Simple consolidation
Boo acquired 80% of Goose's equity for $300,000 on 1 January 20X8. At the date of acquisition Goose had retained earnings of $190,000. On 31 December 20X8 Boo despatched goods which cost $80,000 to Goose, at an invoiced cost of $100,000. Goose received the goods on 2 January 20X9 and recorded the transaction then. The two companies' draft financial statements as at 31 December 20X8 are shown below.
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 20X8
|
|
Boo
|
Goose
|
|
|
$'000
|
$'000
|
|
Revenue
|
5,000
|
1,000
|
|
Cost of sales
|
2,900
|
600
|
|
Gross profit
|
2,100
|
400
|
|
Other expenses
|
1,700
|
320
|
|
Profit before tax
|
400
|
80
|
|
Income tax expense
|
130
|
25
|
|
Profit for the year
|
270
|
55
|
|
Other comprehensive income:
|
|
|
|
Gain on revaluation of property
|
20
|
-
|
|
Total comprehensive income for the year
|
290
|
55
|
STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8
|
Assets
|
|
|
|
Non-current assets
|
1,940
|
200
|
|
Property, plant and equipment
|
300
|
-
|
|
Investment in Goose
|
2,240
|
200
|
|
|
|
|
|
Current assets
|
500
|
120
|
|
Inventories
|
650
|
40
|
|
Trade receivables
|
170
|
35
|
|
Bank and cash
|
1,320
|
195
|
|
|
3,560
|
395
|
|
|
|
|
|
Total assets
|
|
|
|
Equity and liabilities
|
|
|
|
Equity
|
2,000
|
100
|
|
Share capital
|
500
|
240
|
|
Retained earnings
|
20
|
-
|
|
Revaluation surplus
|
2,520
|
340
|
|
|
|
|
|
Current liabilities
|
910
|
30
|
|
Trade payables
|
130
|
25
|
|
Tax
|
1,040
|
55
|
|
Total equity and liabilities
|
3,560
|
395
|
|
|
|
|
Required
Prepare a draft consolidated statement of profit or loss and other comprehensive income and statement of financial position. It is the group policy to value the non-controlling interest at acquisition at fair value. The fair value of the non-controlling interest in Goose at the date of acquisition was $60,000.