0% Normal Investment 19%

IFRS 9

Separate books: Consolidated Books :

1. Cost 1. Equity Accounting
2. Fair value - OCI
3. Equity Accounting

Parent - ABC 55%

25%

Investment 1,125,000
Cash 1,125,000

FV 55 Parent Entity Separate books mein isse

FV 48 nahi karega
Investment 250,000
OCI 250,000

Investment 6,160,000
Cash 6,160,000

Consolidated books
COST FV
Investment in
associate 1,125,000 1,375,000
Investment in subs 6,160,000

Equity Accpunting hoti Kya hai ?

Account for share of your equity in your associate in your investment

Day 1 Investment 1,125,000

Cash 1,125,000

Separate books
Cash 37,500
Dividend Income 37,500
 1-Jan-20 31-Dec-20
Share capital 1,000,000 1,000,000
Retained Earnings 4,500,000 7,850,000
Associate equity 5,500,000 8,850,000
share 25% 25%
Share of equity 1,375,000 2,212,500
Difference 837,500 yet to be received

Investment 250,000
Bargain purchase gain / GR 250,000

Investment 837,500
Share of undistribted profit / GR 837,500

B/S:
Investment in associate 2,212,500 given 1,125,000 + 250,00

Group reserves:
Retained earnings of Parent 37,500
BPG 250,000
Share of undistributed profit 837,500

Parent - Associate ko Rs. 100,000 ki inventory sale ki at margin of 40%

Receivable / Cash 100,000

 Sales 100,000

COGS 60,000
Stock 60,000

Sales 100,000
Cogs (60,000)
Profit from assoicate 40,000
30% inventory unsold
URP 12,000
Holding 25 % 3,000

GR 3,000
Investment 3,000

Associate - Parent

GR 3,000
Stock 3,000

Net Assets of Subsidiary:

At Acq At Rep
Share capital 500 500
Share premium 80 80
Retained Earnings 870 400
Plant 50 20
URP S - P - (20) (400/125x25x1/4)
1,500 980
Post acq loss (520)
Parent (416)
NCI (104)

Goodwill:
Parent consideration 1,700 500 x 80% x 4.25
Fair value of NCI 368
2,068
Net assets (1,500)
568
Impairment (150)
Net Goodwill 418

Non controlling interest - NCI

Fair value of NCI 368
Post acq loss (104)
Impairment (30)
234

Group Reserves:
Retained Earnings of Parent 1,145
Post acq loss (416)
Impairment (120)
Undist share of profit from associ 135
URP - A - P - inventory (9)
Impairment of associate (15)
720
Accounting for investment in associate

Investment 500 250 x 30% / 3 x 4

Share capital 100
Share premium 400

Investment 135
Group reserves 135

GR 9
Stock 9

GR 15
Investment 15

SP 150,000 90,000
Cost (100,000)
50,000
URP 30,000
Holding % 30% 9,000

At Acq At Rep
Share capital 250 250
Share premium 750 1,200
1,000 1,450
Share 30% 30%
 300 435

Balance sheet:

Property 2,150
Plant and Equipment 680
Goodwill 418
investment in associate 620
Other investment 125
Inventory 751
Receivable 590
Cash 170
5,504

Share capital 1,900

Share premium 650
Group reserves 720
NCI 234
10% Loan notes 800
Trade Payable 800
Income Tax payable 400
5,504
 Significant
20% influence 50%

Associate IAS 28
Target

idated Books :
ty Accounting

XYZ - Subsi 2,000,000 Share Capital

200000 Shares
110,000 55%
DCB - Associate

total share capital = 1,000,000 of Rs. 10 each

Total Shares= 100,000
Shaes acquired 25,000
Fair value per share 45 / share

Cost of investment 1,125,000

te books mein issey change

hi karega
 Yeh entry tab banaega parent jab investment have been
carried at Fairvalue

