Calculation of the effects of consolidation under the parent and entity theories:

Phi acquired an 80% ownership interest in Alpha on 1 January 20x1 for $1,000,000. At the date of acquisition, Alpha showed the following balances under shareholders’ equity:

Share capital . . . . . . . . . . . . $500,000 Retained earnings . . . . . . . . 200,000 Shareholders’ equity . . . . . . $700,000

At the date of acquisition, the excess of fair value of Alpha’s inventory over book value was $100,000. The inventory was still unsold as at 31 December 20x1. The fair value of non-controlling interests as at 1 January 20x1 was $250,000. The separate financial statements for Phi and Alpha for the year ended 31 December 20x1 are shown below. Ignore tax effects.

Required:

Complete the consolidated financial statements for Phi and Alpha for the year ended 31 December 20x1 under the parent and entity theories of consolidation.

 

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At the date of acquisition, excess of fair value of Alpha's inventory over book value was $100,000. The inventory was still unsold as at 31 December 20x1. The fair value of non-controlling interests as at 1 January 20x1 was $250,000. The separate financial statements for Phi and Alpha for the year ended 31 December 20x1 are shown below. Ignore tax effects. (All figures are in 5'000) Net profit after tax Non-controlling interests Net profit after non-controlling interests Retained earnings, 1 January.. Retained earnings, 31 December. (All figures are in 5'000) Property and plant Inventory.... Income Statement For the Year Ended 31 December 20x1 Cash Goodwill on consolidation. Investment in Alpha.. Liabilities.. Net assets Share capital... Retained earnings.. Non-controlling interests' share of fair value increment and goodwill.. Equity........ Non-controlling interests Equity and non-controlling interests. Phi $ 800 1,300 200 $2,100 $480 Phi $2,300 300 100 Statement of Financial Position As at 31 December 20x1 1,000 (600) $1,100 Alpha $1,000 2,100 $280 $3,100 53.100 Alpha $1,200 200 50 (470) $980 $ 500 480 $ 980 $ 980 Consolidated financial statements Entity theory Parent theory Parent NCI Total 80% 20% 100% Consolidated financial statements Entity theory Parent theory Parent NCI Total Required: Complete the consolidated financial statements for Phi and Alpha for the year ended 31 December 20x1 under the parent and entity theories of consolidation. page 65 At the date of acquisition, excess of fair value of Alpha's inventory over book value was $100,000. The inventory was still unsold as at 31 December 20x1. The fair value of non-controlling interests as at 1 January 20x1 was $250,000. The separate financial statements for Phi and Alpha for the year ended 31 December 20x1 are shown below. Ignore tax effects. (All figures are in 5'000) Net profit after tax Non-controlling interests Net profit after non-controlling interests Retained earnings, 1 January.. Retained earnings, 31 December. (All figures are in 5'000) Property and plant Inventory.... Income Statement For the Year Ended 31 December 20x1 Cash Goodwill on consolidation. Investment in Alpha.. Liabilities.. Net assets Share capital... Retained earnings.. Non-controlling interests' share of fair value increment and goodwill.. Equity........ Non-controlling interests Equity and non-controlling interests. Phi $ 800 1,300 200 $2,100 $480 Phi $2,300 300 100 Statement of Financial Position As at 31 December 20x1 1,000 (600) $1,100 Alpha $1,000 2,100 $280 $3,100 53.100 Alpha $1,200 200 50 (470) $980 $ 500 480 $ 980 $ 980 Consolidated financial statements Entity theory Parent theory Parent NCI Total 80% 20% 100% Consolidated financial statements Entity theory Parent theory Parent NCI Total Required: Complete the consolidated financial statements for Phi and Alpha for the year ended 31 December 20x1 under the parent and entity theories of consolidation. page 65