The statements of financial position of CC Ltd and its two subsidiaries DD Ltd and EE Ltd
Question:
The statements of financial position of CC Ltd and its two subsidiaries DD Ltd and EE Ltd as at 31 December 2019 are as follows:
The following information is available:
(a) CC Ltd acquired 60% of the shares of DD Ltd on 1 January 2018, when DD Ltd had retained earnings of £280,000. The fair value of the property and equipment of DD Ltd on that date was £30,000 more than book value. This valuation has not been reflected in the books of DD Ltd.
(b) CC Ltd acquired 90% of the shares of EE Ltd on 1 January 2019, when EE Ltd had a revaluation reserve of £60,000 and retained earnings of £230,000. The fair value of EE Ltd's assets and liabilities on that date was equal to their book value.
(c) Neither DD Ltd nor EE Ltd have issued any shares since being acquired by CC Ltd.
(d) Goodwill arising on consolidation in relation to DD Ltd has suffered an impairment loss of 50% since the date of acquisition. The impairment loss for EE Ltd is 25%.
(e) The following intra-group balances exist on 31 December 2019:
- DD Ltd owes CC Ltd £15,000
- EE Ltd owes CC Ltd £25,000
- EE Ltd owes DD Ltd £8,000.
All of these balances are included in trade receivables and payables.
(f) Goods purchased for £8,000 from CC Ltd are included in DD Ltd's inventory at 31 December 2019. CC Ltd had invoiced these goods to DD Ltd at cost plus 60%.
(g) Any depreciation consequences of the fair value adjustment relating to the property and equipment of DD Ltd may be ignored.
Required:
Prepare a consolidated statement of financial position as at 31 December 2019.
Step by Step Answer:
Group statement of financial position as at 31 December 2019 Notes i The good...View the full answer