Consolidated books

Investment in associate
Elimnate
investment in
Subsidiary
6,160,000

nvestment

Cost of investment

Parent RE already hogi income

 Share
Profit 3,500,000 25% 875,000
Dividend 15% (150,000) 25% (37,500)
Undistributed 3,350,000 837,500

be received

Consolidated books mein adjusting entry

Investment sirf undistributed profit k share s increase hoti hai

1,125,000 + 250,000 + 837,500

rgin of 40%
 Associate consolidate ?
Associate equity accounting % share

25x25x1/4)
0% x 4.25

Other investment 125

x 30% / 3 x 4 Shares issued 100
Parent price 5
500
Capital 100
Premium 400

inventory leftover

60%
 50% + Control 100%

Consolidation
IFRS 3 and IFRS 10

Done till basics

MP 56 / per share
Cost 6,160,000
ted books
Cost
1,125,000
Puri kamai from associate
received
yet to be received
P acquired 25% of A on Jan 1 ,2020 and 80% of S on March 1, 2020. P paid Rs. 1,125,000 for
acquiring 25% shares in A.
P S A
Sales 12,000,000 9,600,000 7,100,250
Cost of sales (4,800,000) (3,840,000) (2,688,000)
7,200,000 5,760,000 4,412,250
Admin expenses (600,000) (480,000) (336,000)
Selling Expesnes (240,000) (192,000) (134,400)
6,360,000 5,088,000 3,941,850
Interest expense (480,000) (384,000) (268,800)
Other income 357,500 286,000 700,200
6,237,500 4,990,000 4,373,250
Tax (1,559,375) (1,247,500) (873,250)
4,678,125 3,742,500 3,500,000

Other information:
1. Details of share capital are: Parent share in
dividend
S 2,000,000 320,000 357,500
A 1,000,000 37,500
During the year S and A declared interim dividend of 20% and 15% respectively on october and
november respectively.
Retained earnings on January 1, 2020 of A were Rs. 4,500,000.

2. S sold goods to P at a price of Rs. 150,000 S charge margin of 20%. 40% of the goods are still
unsold.

3. A sold goods to P worth Rs. 200,000 at a margin of 25%. 20% of the goods still unsold by P.

4. P sold goods to A worth Rs. 225,000 at a margin of 15%. 40% of the goods still unsold by A.

5. Depreciation due to fair value adjustement of subsidiary at the date of acquisition Rs. 50,000

6, Goodwill of subsidiary have been impaired by Rs. 75,200. Company measures NCI at Fair
Value.

Required:
Prepare consolidated statement of profit or loss.
 Unadjusted P&L Div from S
Sales 20,000,000
Cost of sales (8,000,000)
12,000,000
Admin expenses (1,000,000)
Selling Expesnes (400,000)
10,600,000
Interest expense (800,000)
Other income 595,833 (320,000)
Share of profit from associate
10,395,833
Tax (2,598,958)
Profit after tax 7,796,875
4678125
3118750 unadjuted

Equity Accounting:

Share of profit from associate Assocaite ki books ka profit uthaein and ap

Share
Associate profit fty 3,500,000 25%

At Acq At Rep
Sh cap 1,000,000
Re 4,500,000
5,500,000
share 25%
1,375,000
cost of investment 1,125,000
BPG (250,000)

Share of profit from associate working:

Associate profit x holding % 875,000 (3.5 m x 25%)

BPG 250,000
Impairment of associate - to be deducted
URP - A - P (2,500) 200,000 x 25% x 20% x 25
Inc dep if any by holding % - to be deducted
1,122,500
 Intra group adjustments
S-P Incremental Dep Impairment
(150,000)
150,000 (12,000)

(50,000) (75,200)

fit uthaein and apni holding % se multiply kar dein

875,000
educted
x 25% x 20% x 25%
educted
p adjustments
Div from A Share of profit from associate P - A sale

(3,375)

(37,500.0)
1,122,500

Parent share of profit

NCI share of profit

Sep books of sub:

Unadjusted
Less: URP - S - P
Incremental Dep
Impairment
Adjusted Sub profit
NCI Share
parent
Div from S
Div from A
URP P -A

Associate share of profit

Adjusted P&L
19,850,000
(7,865,375)
11,984,625
(1,125,200)
(400,000)
10,459,425
(800,000)
238,333
1,122,500
11,020,258
(2,598,958)
8,421,300 PAT

7,824,990 Bal fig

596,310

3,118,750
(12,000)
(50,000)
(75,200)
2,981,550
20%
596,310
 4678125
(320,000.0)
(37,500.0)
(3,375)
4,317,250.00

1,122,500

8,421,300.00
Changes in group structure

1. Step Acquistion
a. Normal investment -- now it has become your subsidiary.
b. Associate investment -- now it has become your subsidiary
c. Already subsidiary and further acquisition --> Further acquisition

55% 20%
Owner Further

2. Disposal
a. Entire Disposal- 60% owner ship thi and 60% sold out
b. Disposal to extent that it remains associate or normal investmen
c. Disposal to extent that company remains Subsidiary.

