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Required: 1. What figure for goodwill on consolidation should appear in the consolidated statement of financial position of the group at 30 September 20X8? 2. What figure for non-controlling interest should appear in the consolidated statement of financial position of the Pedantic group at 30 September 20X8? 3. What should the figure for retained earnings be in the group's consolidated statement of financial position at 30 September 20X8? 4. What profit is attributable to the parent company in the consolidated statement of profit or loss of the Group for the year to 30 September 20X8? 5. Prepare the consolidated statement of profit or loss for Pedantic for the year ended 30 September 20X8. 6. Prepare the consolidated statement of financial position for Pedantic as at 30 September 20X8.

Required: 1. What figure for goodwill on consolidation should appear in the consolidated statement of financial position of the group at 30 September 20X8? 2. What figure for non-controlling interest should appear in the consolidated statement of financial position of the Pedantic group at 30 September 20X8? 3. What should the figure for retained earnings be in the group's consolidated statement of financial position at 30 September 20X8? 4. What profit is attributable to the parent company in the consolidated statement of profit or loss of the Group for the year to 30 September 20X8? 5. Prepare the consolidated statement of profit or loss for Pedantic for the year ended 30 September 20X8. 6. Prepare the consolidated statement of financial position for Pedantic as at 30 September 20X8.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On 1 October 20X7, Pedantic acquired 80% of the equity share capital of Sophistic in a share exchange of two shares in Pedantic for three shares in Sophistic. The issue of shares has not yet been recorded by Pedantic. At the date of acquisition shares in Pedantic had a market value of $5 cach. Below are the summarised draft financial statements of both entities. Statement of profit or loss for the year ended 30 September 20X8 Pedantic Sophistic S000 S00 Revenue 85,000 42,000 Cost of sales (63,000) (32,000) Gross profit 22,000 10,000 Distribution costs (4,000) (3,500) Administrative expenses (8,000) (1,000) Finance costs (600) (500) Profit before tax 9,400 5,000 Income tax expense (2,162) (1,000) Profit for the year 7,238 4,000 Statements of financial position as at 30 September 20X8 Pedantic Sophistic so00 s00 Assets Non-current assets Property, plant & equipment 40,600 14,600 Current Assets 16.000 7.100 Total Assets 56.600 21.700 Equity & liabilities
Transcribed Image Text:On 1 October 20X7, Pedantic acquired 80% of the equity share capital of Sophistic in a share exchange of two shares in Pedantic for three shares in Sophistic. The issue of shares has not yet been recorded by Pedantic. At the date of acquisition shares in Pedantic had a market value of $5 cach. Below are the summarised draft financial statements of both entities. Statement of profit or loss for the year ended 30 September 20X8 Pedantic Sophistic S000 S00 Revenue 85,000 42,000 Cost of sales (63,000) (32,000) Gross profit 22,000 10,000 Distribution costs (4,000) (3,500) Administrative expenses (8,000) (1,000) Finance costs (600) (500) Profit before tax 9,400 5,000 Income tax expense (2,162) (1,000) Profit for the year 7,238 4,000 Statements of financial position as at 30 September 20X8 Pedantic Sophistic so00 s00 Assets Non-current assets Property, plant & equipment 40,600 14,600 Current Assets 16.000 7.100 Total Assets 56.600 21.700 Equity & liabilities
Equity shares of $1 cach 10,000 6,000 Retained Earnings 35.400 7.000 45,400 13,000 Non-current liabilities 10% Loan Notes 3,000 4,000 Current liabilities 8.200 4.700 Total equity & liabilities 56,600 21,700 The following information is relevant: (i) At the date of acquisition, the fair values of Sophistic's net assets were equal to their carrying amounts. (ii) Sales from Sophistic to Pedantic in the post-acquisition period were $6 million. Sophistic made a mark up on cost of 25% on these sales. One quarter of these goods remained in the inventory of Pedantic at the year-end. (iii) Other than where indicated, statement of profit or loss items are deemed to accrue evenly on a time basis. (iv) At 30 September 20X8, Sophistic had a receivable due from Pedantic of $1 million. This agreed with the amount payable to Sophistic in Pedantic's financial statements. (v) Pedantic has a policy of accounting for any non-controlling interest at fair value. The fair value of the non-controlling interest at the acquisition date Consolidated goodwill was not impaired at 30 September 20X8. was $2.8 million. Required: 1. What figure for goodwill on consolidation should appear in the consolidated statement of financial position of the group at 30 September 20X8? 2. What figure for non-controlling interest should appear in the consolidated statement of financial position of the Pedantic group at 30 September 20X8? 3. What should the figure for retained earmings be in the group's consolidated statement of financial position at 30 September 20X8? 4. What profit is attributable to the parent company in the consolidated statement of profit or loss of the Group for the year to 30 September 20X8? 5. Prepare the consolidated statement of profit or loss for Pedantic for the year ended 30 September 20X8. 6. Prepare the consolidated statement of financial position for Pedantic as 30 September 20X8. at
Transcribed Image Text:Equity shares of $1 cach 10,000 6,000 Retained Earnings 35.400 7.000 45,400 13,000 Non-current liabilities 10% Loan Notes 3,000 4,000 Current liabilities 8.200 4.700 Total equity & liabilities 56,600 21,700 The following information is relevant: (i) At the date of acquisition, the fair values of Sophistic's net assets were equal to their carrying amounts. (ii) Sales from Sophistic to Pedantic in the post-acquisition period were $6 million. Sophistic made a mark up on cost of 25% on these sales. One quarter of these goods remained in the inventory of Pedantic at the year-end. (iii) Other than where indicated, statement of profit or loss items are deemed to accrue evenly on a time basis. (iv) At 30 September 20X8, Sophistic had a receivable due from Pedantic of $1 million. This agreed with the amount payable to Sophistic in Pedantic's financial statements. (v) Pedantic has a policy of accounting for any non-controlling interest at fair value. The fair value of the non-controlling interest at the acquisition date Consolidated goodwill was not impaired at 30 September 20X8. was $2.8 million. Required: 1. What figure for goodwill on consolidation should appear in the consolidated statement of financial position of the group at 30 September 20X8? 2. What figure for non-controlling interest should appear in the consolidated statement of financial position of the Pedantic group at 30 September 20X8? 3. What should the figure for retained earmings be in the group's consolidated statement of financial position at 30 September 20X8? 4. What profit is attributable to the parent company in the consolidated statement of profit or loss of the Group for the year to 30 September 20X8? 5. Prepare the consolidated statement of profit or loss for Pedantic for the year ended 30 September 20X8. 6. Prepare the consolidated statement of financial position for Pedantic as 30 September 20X8. at
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