Consolidated Financial Statements Oak plc acquired 70% of Elm Ltd's equity shares for 300,000 on 1...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consolidated Financial Statements Oak plc acquired 70% of Elm Ltd's equity shares for €300,000 on 1 January 2018. At the date of acquisition Elm Ltd had retained earnings of €190,000. The two companies' financial statements are presented as follows as at 31 December 2018: Statements of Financial Position as at 31 December 2018 Assets Non-current assets Property, plant and equipment Investment Elm Ltd Current assets Inventories Trade receivables Cash and bank Total assets Equity and liabilities Equity Share capital, €1 Retained earnings Revaluation surplus Noncurrent liabilities Bank loan Current liabilities Overdraft Trade payables Tax payable Total equity and liabilities Oak plc €'000 1,940 300 2,240 400 450 270 1320 3,360 2,000 500 20 2,520 500 250 90 740 3,360 Elm Ltd €'000 200 200 220 240 = 260 660 100 240 340 65 230 25 320 660 Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2018 Sales revenue Cost of sales Gross profit Other expenses Profit before interest and tax Interest expense Profit before tax Income tax expense Profit for the year Other comprehensive income: Gain on revaluation of property Total comprehensive income for the year Oak plc €'000 5,000 2,900 2,100 1,710 390 30 360 90 270 20 290 Elm Ltd €'000 1,000 600 400 325 4. 5. 75 25 50 Additional information: 1. In mid-December 2018 Oak plc sold goods to Elm Ltd on credit and sent an invoice for €200,000. Elm Ltd received the goods and the invoice but has not yet paid for the goods. The goods had cost Oak plc €150,000. All the goods are in Elm's inventory. 2. On the date of acquisition the fair value of one item (land) in Elm's property, plant and equipment exceeded its carrying amount by €50,000. This valuation has not been reflected in the books of Elm Ltd. 3. It is the group policy to value the non-controlling interest at acquisition at fair value. The fair value of the non-controlling interest in Elm Ltd at the date of acquisition was €70,000. Goodwill has suffered no impairment. Elm Ltd has issued no shares since the acquisition. 6. Elm Ltd has not declared or paid any dividends in 2018. 7. There are no depreciation consequences of the fair value adjustment (as the underlying item was land). REQUIRED: 1. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2018 and the statement of financial position as at 31 December 2018 for Oak plc group. NB! It is essential that you show all your workings. Consolidated Financial Statements Oak plc acquired 70% of Elm Ltd's equity shares for €300,000 on 1 January 2018. At the date of acquisition Elm Ltd had retained earnings of €190,000. The two companies' financial statements are presented as follows as at 31 December 2018: Statements of Financial Position as at 31 December 2018 Assets Non-current assets Property, plant and equipment Investment Elm Ltd Current assets Inventories Trade receivables Cash and bank Total assets Equity and liabilities Equity Share capital, €1 Retained earnings Revaluation surplus Noncurrent liabilities Bank loan Current liabilities Overdraft Trade payables Tax payable Total equity and liabilities Oak plc €'000 1,940 300 2,240 400 450 270 1320 3,360 2,000 500 20 2,520 500 250 90 740 3,360 Elm Ltd €'000 200 200 220 240 = 260 660 100 240 340 65 230 25 320 660 Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2018 Sales revenue Cost of sales Gross profit Other expenses Profit before interest and tax Interest expense Profit before tax Income tax expense Profit for the year Other comprehensive income: Gain on revaluation of property Total comprehensive income for the year Oak plc €'000 5,000 2,900 2,100 1,710 390 30 360 90 270 20 290 Elm Ltd €'000 1,000 600 400 325 4. 5. 75 25 50 Additional information: 1. In mid-December 2018 Oak plc sold goods to Elm Ltd on credit and sent an invoice for €200,000. Elm Ltd received the goods and the invoice but has not yet paid for the goods. The goods had cost Oak plc €150,000. All the goods are in Elm's inventory. 2. On the date of acquisition the fair value of one item (land) in Elm's property, plant and equipment exceeded its carrying amount by €50,000. This valuation has not been reflected in the books of Elm Ltd. 3. It is the group policy to value the non-controlling interest at acquisition at fair value. The fair value of the non-controlling interest in Elm Ltd at the date of acquisition was €70,000. Goodwill has suffered no impairment. Elm Ltd has issued no shares since the acquisition. 6. Elm Ltd has not declared or paid any dividends in 2018. 7. There are no depreciation consequences of the fair value adjustment (as the underlying item was land). REQUIRED: 1. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2018 and the statement of financial position as at 31 December 2018 for Oak plc group. NB! It is essential that you show all your workings.
