Illustration of consolidated balance sheet
H Ltd owned S Ltd since the date of incorporation of S Ltd. The balance sheets of the two companies
as at 31 December 20X2 is as follows.
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H Ltd
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S Ltd
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Non Current assets
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£
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£
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£
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£
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Tangible - PPE
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35,000.00
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45,000.00
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Investment in S Ltd
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45,000.00
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80,000.00
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45,000.00
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Current assets
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Inventory
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16,000.00
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12,000.00
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Accounts receivables
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8,000.00
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9,000.00
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Cash at bank
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1,000.00
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25,000.00
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-
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21,000.00
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TOTAL ASSETS
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105,000.00
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66,000.00
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Share Capital
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70,000.00
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40,000.00
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Retained profits
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11,000.00
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19,000.00
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81,000.00
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59,000.00
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Non Current Liabilities
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10% Loan Stock
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10,000.00
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-
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Current Liabilities
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Bank Overdraft
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-
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3,000.00
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Accounts Payable
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14,000.00
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14,000.00
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4,000.00
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7,000.00
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105,000.00
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66,000.00
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Required;
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Prepare the consolidated balance sheet of H Ltd and S Ltd as at 31 December 20X2
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Solution
Consolidate Balance Sheet of H and S Ltd.. As at 31 December 20x2
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NON-CURRENT ASSETS
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£
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£
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Property, plant and equipment (35+45)
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80,000
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Goodwill
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5,000
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85,000
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Inventory (16+12)
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28,000
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Accounts receivable(8+9)
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17,000
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Cash at bank
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1,000
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46,000
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TOTAL ASSETS
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131,000
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Ordinary share capital
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70,000
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Retained profits
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30,000
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100,000
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10% Loan stock
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10,000
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Bank overdraft
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3,000
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Accounts payables
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18,000
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21,000
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TOTAL EQUITY AND LIABILITIES
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131,000
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WORKINGS
NOTE:
H owns S Ltd. since date of incorporation thus:
It owns 100% of S Ltd.. (No minority interest)
There are no pre-acquisition profits (all the profits of share capital are distributable)
Cost of control
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£
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£
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Investment in S
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45,000
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OSC (40,000 x 100%)
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40,000
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_____
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Goodwill (balance figure)
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5,000
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45,000
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45,000
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Group retained profits
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£
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£
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Balance c/d
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30,000
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H Ltd..
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11,000
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_____
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S Ltd..
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19,000
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30,000
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30,000
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