1. Consolidation Parentis ACCA June 2007

2. Step 1 Copy out the question PSAdjustmentsConsolidated PPE640340 Investments1200 Int Property030 Inventory7622 Receivables8444 Bank04 920440

3. Step 1 Copy out the question PSAdjustmentsConsolidated Equity300200 Ret Earnings300140 10% Loan12020 Payables13057 Tax4523 Overdraft25- 920440

4. Consolidation Format- Goodwill  What did we pay? What did we get?  Date 1 April 2006  Acquired 600m shares, =75%  Paid 300x 0.75= 225m  Deferred payment 0.11x 1/1.1 x 600m= 60m  Loan stock 600m/ 500x $100= 120m  Total paid $405

5. Consolidation Format- Goodwill  Paid $405m + NCIs $125m = $530m  Received  Shares 200m  Retained earnings = 120m  Fair value adjustments = $40m (note 1)  Goodwill = 530- 360= 170 on acquisition

6. Consolidation Format- Retained Earnings On Acquisition31 March 2007 Share Capital200 Retained Earnings120140 Fair value adjustment40 Depreciation(2) Intellectual Property(20) Interco Profit(2) Total360356

7. Consolidation Format- Retained Earnings  P = 300  Goodwill Impairment 40x 75%= (30)  Discount unwinding 600m x 10% x10%= (6) (Debit is in finance costs) S post acq (360-356)x75%= (3) Total 261

8. Consolidation Format- NCI Value at acq125 Goodwill Impairment(10) Post acq REs(1) Total114

9. PSAdjustmentsConsolidated PPE640340+40-21018 Investments1200-1200 Int Property030-2010 Goodwill170-40130 Inventory7622-296 Receivables8444-4-7117 Bank044 9204401375

10. PSAdjustmentsConsolidated Equity300200-200+75375 Share Premium 300mx0.5150 Ret Earnings300140-440+261261 10% Loan12020140 Payables13057-7180 Cash due66 Tax452368 Overdraft25--421 NCIs 114 9204401375