On 1 January 20X1 Fibre plc acquired 80% of the ordinary shares of a Singaporean company, Fastlink
Question:
On 1 January 20X1 Fibre plc acquired 80% of the ordinary shares of a Singaporean company, Fastlink Ltd, for £6m when Fastlink's retained earnings were $15.5m and the share premium was $0.8m. Fastlink's financial statements have been prepared in their functional currency of Singapore dollars and comply with IAS 21. The summarised statements of income and financial position as at 31 December 20X1 were as follows:
The following information is also available:
(i) The opening inventory was acquired when the exchange rate was £1 = $2.6 and the closing inventory when the rate was £1 = $2.2.
(ii) Exchange rates were as follows:
At 1 January 20X1................................................................£1 = $2.5
Average for the year ending 31 December 20X4...........................£1 = $2.25
At 31 December 20X1............................................................£1 = $2.0
Required:
(a) Prepare a consolidated statement of income.
(b) Prepare a consolidated statement of financial position:
(i) Show the goodwill calculation.
(ii) Show the non-controlling interest calculation.
(iii) Complete with retained earnings as a balancing figure.
(c) Reconcile the retained earnings figure showing exchange gains and losses.
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
Step by Step Answer:
Financial Accounting and Reporting
ISBN: 978-1292080505
17th edition
Authors: Barry Elliott, Jamie Elliott