Case a & b: Normal Investment or Associate Becomes Subsidiary

1-Jan-20 AMK limited Acquired 25% shares of ABC limited

Details of ABC Limited

share capital of Rs. 10 each
Retained earnings as at January 1, 2020
Share price per share

Separate Books: Associate have been carried at cost - because allowed

 Investment
1-Jan-20
Cash
100,000 shares x 25% x 30

Pehla Sawal ? Kya consolidation yahan se hogi ABC ki ?

Answer: No

On July 1, 2020 company acquired further 45% shares of ABC Limited

Fv per share 42

Old Ownership
New further acquired
WE have established Control

Investment
1-Jul-20
Cash
100,000 x 45% x 42

Balance sheet - Separate Books

AMK LTD ABC LTD
Investment 2,640,000

You have to consolidate ABC limited From July 1, 2020.

Net assets of ABC limited as at July 1, 2020
At Acq
1-Jul-20
Share capital 1,000,000
Retained earning 4,250,000
Fair value adjustment -
5,250,000

Summary: Normal investment or assocaite becomes subisidiary you have to

market value and park gain in Group Reserves.

consolidated books:

Investment
1-Jul-20
Group reserves
42 - 30 x 25,000

Goodwill:

Consideration of parent 2,940,000

Net Assets of subsidiary (3,675,000)
BPG (735,000)

Practice Question for understanding:

Huzaifa --> sami mein 40% holding --> assocaite

 Old 90 Old
New 70 new rate / fv
160 Cost of investment

Net Assets of subisidiary:

At Acq At Rep
Share capital 100 100
Retained Earnings 100 122
200 222

Post Acq 22.00

Parent 60% 13.20
NCI 40% 8.80

Goodwill:
Consideraton
Parent old 90
Fv adj 15 105 - 90
Fv of old inv 105
Fv of new 70
175
FV of nci 90
Fv of business 265.00
Net asset (200.00)
65.00

NCI:
Fair value 90.00
Post acq 8.80
 98.80

Group reserves:
Re of Parent 250.00
Post acq 13.20
Reval of investment 15.00
278.20

Goodwill 65.00
Sundry assets 600.00
665.00

Share capital 200.00

GR 278.20
NCI 98.80
Liabilities 88.00
665.00
bsidiary.
ubsidiary
her acquisition after Control.

75%
Current holding

rmal investment --> 60% and you have sold 20% then 40%

es Subsidiary

C limited

Rs. 1,000,000
Rs. 3,000,000
Rs. 30

se allowed
 750,000 Separate
750,000 books

Limited

25%
45%
70% on July 1, 2020

1,890,000 Separate
1,890,000 books

750,000 Fv of consideration Jan 1, 2020

1,890,000 FV of consideration current date

Profit of ABC FTY Rs. 2,500,000

ary you have to revalue old holding at current

300,000
300,000

GR
Reporting period April 1, 2010 - March 31, 2011

Number Holding
of shares Total
acquired Shares
1-Jul-09 0.1 1 10%
Control 1-Oct-10 0.45 1 45%
55%

Net Assets of subsidiary:

At Acq At Rep
Share capital 100 100
Retained earnings 60 80
Land fv adj 25 25
Urp - S -P - (1.25)
185.00 203.75
Post Acq Profit 18.75
Parent 55% 10.31
NCI 45% 8.44

Goodwill:
Consideration
Old 23.00
Fv adj 5.00
28.00
Fv of new cons 108.00
Parent cons 136.00
Fv of NCI 70.00
 Fv of business 206.00
Net Assets (185.00)
21.00

NCI:
Fair of nci 70.00
Post acq 8.44
78.44

Group reserves
Re of parent 550.00
Post acq profit 10.31
Fv adjustment 5.00
Transfer from FV reserve 3.00
Error Adjustment (4.00)
564.31

Property, plant and equipment 925.00

Goodwill 21.00
Current assets 483.75
1,429.75

Share capital 300.00

Group reserves 564.31
NCI 78.44
Non-current liabilities 190.00
Current Liabilities 297.00
1,429.75
Further Acquisition after Control:

Example: We already have 60%

We further acquired 20% ---> On July 1, 2020

Important Lines: When there is a further acq after control. This is technically

Separate books:

Investment 2,600,000
1-Jan-20
Cash

Investment 650,000
1-Jul-20
Cash

Parent
Investment 3,250,000 -> Separate books

Rs. 2.6 million eliminated on Jan 1 Rs. 650K to be eliminated

1-Jul-20

January 1, 2020 net assets of Subsidiary:

