Adjusting for the above (where necessary) prepare a consolidated statement of financial position
Adjusting for the above (where necessary) prepare a consolidated statement of financial position
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Notes to the accounts:
- On 31stMarch 2021 Langwith entered into a four-year lease contract for a new machine used in the production with a contract requiring the payment of £14,930 per annum in arrears. This does not appear in the accounts above. The interest rate implicit in the lease is 7.5% and Langwith uses the actuarial method to allocate interest for finance leases. The Langwith’s
depreciation policy for these assets applies the straight-line method over four years and there is not thought to be a residual value of the asset at the end of this period. - AlcuinLtd acquired two million of the ordinary shares of Langwith Ltd on 29th November 2014 when the
retained earnings of Langwith Ltd were £1,000,000. - AlcuinLtd acquired 75% of the ordinary shares of Halifax Ltd on 7th September 2016 when the retained earnings of Halifax Ltd were £500,000; Alcuin use the proportionate share (‘partial’) method of valuing the non-controlling interest in Halifax.
- During the year goods with an original cost of £400,000 were sold by Alcuin to Langwith for £600,000. Half of these goods are in Alcuin’s inventory at the year end.
- On 1stOctober 2020, Halifax sold units with a total sales price of £500,000 to a single large customer. Included in the contract was a two-year service warranty covering all required repairs during this time. The normal selling price of the same merchandise would be £400,000 without the warranty. As of 31st March 2021, Halifax recognised £425,000 of revenue, included in the above accounts.
Require: Adjusting for the above (where necessary) prepare a consolidated
![Statement of financial position as at 31st March 2021
Alcuin
Langwith
Halifax
£000
£000
£000
Assets
Non-current assets
Property, Plant and Equipment (note 1)
Investment in Langwith (note 2)
alnvestment in Halifax (note 3)
Current assets
10,500
5,000
3,000
5,500
2,500
1,500
1,000
6,500
500
Total assets
20,000
3,000
Equity and liabilities
Equity
Ordinary share capital (£1)
Retained earnings
10,000
2,000
1,000
7,000
3,750
750
Non-current liabilities
2,000
Current liabilities
1,000
750
1,250
Total equity and liabilities
20,000
6,500
3,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc1c7dce2-7ad8-4864-a83d-29a6a8345983%2F90134df0-9795-49cb-b046-57608a3c106a%2Fs52u98_processed.png&w=3840&q=75)
Transcribed Image Text:Statement of financial position as at 31st March 2021
Alcuin
Langwith
Halifax
£000
£000
£000
Assets
Non-current assets
Property, Plant and Equipment (note 1)
Investment in Langwith (note 2)
alnvestment in Halifax (note 3)
Current assets
10,500
5,000
3,000
5,500
2,500
1,500
1,000
6,500
500
Total assets
20,000
3,000
Equity and liabilities
Equity
Ordinary share capital (£1)
Retained earnings
10,000
2,000
1,000
7,000
3,750
750
Non-current liabilities
2,000
Current liabilities
1,000
750
1,250
Total equity and liabilities
20,000
6,500
3,000
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