Question 4 Maicon ple acquired 75 percent of the ordinary share capital of Rodwell Limited on...

 

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Question 4 Maicon ple acquired 75 percent of the ordinary share capital of Rodwell Limited on 1 January 2011, when the balance on the retained earnings reserve of Rodwell Limited was £250,000. Maicon plc also acquired 40 percent of the preference share capital of Rodwell Limited on 1 January 2012, when the balance on the retained earnings reserve of Rodwell Limited was £272,000, and issued £50,000 of 8% debentures to Rodwell Limited on 1 January 2012. The unadjusted balance sheets of the Maicon plc and Rodwell Limited at 31 December 2012 are shown below. Ordinary share capital of £1 each 4% preference share capital of £1 each Retained earnings 8% debentures repayable on 31 December 2014 Inventory Trade receivables Current account with Rodwell Limited Bank Tangible non-current assets Investments in Rodwell Limited: Ordinary share capital Preference share capital Debentures Long-term trade investment Bank overdraft Trade payables Current account with Maicon plc Dividend proposed Maicon plc £ 3,000,000 260,000 912,000 4,172,000 £ 1,657,600 688,800 92,000 2,477,800 1,224,000 500,000 50,000 225,000 (583,200) (1,920,000) (240,000) 4,172,000 Rodwell Limited £ 800,000 1,000,000 300,000 2,100,000 £ (600,000) 792,000 292,000 68,800 2,532,800 (787,200) (78,400) (120,000) 2,100,000 The following additional information is available. (1) No interim dividends were declared or paid in the year 2012 out of year 2012 profits. Maicon plc has not yet accounted for the dividends receivable from Rodwell Limited. (2) The interest on the debentures issued to Rodwell Limited has not been paid for the year ended 31 December 2012 and has not been included in the balance sheets shown above. (3) A remittance of £13,600 from Rodwell Limited, sent in late December 2012, was not received by Maicon plc until January 2013. (4) Included in Rodwell Limited's inventory at 31 December 2012 were goods that had been sold to them during the year by Maicon plc for £32,000, which had an original cost of £19,200. (5) The value of goodwill arising following the acquisition of the ordinary share capital of Rodwell Limited had diminuted in value by £174,600 up to 31 December 2012 and the value of goodwill arising following the acquisition of the preference share capital of Rodwell Limited had diminuted in value by £20,000 by the same date. REQUIRED Prepare the consolidated balance sheet of the Maicon Group plc at 31 December 2012. (50 marks) Question 4 Maicon ple acquired 75 percent of the ordinary share capital of Rodwell Limited on 1 January 2011, when the balance on the retained earnings reserve of Rodwell Limited was £250,000. Maicon plc also acquired 40 percent of the preference share capital of Rodwell Limited on 1 January 2012, when the balance on the retained earnings reserve of Rodwell Limited was £272,000, and issued £50,000 of 8% debentures to Rodwell Limited on 1 January 2012. The unadjusted balance sheets of the Maicon plc and Rodwell Limited at 31 December 2012 are shown below. Ordinary share capital of £1 each 4% preference share capital of £1 each Retained earnings 8% debentures repayable on 31 December 2014 Inventory Trade receivables Current account with Rodwell Limited Bank Tangible non-current assets Investments in Rodwell Limited: Ordinary share capital Preference share capital Debentures Long-term trade investment Bank overdraft Trade payables Current account with Maicon plc Dividend proposed Maicon plc £ 3,000,000 260,000 912,000 4,172,000 £ 1,657,600 688,800 92,000 2,477,800 1,224,000 500,000 50,000 225,000 (583,200) (1,920,000) (240,000) 4,172,000 Rodwell Limited £ 800,000 1,000,000 300,000 2,100,000 £ (600,000) 792,000 292,000 68,800 2,532,800 (787,200) (78,400) (120,000) 2,100,000 The following additional information is available. (1) No interim dividends were declared or paid in the year 2012 out of year 2012 profits. Maicon plc has not yet accounted for the dividends receivable from Rodwell Limited. (2) The interest on the debentures issued to Rodwell Limited has not been paid for the year ended 31 December 2012 and has not been included in the balance sheets shown above. Question 4 Maicon ple acquired 75 percent of the ordinary share capital of Rodwell Limited on 1 January 2011, when the balance on the retained earnings reserve of Rodwell Limited was £250,000. Maicon plc also acquired 40 percent of the preference share capital of Rodwell Limited on 1 January 2012, when the balance on the retained earnings reserve of Rodwell Limited was £272,000, and issued £50,000 of 8% debentures to Rodwell Limited on 1 January 2012. The unadjusted balance sheets of the Maicon plc and Rodwell Limited at 31 December 2012 are shown below. Ordinary share capital of £1 each 4% preference share capital of £1 each Retained earnings 8% debentures repayable on 31 December 2014 Inventory Trade receivables Current account with Rodwell Limited Bank Tangible non-current assets Investments in Rodwell Limited: Ordinary share capital Preference share capital Debentures Long-term trade investment Bank overdraft Trade payables Current account with Maicon plc Dividend proposed Maicon plc £ 3,000,000 260,000 912,000 4,172,000 £ 1,657,600 688,800 92,000 2,477,800 1,224,000 500,000 50,000 225,000 (583,200) (1,920,000) (240,000) 4,172,000 Rodwell Limited £ 800,000 1,000,000 300,000 2,100,000 £ (600,000) 792,000 292,000 68,800 2,532,800 (787,200) (78,400) (120,000) 2,100,000 The following additional information is available. (1) No interim dividends were declared or paid in the year 2012 out of year 2012 profits. Maicon plc has not yet accounted for the dividends receivable from Rodwell Limited. (2) The interest on the debentures issued to Rodwell Limited has not been paid for the year ended 31 December 2012 and has not been included in the balance sheets shown above. (3) A remittance of £13,600 from Rodwell Limited, sent in late December 2012, was not received by Maicon plc until January 2013. (4) Included in Rodwell Limited's inventory at 31 December 2012 were goods that had been sold to them during the year by Maicon plc for £32,000, which had an original cost of £19,200. (5) The value of goodwill arising following the acquisition of the ordinary share capital of Rodwell Limited had diminuted in value by £174,600 up to 31 December 2012 and the value of goodwill arising following the acquisition of the preference share capital of Rodwell Limited had diminuted in value by £20,000 by the same date. REQUIRED Prepare the consolidated balance sheet of the Maicon Group plc at 31 December 2012. (50 marks) (3) A remittance of £13,600 from Rodwell Limited, sent in late December 2012, was not received by Maicon plc until January 2013. (4) Included in Rodwell Limited's inventory at 31 December 2012 were goods that had been sold to them during the year by Maicon plc for £32,000, which had an original cost of £19,200. (5) The value of goodwill arising following the acquisition of the ordinary share capital of Rodwell Limited had diminuted in value by £174,600 up to 31 December 2012 and the value of goodwill arising following the acquisition of the preference share capital of Rodwell Limited had diminuted in value by £20,000 by the same date. REQUIRED Prepare the consolidated balance sheet of the Maicon Group plc at 31 December 2012. (50 marks)