated statement of financial position as at 31 December 202 for P Group. (30 marks) Question Case P Group is formed by P Ltd, $1 Ltd, and $2 Ltd. The current separate financial statements of P Ltd, $1 itd and 1 tad ars chrown halnw 11 fiourec are in f unlece ntharwice indliratad The fair value of identifiable net assets of $1 Ltd and $2 Ltd were close to book value at both date of acquisition, except for a fixed asset of $2Lt. The book value and fair value of the fixed asset were $600,000 and $700,000, respectively, as at 1 January 200, and were $500,000 and $800,000, respectively, as at 1 January 201. The estimated useful life of the fixed asset was 5 years at 1 January 201 with no residual value. Additional information: 1. P Ltd recognizes non-controlling interests ( NCI) at full fair value. Fair value of NCl of S1Ltd includes both direct NCl of S1Ltd and indirect NCl share of S2Ltd. Fair value of NCl of S2Ltd is direct NCI of S2 Ltd. 2. Assets and liabilities whose classification are not shown in the Statement of Financial Position should be included in "Other net assets". 3. Assume a tax rate of 20% and that dividends income are tax-exempt. Required: 1. Analyze the group structure of the companies involved at the year ended 20x2, comment on whether P Ltd has "control" or "significant influence" over S1 Ltd and S2 Ltd, and discuss the non-controlling interests ( NCI) involved. ( 25 marks) 2. Describe the available approaches to consolidate the subsidiaries of P Ltd and how they can be applied for the current situation. Comment on the differences between the approaches and the conditions that they are applicable. (25 marks) 3. Prepare the consolidation entries for the year ended 31 December 20x2. (20 marks) 4. Prepare the consolidated statement of profit or loss for the year ended 31 December 20x2 and the consolidated statement of financial position as at 31 December 202 for P Group. (30 marks)
