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Hello, I saw your answer and explanation for the following question: On 31 December 2018 Pee Plc purchased 80% of the share capital of Cee Ltd for £60,000 when its accumulated profits were £30,000. The individual Statement of Financial Positions of Pee Plc and Cee Ltd at 31 December 2020 were as follows:   But I cannot understand part 2 and especially 3 from where it comes £15,000 + £2,000 = £17,000. Please see the attached photo.   Could you be able to help me out? Thank you

Hello, I saw your answer and explanation for the following question: On 31 December 2018 Pee Plc purchased 80% of the share capital of Cee Ltd for £60,000 when its accumulated profits were £30,000. The individual Statement of Financial Positions of Pee Plc and Cee Ltd at 31 December 2020 were as follows:   But I cannot understand part 2 and especially 3 from where it comes £15,000 + £2,000 = £17,000. Please see the attached photo.   Could you be able to help me out? Thank you

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hello, I saw your answer and explanation for the following question:

On 31 December 2018 Pee Plc purchased 80% of the share capital of Cee Ltd for £60,000 when its accumulated profits were £30,000. The individual Statement of Financial Positions of Pee Plc and Cee Ltd at 31 December 2020 were as follows:

 

But I cannot understand part 2 and especially 3 from where it comes

£15,000 + £2,000 = £17,000. Please see the attached photo.

 

Could you be able to help me out?

Thank you

A bartleby.com E University | PDF2DOCX| TEST Amazon Jobs Local Food Map - Big Barn UWS Moodle Shopify Etsy UPS OnBuy Sheets Tidio Parcelforce Rephrase it Van Driver Jobs Home - Job help Amazon Flex job >> G G b Answer. G G = bartleby Q Search for textbooks, step-by-step explanations to homework question... E Ask an Expert + Q&A Library Question1 a) On 31 December 2018 Pee Plc purc... Step 1 When a parent company acquired more than50% of stocks in another company, it must prepare a consolidated statement at the end of the year. Under the consolidated statement, a non-controlling interest is also shown if the stock acquired is less than 100%. Under the consolidated statements, the intercompany transactions are eliminated. Intercompany transactions are those transactions that occur between the parent company and subsidiary company. Step 2 The consolidated statement will include the goodwill generated while acquiring the stocks in subsidiary company and non-controlling interest. Consolidated Non-current assets: Property, Plant and equipment 160000 50000 210000 Cost of investment 60000 Goodwill 25000 220000 50000 235000 Current assets 30000 10000 40000 Total assets 250000 60000 275000 Equity and liabilities: Ordinary shares 100000 20000 100000 Retained profit 150000 40000 158000 Non-controlling asset 17000 Total 250000 60000 275000
Transcribed Image Text:A bartleby.com E University | PDF2DOCX| TEST Amazon Jobs Local Food Map - Big Barn UWS Moodle Shopify Etsy UPS OnBuy Sheets Tidio Parcelforce Rephrase it Van Driver Jobs Home - Job help Amazon Flex job >> G G b Answer. G G = bartleby Q Search for textbooks, step-by-step explanations to homework question... E Ask an Expert + Q&A Library Question1 a) On 31 December 2018 Pee Plc purc... Step 1 When a parent company acquired more than50% of stocks in another company, it must prepare a consolidated statement at the end of the year. Under the consolidated statement, a non-controlling interest is also shown if the stock acquired is less than 100%. Under the consolidated statements, the intercompany transactions are eliminated. Intercompany transactions are those transactions that occur between the parent company and subsidiary company. Step 2 The consolidated statement will include the goodwill generated while acquiring the stocks in subsidiary company and non-controlling interest. Consolidated Non-current assets: Property, Plant and equipment 160000 50000 210000 Cost of investment 60000 Goodwill 25000 220000 50000 235000 Current assets 30000 10000 40000 Total assets 250000 60000 275000 Equity and liabilities: Ordinary shares 100000 20000 100000 Retained profit 150000 40000 158000 Non-controlling asset 17000 Total 250000 60000 275000
A bartleby.com E University | PDF2DOCX| TEST Amazon Jobs Local Food Map - Big Barn UWS Moodle Shopify Etsy UPS OnBuy Sheets Tidio Parcelforce Rephrase it Van Driver Jobs Home - Job help Amazon Flex job >> G G b Answer. G = bartleby Q Search for textbooks, step-by-step explanations to homework question... E Ask an Expert + Q&A Library Question1 a) On 31 December 2018 Pee Plc purc... Note: 1. The goodwill at the time of acquisition can be determined as follows: Ordinary shares Retained profit 20,000 30,000 Total net asset 50,000 Further, the P company acquires 80% of stocks for £60,000. 60,000 Hence, the complete value of the firm = = £75, 000 0.80 Therefore, Goodwill = 75, 000 - 50, 000 = £25, 000 2. Retained earnings for the consolidated statement can be determined as follows: Retained earnings of parent company = £150, 000 Share of parent company in subsidiary profit after acquisition = (40, 000 - 30, 000) x 80% = £8,000 Therefore, Total retained earnings for consolidated statements = 150, 000 + 8, 000 = £158, 000 3. Non-controlling interest for consolidated statement Non – controlling interest = Non – controlling interest at acquisition + Minority share in prof it after acquisition = 15, 000 + 2, 000 = £17, 000
Transcribed Image Text:A bartleby.com E University | PDF2DOCX| TEST Amazon Jobs Local Food Map - Big Barn UWS Moodle Shopify Etsy UPS OnBuy Sheets Tidio Parcelforce Rephrase it Van Driver Jobs Home - Job help Amazon Flex job >> G G b Answer. G = bartleby Q Search for textbooks, step-by-step explanations to homework question... E Ask an Expert + Q&A Library Question1 a) On 31 December 2018 Pee Plc purc... Note: 1. The goodwill at the time of acquisition can be determined as follows: Ordinary shares Retained profit 20,000 30,000 Total net asset 50,000 Further, the P company acquires 80% of stocks for £60,000. 60,000 Hence, the complete value of the firm = = £75, 000 0.80 Therefore, Goodwill = 75, 000 - 50, 000 = £25, 000 2. Retained earnings for the consolidated statement can be determined as follows: Retained earnings of parent company = £150, 000 Share of parent company in subsidiary profit after acquisition = (40, 000 - 30, 000) x 80% = £8,000 Therefore, Total retained earnings for consolidated statements = 150, 000 + 8, 000 = £158, 000 3. Non-controlling interest for consolidated statement Non – controlling interest = Non – controlling interest at acquisition + Minority share in prof it after acquisition = 15, 000 + 2, 000 = £17, 000
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