1. Consolidation Polestar Statement of Profit or Loss ACCA December 2013

2. Copy out the question PSAdjustmentsConsolidated Revenue 11000033000 CofS (88000)(33600) Distribution (3000)(1000) Admin (5250)(1200) Finance (250)0 Tax (3500)500

3. Copy out the question PSAdjustmentsConsolidated PPE 4100021000 Investment 16000 CAs 165004800 Equity Shares 300006000 RetEarns 2850012000 CLs 150007800

4. Consolidation Format- Goodwill  What did we pay? What did we get?  Date 1 April 2013, 6 months  12000 shares  Acquired 9000 shares, =75%  Paid 9000 x 1.50= 13500  Contingent $1800

5. Consolidation Format- Goodwill  Paid $15300 + NCIs $3600 = $18900  Received  Shares 6000  Retained earnings, py = 16600  Retained earnings, cy = (2300)  Fair value adjustments = 2000  Goodwill = (3400) on acquisition

6. Net Assets S AcqReporti ng Date Post Acq Shares6000 Ret earn1430012000(2300) Plant2000 Depn(100) Profit(600)

7. Group Retained Earnings P28500 S 3000 x 75%(2250) Contingent Cons300 Goodwill3400 Equity Invs(200) NCI Acq3600 3000x 25%(750)

8. PSAdjustmentsConsolidated Revenue11000033000(4000) (9000)130000 CofS(88000)(33600)4000 9000 (100) (600) (109300) Loss on Invs(200) Distribution(3000)(1000)(4000) Admin(5250)(1200)3400(3050) Finance(250)0 Tax(3500)500(3000)

9. PSAdjustmentsConsolidated PPE41000210002000 (100)63900 Investments16000(13500) (200)2300 CAs165004800(600)20700 Equity Shares3000060004500 (6000)30000 RetEarns29750 NCIs2850 CLs150007800(300)22800 Contingency1500

10. Polestar c  Cost of sales is greater than revenue, current liabilities are greater than current assets, the fall in the value of the contingency indicates declining confidence that the business will be profitable  Significant intercompany trading  Sales may not be at arms length  There may be centralised functions which will need to be duplicated on purchase  Intercompany liabilities could be ‘settled’, valuable assets transferred up at below value