Consolidated Statement of Financial Position Fair value adjustments Given below are the statements of financial position of
Question:
Consolidated Statement of Financial Position
Fair value adjustments
Given below are the statements of financial position of Shine and John as at 31 December 20X1:
Shine | John | |
$000 | $000 | |
Non- Current assets | ||
Property , Plant & Equipment | 155,000 | 54,000 |
Investments | 25,000 | |
180,000 | 54,000 | |
Current assets | ||
Inventory | 10,250 | 20,000 |
Receivables | 6,500 | 16,000 |
Cash | 2,500 | 6,400 |
19,250 | 42,400 | |
Total Assets | 199,250 | 96,400 |
Equity | ||
Share capital $1 | 70,000 | 44,000 |
Share premium | 11,000 | |
Retained earnings | 37,000 | 34,200 |
118,000 | 78,200 | |
Non-current liabilities | 60,000 | 10,400 |
Current liabilities | 21,250 | 7,800 |
Total Equity & Liabilities | 199250 | 96,400 |
Additional Information
- Shine acquired 35,200 shares of John 3 years ago, when the retained Earnings of John stood at $ 20m. Shine paid initial cash consideration of $ 20m. In addition, Shine issued three shares for every five shares received in John and promised to pay a further $7.5m in three years’ time. The market value of Shine’s shares was $1.75. Current interest rates are 12% pa.
- At acquisition, the fair values of John’s plant exceeded its book value b$ 6m. The plant had a remaining useful life of five years at this date.
- The consolidated good will has been impaired by $ 3m
- John has an internally generated brand, which has never been recognized in its statement of financial position. Management of Shine with the help of some experts decided to value this brand at $ 12m with a remaining useful life of 6 years.
- The Shine Group values the non-controlling interest using the fair value method. At the date of acquisition, the fair value of the 30% non-controlling interest was $ 7.2m.
Required:
Prepare the consolidated statement of financial position for Shine Groupas at 30 November 20X1
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville