Q: No: 45 (KAPLAN)

HAPSBURG
CONSOLIDATED STATEMENT OF FINANCIAL POSITION: -
NON - CURRENT ASSETS: $ 000
Goodwill (W1) 13,000
Plant, property & equipment (41,000+34,800+5,000-1,250) 79,550
Investment - Associate (W4) 15,000
Investment - Other (3,000+1,500) 4,500
Total non-current assets 112,050
CURRENT ASSETS:
Inventory (9,900+4,800-300) 14,400
Trade receivables (13,600+8,600) 22,200
Cash (1,200+3,800) 5,000
Total current assets 41,600
Total assets 153,650

EQUITY AND LIABILITIES:

Share capital (20,000+16,000) 36,000
Share premium (8,000+16,000) 24,000
Consolidated reserve (W2) 8,300
Parent's equity 68,300
Non - controlling interest (W3) 8,950
Total equity 77,250
NON - CURRENT LIABILITIES:
10% Loan notes (16,000+4,200) 20,200
Deferred consideration (18,000+1,800) 19,800 40,000
CURRENT LIABILITIES:
Trade payables (16,500+6,900) 23,400
Taxation (9,600+3,400) 13,000 36,400
Total equity and liabilities 153,650
 WORKINGS
WORKING # 1 - GOODWILL: $ 000
Shares consideration (24,000 x 2/3 x 2) 32,000
Deferred consideration (24,000 x 0.75) 18,000
Cost of investment 50,000
Less: Fair Value of Net Assets Acquired:
Share capital 30,000
Share premium 2,000
Retained earnings at acquisition 4,000
Fair value adjustments - Plant 5,000
Fair value adjustments - Investment 1,500
Fair value of net assets 42,500
Parent's holding % 80%
Fair value of net assets acquired (34,000)
Parent's goodwill 16,000
Fair value of non-controlling interest (6,000 x 1.50) 9,000
Less: Fair value of net assets acquired of NCI (42,500 x 20%) (8,500)
Non-controlling interest goodwill 500
Total goodwill 16,500
Less: Impairment of goodwill (3,500)
Consolidated goodwill 13,000

WORKING # 2 - CONSOLIDATED RESERVE: $ 000

Parent's retained earnings 10,600
Add: Post acquisition profits in subsidiary (4,500 x 75%) 3,600
Add: Post acquisition profits in associate (6,000 x 6/12 x 30%) 900
Less: Unwinding of discount (1,800)
Less: Depreciation on fair value adjustment - Plant (1,000)
Less: Unrealized profit on inventory (300)
Less: Impairment of investment in associate (900)
Less: Impairment of goodwill (2,800)
Consolidated reserve 8,300
WORKING # 3 - NON - CONTROLLING INTEREST: $ 000
Fair value of net assets at SFP date 40,500
Non-controlling interest % 20%
8,100
Add: Non - controlling interest goodwill 500
Add: Fair value adjustment - Plant 1,000
Less: Depreciation on fair value - Plant (250)
Add: Fair value adjustment - Investment 300
Less: Impairment of goodwill (700)
Non - controlling interest 8,950

WORKING # 4 - INVESTMENT IN ASSOCIATE: $ 000

Initial investment (6,000 x 2.50) 15,000
Add: Post acquisition profit from associate (6,000 x 6/12x 30%) 900
Less: Impairment in investment (900)
Investment in associate 15,000

ADJUSTMENTS:
DR Investment 50,000
CR Share capital (24,000 x 2/3 x 1) 16,000
CR Share premium (24,000 x 2/3 x 1) 16,000
CR Deferred consideration (24,000 x 0.75) 18,000
(Investment in subsidiary)      

DR Consolidated reserve (18,000 x 10%) 1,800

CR Deferred consideration 1,800
(Unwinding of discount)      

DR Plant 5,000
CR Goodwill (5,000 x 80%) 4,000
CR Non-controlling interest (5,000 x 20%) 1,000
(Fair value adjustment - Plant)      

DR Consolidated reserve (1,250 x 80%) 1,000

DR Non-controlling interest (1,250 x 20%) 250
CR Plant 1,250
(Depreciation on fair value adjustment - Plant)      

DR Investment 1,500
CR Goodwill (1,500 x 80%) 1,200
CR Non-controlling interest (1,500 x 20%) 300
(Fair value adjustment - Investment)      

DR Consolidated reserve 300

CR Inventory (4-2.4/4 x 2.5 x 30%) 300
(Unrealized profit on inventory - associate)      

DR Investment (6,000 x 6/12 x 30%) 900

CR Consolidated reserve 900
(Post acquisition profits in associate)      

DR Consolidated reserve (3,500 x 80%) 2,800

DR Non-controlling interest (3,500 x 20%) 700
CR Goodwill 3,500
(Impairment of goodwill)      

DR Consolidated reserve 900

CR Investment 900
(Impairment in investment in associate)