1. Advanced Financial Accounting
Lecture-40

2. Question Balance Sheet as 31st December 2008
H (Rs)
S (Rs)
Fixed assets
1,000
550
Investment in S.
750
---
Current assets
450
350
Total assets
2,150
900
Share capital
1,200
400
Reserves
700
300
Current liabilities
250
200
Total liabilities & equities
The Holding Co.(H) acquired 80% share of the Subsidiary Co. (S) on 31st December 2008 when it’s reserves were worth Rs. 200 and the fair value of net assets of S were Rs. 300 more tan the book value.
Required: Prepare the Consolidated Balance Sheet as at 31st December 2008.
The data will appear as row-wise and individual amount will be highlighted one by one

3. Working-1
Holding % = 80%
Monitory % = 20%

4. Working -2 400 200 100 300 900 Pre-acquisition Post-acquisition
Capital
400
Reserves
200
100
Fair value
300
Total
900
Data will appear row-wise

5. Working -3 Goodwill Cost of investment in subsidiary Co. 750
Less Fair value of net assets (900 x 80%) 720 30

6. Working -4 Group Reserves All reserves of parent Co. 700
Post acquisition of subsidiary Co.(100x80%) 80
780

7. Working -5 Minority Interest Owner’s equity of S Co. . 700
Add Fair value
1,000
Minority interest = 1,000 x 20% = 200

8. Working Pre-acquisition Post-acquisition Share capital 400 --- Reserve
200
100
Required reserve
300
Total
900
Holding 80%
= 800
Minority 20%
= 200
First total
Then pre
Then post
Than OE then 500
Then 420 and so on

9. Solution Consolidate Balance Sheet As 31st December 2008
Rs.
Fixed Assets (1, )
1,850
Goodwill. 30
Current Assets ( )
750
Total Assets
2,630
Owner’s Equity
Share Capital ,200
Reserves
Minority Interest
2,180
Current Liabilities
450

10. Question Balance Sheet as 31st December 2008
H (Rs)
S (Rs)
Fixed assets
1,000
550
Investment in S.
750
---
Current assets
450
350
Total assets
2,150
900
Share capital
1,200
400
Reserves
700
300
Current liabilities
250
200
Total liabilities & equities
The Holding Co.(H) acquired 80% share of the Subsidiary Co. (S) on 31st December 2008 when it’s reserves were worth Rs. 200 and the fair value of net assets of S were Rs. 300 more tan the book value. The revaluation of assets of S were subject to application of Rs. 45 and goodwill impaired by Rs. 6.
Required: Prepare the Consolidated Balance Sheet as at 31st December 2008.
The data will appear as row-wise and individual amount will be highlighted one by one

11. Working-1
Holding % = 80%
Monitory % = 20%

12. Working -2 400 200 100 300 900 Pre-acquisition Post-acquisition
Capital
400
Reserves
200
100
Fair value
300
Total
900
Data will appear row-wise

13. Working -3 Goodwill Cost of investment in subsidiary Co. 750
Less Fair value of net assets (900 x 80%) 720 30
Less Impaired 24

14. Working -4
Group Reserves
Less Impaired
Less Depreciation
738

15. Working -5 Minority Interest Owner’s equity of S Co. . 700
Add Fair value
Less Depreciation (45)
955
Minority interest = 955 x 20% = 191

16. Working -5 Minority Interest Owner’s equity of S Co. . 700
Add Fair value
1,000
Less Depreciation
191

17. Working 45 Group Reserve 45 x 80% = 36 Minority Interest 45 x 20% = 4
First 45
Then group reserve
Then M

18. Solution Consolidate Balance Sheet As 31st December 2008
Rs.
Fixed Assets (1, )
1,805
Goodwill. 24
Current Assets ( )
750
Total Assets
2,579
Owner’s Equity
Share Capital ,200
Reserves
Minority Interest
2,129
Current Liabilities ( )
450