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    Lecture 4 Exercises Sofp 1

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    Ziyodullo Isroilov
    The consolidated statement of financial position combines the financial positions of Straw Ltd and its subsidiary Berry Ltd as of September 30, 2022. It shows total assets of £516,000, consisting of plant and equipment of £297,000, inventory of £15,000, receivables of £55,000, and cash of £15,000. Total equity is £439,000, with share capital of £175,000 and retained earnings of £264,000. Current liabilities are £77,000.

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    Lecture 4 Exercises Sofp 1

    Uploaded by

    Ziyodullo Isroilov
    26 views2 pages
    The consolidated statement of financial position combines the financial positions of Straw Ltd and its subsidiary Berry Ltd as of September 30, 2022. It shows total assets of £516,000, consisting of plant and equipment of £297,000, inventory of £15,000, receivables of £55,000, and cash of £15,000. Total equity is £439,000, with share capital of £175,000 and retained earnings of £264,000. Current liabilities are £77,000.

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    The consolidated statement of financial position combines the financial positions of Straw Ltd and its subsidiary Berry Ltd as of September 30, 2022. It shows total assets of £516,000, consisting of plant and equipment of £297,000, inventory of £15,000, receivables of £55,000, and cash of £15,000. Total equity is £439,000, with share capital of £175,000 and retained earnings of £264,000. Current liabilities are £77,000.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    26 views2 pages

    Lecture 4 Exercises Sofp 1

    Uploaded by

    Ziyodullo Isroilov
    The consolidated statement of financial position combines the financial positions of Straw Ltd and its subsidiary Berry Ltd as of September 30, 2022. It shows total assets of £516,000, consisting of plant and equipment of £297,000, inventory of £15,000, receivables of £55,000, and cash of £15,000. Total equity is £439,000, with share capital of £175,000 and retained earnings of £264,000. Current liabilities are £77,000.

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    © All Rights Reserved
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    You are on page 1of 2

    Consolidated statement of financial position

    Exercise 1

    The statement of financial positions of Home Ltd (Home) and Straw Ltd (Straw) at
    31 December 2021 are as follows:
    H S
    £’000 £’000
    Property, plant& equipment 530 560
    Investment 990 -
    1,520 560
    Current assets 340 530
    1,860 1,090

    Ordinary share capital of £1 each 960 800


    Retained profits 800 240
    1,760 1,040
    Current liabilities 100 50
    1,860 1,090

    Note

    Home purchased all the shares of Straw on 01 January 2020 for £990,000 when the
    retained profits of Straw showed a balance of £160,000. There has been no
    impairment of goodwill on consolidation since acquisition.

    Required:
    Prepare the consolidated statement of financial position at 31 December 2021.

    Exercise 2

    Assume the same facts as in Exercise 1 except that:

    1. Home purchased 640,000 of the £1 shares of Straw on 1 January 2020 for


    £800,000 when the retained profits of Straw showed a balance of £160,000.
    There has been no impairment of goodwill on consolidation since acquisition.
    2. On 01 January 2021, the fair value of Straw’s plant was £20,000 higher than its
    carrying value at that date. The remaining life of all of Straw’s plant at the date
    of acquisition was 4 years and this period has not changed as a result of the
    acquisition. Depreciation of plant is charged on the straight-line basis to cost of
    sales. Straw has not adjusted the value of its plant as a result of the fair value
    exercise.
    3. Home’s policy is to value the non-controlling interest at fair value. The fair value
    of the non-controlling interest in Straw at the date of acquisition was assessed at
    £205,000.
    4. An impairment review on 31 December 2021 concluded that goodwill has
    suffered an impairment of £15,000.

    Required:
    Prepare the consolidated statement of financial position at 31 December 2021.
    Homework : Straw

    The statement of financial positions of Straw Ltd (Straw) and its subsidiary entity
    Berry Ltd (Berry) at 30 September 2022 were as follows:
    Straw Berry
    £’000 £’000

    Plant property and equipment 120 177


    Investment in Berry 134
    Inventory 10 5
    Receivables 30 25
    Bank 10 5

    304 212

    Ordinary share capital of £1 each 100 75


    Retained profits 144 120
    244 195
    Current liabilities 60 17

    304 212
    Additional information

    1. On 01 October 2019, when the retained earnings of Berry showed a balance of


    £60,000, Straw purchased 60,000 ordinary shares in Berry for £134,000.

    2. On 01 October 2019, the net assets of Berry had a fair value of £155,000. The
    excess of fair value over the carrying value in the individual financial
    statements of Berry was due to plant included in property, plant and
    equipment. The plant had a useful economic life of five years from 01 October
    2019. None of the plant that was subject to fair value at 01 October 2019 had
    been sold by 30 September 2022.

    3. Straw sold goods to Berry during the year for £10,000 at a mark-up of 25% on
    cost. At the year-end, half of these goods were still held in inventory

    4. Included in the trade receivables of Straw is £6,000 owed by Berry. Berry’s


    trade payables showed an amount of £4,000 payable to Straw. The difference
    between the two balances was reconciled to a cheque in transit received by
    Straw after 30 September 2022.

    5. Straw’s policy is to value the non-controlling interest at fair value.


    The directors of Straw assessed the fair value of the non-controlling interest in
    Stirling at the date of acquisition to be £32,000.

    6. Since acquisition there has been no impairment of goodwill on consolidation.

    Required:
    Prepare the consolidated statement of financial position for the group as at
    30 September 2022.

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