Expert Answer:
Answer rating: 100% (QA)
First we pass elimination entries Property Plant and equipment Dr 50000 Share Capital Dr 100000 Reta... View the full answer
Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
Posted Date:
Students also viewed these accounting questions
-
The assets of Fonzarelli SpA are presented as follows (amounts in thousands). Instructions Indicate the deficiencies, if any, in the foregoing presentation of Fonzarelli's assets. Fonzarelli SpA...
-
Statement of profit or loss and other comprehensive income Year ended 31 Nine-month Dec-18 period ended 31 Dec-17 Revenue 2,200,228 1,561,138 Cost of sales -1,199,154 -877,354 Gross profit 1,001,074...
-
The assets of Fonzarelli SpA are presented as follows (amounts in thousands). Instructions Indicate the deficiencies, if any, in the foregoing presentation of Fonzarellis assets. Fonzarelli SpA...
-
Three charges are placed as shown in the figure below. A scale is provided for the distances. Match the numerical values with the appropriate force of interaction. 19=8c a. b. 9=-2C I'm 93=4...
-
Buzz can be created in a variety of ways, for example, advertising. Explain how advertising can be used to generate buzz. What are some of the dangers of this method?
-
A \(200 \mathrm{~kg}\) machine is subjected to an excitation of magnitude \(1500 \mathrm{~N}\). The machine is mounted on a foundation of stiffness \(2.8 \times 10^{6} \mathrm{~N} / \mathrm{m}\)....
-
Derive an expression for the displacement transmissibility of a damped single-degree-offreedom system whose base is subjected to a general periodic displacement.
-
Identify audit tests that may be used as alternative audit procedures when a response is not received for a positive confirmation request. Compare and contrast the quality of audit evidence yielded...
-
In the figure, two blocks are connected over a pulley. The mass of block A is 5.10 kg and the coefficient of kinetic friction between A and the incline is 0.220. Angle 0 of the incline is 45.0. Block...
-
Scallion Ltd uses subsidiary ledgers for Accounts Receivable and Accounts Payable only. The company is registered for GST at the rate of 10% and is required to pay GST on its purchases and to collect...
-
) A long straight wire on the z-axis carries a current of 10.0 A in the +z direction. A circular loop in the xy-plan has a radius 0.10 m and is centered at x = 0.25 m on the x-axis. What current must...
-
Kelly Chen, owner of Flower Hour, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Chen wants to set van operating costs so that...
-
After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the Debit and Credit columns are $28,246 and $21,306, respectively. What is the...
-
Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Budgeted Activity Process Activity Assembly...
-
Retained Earnings Date May 31 Dividends Date PR Debit Account Number 318 Credit Salaries Expense Account Number 622 Balance Date PR Debit Credit Balance G2 83,000 May 31 G2 41,500 PR Debit Account...
-
Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented income statement as shown: Sales Variable expenses Contribution margin...
-
A slide projector needs to create a 98-cm-high image of a 2.0-cm-tall slide. The screen is 330 cm from the slide. For the steps and strategies involved in solving a similar problem, you may view a...
-
The 2017 financial statements of the U.S. government are available at: https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/fr_index.htm Use these to answer the following questions: a. Statement...
-
List the main types of information which should be provided in the notes which accompany and form an integral part of the financial statements.
-
(a) Explain how an entity should select its accounting policy in relation to an item if there is no applicable international standard or IFRIC Interpretation. (b) In what circumstances may an entity...
-
Hullman Ltd prepares financial statements to 31 March each year. Consider each of the following situations and determine in each case whether or not a provision should be recognised in the company's...
-
Examine Fowlers account pattern on following characteristics: a. Simplicity b. Generality c. Completeness d. Stability e. Visual and graphical model f. Testability
-
What is Fowlers account pattern? Explain with the help of a diagram.
-
Draw a class diagram for resource rental pattern and its installation for library service by using analogy approach.
Study smarter with the SolutionInn App