On 1 April 20X7 Possum Co acquired 60% of the share capital of Koala Co for $120,000. During the year Possum Co sold goods to Koala Co for $30,000, including a profit margin of 25%. 40% of these goods were still in inventory at the year

The following extract was taken from the financial statements of Possum Co and Koala Co at 31 March 20X8.

What is the consolidated gross profit of the Possum group at 31 March 20X8?

X Co acquired 80% of the equity share capital in Y Co on 31 July 20X6. Extracts from the two companies' statements of profit or loss for the year ended 30 September 20X6 were as follows:

During the year ended 30 September 20X6, Y Co sold goods for $5 000 each month to X Co, at a mark up of 25%. At the end of the year X Co had 50% of these goods left in inventory.

What is the group gross profit for the year ended 30 September 20X6?

Which TWO of the following statements are correct?

Evergreen Co owns 35% of the ordinary shares of What is the correct accounting treatment of the revenues and costs of Deciduous for reporting period in the consolidated statement of profit or loss of the Evergreen group?

Mercedes Co has owned 100% of Benz Co since incorporation. At 31 March 20X9 extracts from their individual statements of financial position were as follows.

During the year ended 31 March 20X9, Benz Co had sold goods to Mercedes Co for $50,000.

Mercedes Co still had these goods in inventory at the year end. Benz Co uses a 25% mark up on all goods.

What were the consolidated retained earnings of Mercedes Group at 31 March 20X9?

Sand Co acquired 80% of the equity share capital of Sun Co several years In the year to 31 December 20X4, Sand Co made a profit after taxation of $120,000 and Sun Co made a profit after taxation of $35,000. During the year Sun Co sold goods to Sand Co at a price of $40,000. The profit mark-up was 40% on the sales price. At 31 December 20X4, 25% of these goods were still held in the inventory of Sand Co.

What profit is attributable to the parent company in the consolidated statement of profit or loss of the Sand Group for the year to 31 December 20X4?

On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values.

Three years later, on 31 December 20X2, the statements of financial position of the two companies were:

The share capital of Beta Co has remained unchanged since 1 January 20X0. The fair value of the non- controlling interest at acquisition was $42,000.

What amount should appear in the group's consolidated statement of financial position at 31 December 20X2 for goodwill?

On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values.

Three years later, on 31 December 20X2, the statements of financial position of the two companies were:

The share capital of Beta Co has remained unchanged since 1 January 20X0. The fair value of the non- controlling interest at acquisition was $42,000.

What amount should appear in the group's consolidated statement of financial position at 31 December 20X2 for non-controlling interest?

Hilton Co acquired 80% of the share capital of Shrew Co on 1 January 20X3 for $280,000.

The statements of financial position of the two companies at 31 December 20X3 were as follows:

There have been no changes in the share capital or share premium account of either company since 1 January 20X3. The fair value of the non-controlling interest on acquisition was $65,000.

What figure for goodwill on consolidation should appear in the consolidated statement of financial position of the Hilton group at 31 December 20X3?

Which of the following companies are subsidiaries of Gamma Co?

Zeta Co: Gamma Co owns 51% of the non-voting preference shares of Zeta Co

Iota Co: Gamma Co has three representatives on the board of directors of Iota Co. Each director can cast 10 votes each out of the total of 40 votes at board meetings.

Kappa Co: Gamma Co owns 75% of the ordinary share capital of Kappa Co, however Kappa Co is located overseas and is subject to tax in that country.

WX acquired 75% of the equity share capital of YZ several years At 31 March 20X6 WX had goods in inventory valued at cost of $60,000, that had been purchased from YZ at a mark-up of 20%.

What is the effect on the profit attributable to the non-controlling interest, and the profit attributable to the parent company for the year ended 31 March 20X6?

Tin Co acquired 90% of the equity share capital of Drum Co on 1 April 20X3. The following information relates to the financial year to 31 December 20X3 for each company.

Neither company paid any dividends during the year.

What profit is attributable to the parent company in the consolidated statement of profit or loss of the Tin Group for the year to 31 December 20X3?

Which of the following statements relating to parent companies and subsidiaries are correct?

1. A parent company could consolidate a company in which it holds less than 50% of the ordinary share capital in certain circumstances.
2. Goodwill on consolidation will appear as an item in the parent company's individual statement of financial position.
3. Consolidated financial statements ignore the legal form of the relationship between parents and subsidiaries and present the results and position of the group as if it was a single entity.

Volcano Co acquired 75% of the equity share capital of Lava Co on 1 September 20X3. The retained profits of the two individual companies at the beginning and end of their financial year were as follows.

What is the parent company's share of consolidated retained earnings that should be reported in the consolidated statement of financial position of the Volcano Group at 31 December 20X3?

