SECTION A: COMPULSORY QUESTION Question 1 Johnston plc bought a 30% stake in Cameron several years ago when Cameron had reserves of €50m and when the fair value of its fixed assets was estimated to be €30m greater than their net book value. Since then Johnston has had a representative on the board of directors of Cameron and has been involved in its management policies. However it is not considered that Johnston controls the financial and operating policies of Cameron. Johnston also has a 50% stake in Menzies, a joint venture entity in which the Bell group of companies also has a 50% stake. Johnston and Bell exercise control over Menzies jointly. Johnston purchased its stake in Menzies when Menzies's reserves were €130m and when the fair value of its net assets was estimated to be the same as their book value. There have been no issues of shares by either Cameron or Menzies since the investments made by Johnston. The respective balance sheets of the companies at 30 September 20X6 are as follows. Johnston €m 600 100 90 Cameron €m 210 Menzies €m 200 Property, Plant& Equipment Investment in Cameron Investment in Menzies Stock Debtors 100 60 40 30 60 70 Bank 20 180 50 120 130 90 920 120 800 40 170 30 20 240 Creditors within 1 year 50 150 350 Creditors more than 1 year 240 350 Share Capital (€1) Share Premium Reserves (P&L) 400 40 50 60 360 800 120 70 240 290 350
SECTION A: COMPULSORY QUESTION Question 1 Johnston plc bought a 30% stake in Cameron several years ago when Cameron had reserves of €50m and when the fair value of its fixed assets was estimated to be €30m greater than their net book value. Since then Johnston has had a representative on the board of directors of Cameron and has been involved in its management policies. However it is not considered that Johnston controls the financial and operating policies of Cameron. Johnston also has a 50% stake in Menzies, a joint venture entity in which the Bell group of companies also has a 50% stake. Johnston and Bell exercise control over Menzies jointly. Johnston purchased its stake in Menzies when Menzies's reserves were €130m and when the fair value of its net assets was estimated to be the same as their book value. There have been no issues of shares by either Cameron or Menzies since the investments made by Johnston. The respective balance sheets of the companies at 30 September 20X6 are as follows. Johnston €m 600 100 90 Cameron €m 210 Menzies €m 200 Property, Plant& Equipment Investment in Cameron Investment in Menzies Stock Debtors 100 60 40 30 60 70 Bank 20 180 50 120 130 90 920 120 800 40 170 30 20 240 Creditors within 1 year 50 150 350 Creditors more than 1 year 240 350 Share Capital (€1) Share Premium Reserves (P&L) 400 40 50 60 360 800 120 70 240 290 350
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Produce a consolidated
September 20X6 consistent with international accounting standards.
Transcribed Image Text:SECTION A: COMPULSORY QUESTION
Question 1
Johnston plc bought a 30% stake in Cameron several years ago when Cameron had
reserves of €50m and when the fair value of its fixed assets was estimated to be
€30m greater than their net book value. Since then Johnston has had a
representative on the board of directors of Cameron and has been involved in its
management policies. However it is not considered that Johnston controls the
financial and operating policies of Cameron.
Johnston also has a 50% stake in Menzies, a joint venture entity in which the Bell
group of companies also has a 50% stake. Johnston and Bell exercise control over
Menzies jointly. Johnston purchased its stake in Menzies when Menzies's reserves
were €130m and when the fair value of its net assets was estimated to be the
same as their book value. There have been no issues of shares by either Cameron
or Menzies since the investments made by Johnston. The respective balance
sheets of the companies at 30 September 20X6 are as follows.
Johnston
€m
600
100
Cameron
€m
210
Menzies
€m
200
Property, Plant& Equipment
Investment in Cameron
Investment in Menzies
90
Stock
100
40
30
60
Debtors
60
70
Bank
20
180
50
120
130 90
920
40
170
30 20
240
Creditors within 1 year
150
350
50
Creditors more than 1 year
120
800
240
350
Share Capital (€1)
Share Premium
Reserves (P&L)
400
40
50
120
60
360
800
70
240
290
350
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