Q1. In a group of companies Palo Plc acquired 80% of the shares of Pilo Plc on 1 January, 2012 when Pilo Plc had retained earnings of K16, 000. The market price of Pilo's shares just before the date of acquisition was K2.50. Palo Plc values non-controlling interest at fair value not at market value. Good will is not impaired. The statement of financial position of Palo Pic and Pilo Plc at 31 December, 2012 were as follows: Property, plant and equipment Shares in Mix Current assets PALO PLC K 70,000 68,000 128,000 52,000 100.000 PILO PLC K 60,000 50,000 35,000 0 000

Q1. In a group of companies Palo Plc acquired 80% of the shares of Pilo Plc on 1 January, 2012 when Pilo Plc had retained earnings of K16, 000. The market price of Pilo's shares just before the date of acquisition was K2.50. Palo Plc values non-controlling interest at fair value not at market value. Good will is not impaired. The statement of financial position of Palo Pic and Pilo Plc at 31 December, 2012 were as follows: Property, plant and equipment Shares in Mix Current assets PALO PLC K 70,000 68,000 128,000 52,000 100.000 PILO PLC K 60,000 50,000 35,000 0 000

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Question

Q1. In a group of companies Palo Pic acquired 80% of the shares of Pilo Plc on 1 January, 2012
when Pilo Plc had retained earnings of K16,000. The market price of Pilo's shares just before
the date of acquisition was K2.50. Palo Pic values non-controlling interest at fair value not at
market value. Good will is not impaired.
The statement of financial position of Palo Pic and Pilo Plc at 31 December, 2012 were as
follows:
Property, plant and equipment
Shares in Mix
Current assets
Share capital - K1 shares
Retained earnings
Current liabilities
Required:
PALO PLC
70,000
68,000
128,000
52,000
180.000
100,000
70,000
170,000
10,000
180,000
PILO PLC
60,000
50,000
35,000
85.000
50,000
25.000
75,000
10,000
85,000
b) Using the information in the case study above prepare a consolidated statement of
financial position as at 31 December 2012.

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