Clementine Co has owned 21% of the ordinary shares of Tangerine Co for several years. Clementine Co does not have any investments in any other companies, and chooses to account for the investment at cost.

How should the investment in Tangerine Co be reflected in the financial statements of Clementine Co?

Which of the following should be accounted for in the consolidated financial statements of Company A using equity accounting?

1. An investment in 51% of the ordinary shares of W Co
2. An investment in 20% of the preference (non-voting) shares of X Co
3. An investment in 33% of the ordinary shares of Y Co
4. An investment in 20% of the ordinary shares of Z Co, and an agreement with other shareholders to appoint the majority of the directors to the board of Z Co

Date Co owns 100% of the ordinary share capital of Prune Co. The following balances relate to Prune Co.

Tangible non-current assets

At acquisition, the fair value of Prune Co's land was $50,000 more than shown in the financial statements of Prune Co. At 31 December 20X8, Date Co's financial statements show a total tangible non-current asset balance of $1,250,000.

What amount should be included in the consolidated financial statements of the Date group at 31 December 20X8 for tangible non-current assets?

Hilton Co acquired 80% of the share capital of Shrew Co on 1 January 20X3 for $280,000.

The statements of financial position of the two companies at 31 December 20X3 were as follows:

There have been no changes in the share capital or share premium account of either company since 1 January 20X3. The fair value of the non-controlling interest on acquisition was $65,000.

What figure for non-controlling interest should appear in the consolidated statement of financial position of the Hilton group at 31 December 20X3?

Donna Co acquired 80% of the equity share capital of Blitsen Co on 1 January 20X4 when the retained earnings of Blitsen Co were $40,000. The fair value of the non-controlling interest at this date was

$25,000. At 31 December 20X4, the equity capital of Blitsen Co was as follows:

During the year Blitsen Co sold goods to Donna Co for $20,000. This price included a mark-up of $12,000 for profit. At 31 December 20X4, 50% of these goods remained unsold in the inventory of Donna Co.

What is the value of the non-controlling interest in the Donna Group at 31 December 20X4, for the purpose of preparing the consolidated statement of financial position?

$         

Six Co owns 80% of the equity share capital of Seven Co. At 31 December 20X4, the trade receivables and trade payables of the two companies were as follows:

These figures include $30,000 that is owed by Seven Co to Six Co for the purchase of goods, for which Six Co has not yet paid. These goods were sold by Six Co for a profit of $15,000 and 50% of them were still held as inventory by Seven Co at 31 December 20X4.

What should be the amounts for trade receivables and trade payables in the consolidated statement of financial position as at 31 December 20X4?

Breakspear Co purchased 600,000 of the voting equity shares of Fleet Co when the value of the non-controlling interest in Fleet Co is $150,000.

The following information relates to Fleet at the acquisition date.

The goodwill arising on acquisition is $70,000.

What was the consideration paid by Breakspear Co for the investment in Fleet Co?

Micro Co acquired 90% of the $100,000 ordinary share capital of Minnie Co for $300,000 on 1 January 20X9 when the retained earnings of Minnie Co were $156,000. At the date of acquisition the fair value of plant held by Minnie Co was $20,000 higher than its carrying amount. The fair value of the non-controlling interest at the date of acquisition was $75,000.

What is the goodwill arising on the acquisition of Minnie Co?

On 1 August 20X7 Patronic purchased 18 million of the 24 million $1 equity shares of The acquisition was through a share exchange of two shares in Patronic for every three shares in Sardonic. The market price of a share in Patronic at 1 August 20X7 was $5.75.

What is the fair value of the consideration transferred for the acquisition of Sardonic?

On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values.

Three years later, on 31 December 20X2, the statements of financial position of the two companies were:

The share capital of Beta Co has remained unchanged since 1 January 20X0. The fair value of the non- controlling interest at acquisition was $42,000.

What should the figure for retained earnings be in the group's consolidated statement of financial position at 31 December 20X2?

$         

P Co, the parent company of a group, owns shares in three other companies. P Co's holdings are:

Which of these companies are subsidiaries of P Co?

Fanta Co acquired 100% of the ordinary share capital of Tizer Co on 1 October 20X7.

On 31 December 20X7 the share capital and retained earnings of Tizer Co were as follows:

The profits of Tizer Co have accrued evenly throughout 20X7. Goodwill arising on the acquisition of Tizer Co was $30,000.

What was the cost of the investment in Tizer Co?

P owns 80% of the equity share capital of S The profit after tax of S for the year ended 31 December 20X6 was $60 During 20X6, P sold goods to S for $4 million at cost plus 20%. At the year end 50% of these goods were left in the inventory of S.

What is non-controlling interest share of the after-tax profit of S for the year ended 31 December 20X6?