Control date
At Acq At Further Acq
1-Jan-20 1-Jul-20
Share capital 1,000,000 1,000,000
Retained earnings 3,000,000 3,700,000
 4,000,000 4,700,000
Post acq for 6 months 700,000
Parent 420,000
NCI 280,000
60:40
Goodwill:
Consideration 2,600,000 ---> Would have been eliminated fro
Net Assets 60% (2,400,000)
200,000

NCI:
Share of NCI at Jan 1, 2020 1,600,000
Post acq for 6 months 280,000
NCI's CA at the date of further acq 1,880,000
Purchase of share from NCI (940,000)
NCI's Share/CA after further acq 940,000
Post acq for 6 months 140,000
1,080,000

NCI 940,000
1-Jul-20 Invesment
OCE

Steps:
1. Calculate goodwill based on orginal consideration at the time of acquiring c
2. Prepare net assets till the date of further acquisition
3. Calculate CA of NCI at the date of further acq
4. Reduce NCI proportinately and compare with further investment amount
5. Park gain or loss in OCE.
6. Subsequent profits will be distributed as per new holding %

Question for Understanding:

Net Assets of subsidiary

At Acq At Further Acq

Share capital 500,000 500,000
Retained Earnings 200,000 540,000
700,000 1,040,000
Post Acq 340,000
Parent 255,000
NCI 85,000
75:25

Goodwill:
Consideration 1,000,000
Net Assets 75% (525,000)
475,000

NCI:
Share of NCI 175,000
Post Acq 85,000
CA of NCI at [Link] 260,000
Purchase of shares (156,000)
Revised CA 104,000
Post acq 6 months 6,000
110,000
OCE
Group Reserves NCI
Retained Earnings 1,825,000
Post Acq Before 255,000
Post Acq After 54,000
2,134,000

Property, plant and equipment 2,300,000

Goodwill 475,000
Current Assets 625,000
3,400,000

Share capital 900,000

Group Reserves 2,134,000
NCI 110,000
OCE (44,000)
Liabilities 300,000
3,400,000
 Acq date
1-Jan-20 Consolidation started from here

trol. This is technically a transaction between owners

60%
2,600,000

20%
650,000

e eliminated

Profit earn = 1.4 million

At Rep
31-Dec-20
1,000,000
4,400,000
 5,400,000
700,000
560,000
140,000
80:20

ave been eliminated from books

1,080,000

650,000
290,000

t the time of acquiring control

er investment amount

olding %

At Rep
500,000
600,000
1,100,000
60,000
54,000
6,000
90:10
 44,000
156,000
Investment 200,000
IFRS 9:

Loan to Director CA 22.00 --> Amortized Cost

Year C/F Pv at
8.7%
1 8.00 7.36
2 8.00 6.77
3 8.00 6.23
20.36

THL GR 1.64
ADJ Long term Rec 1.64

ZFL Investment 5.00

ADJ NA of Sub 5.00

Company Multiple Segments ?

A B C BS
PPE Total
Current aset Total

Liab Total

Non-current assets and discontinued operations accounting and presentatio

Requirement 1: To be disposed segment k assets ko respective jaga se nikal k

Requirement 2:
Carry fair value less cost to sell

Disposal group CA 20 Carry at

Fv-cts 25

CA 20
Fv-cts 18 Carry at
Imp loss (2.00)

Segment's CA:

PPE 60
CA 25
Liab (10)
75
Fv-CTS 55
Imparment (20)

THL Impairment loss - GR 20.00

ADJ NCA Held for sales 20.00

Aaj tak Impairment loss ki % ya amount given of goodwill

Carrying amount of CGU

 Subsidiary assets - liabilities at reporting date

1 Net assets of subsidiary at reporting date

2 Goodwill of subsidiar
Total carrying amount of CGU

Net Assets of Subsidiary:

At Acq At Rep
Share capital 600 600
Retained Earning 299 442
Other reserves 26 137
Free hold land 16.00 16.00
Contingent liab (6.00) (6.00)
Error of subs - 5.00
935 1,194
Post acq 259
Parent 60% 155.40
NCI 40% 103.60

Goodwill:

Parent entity's consideration

Cash 100.0
Deferred cons 82.64 100/1.1^2
Share cons 327.75 28.5 x 11.5
Free hold land 54.00
564.39
FV of NCI 396.00 60 x 40% x 16.5
 960.39
Net Assets (935.00)
Goodwill 25.39
Impairment (9.39)
16.00

NCI:
Fair value of NCI 396.00
Post acq 103.60
Impairment (3.76)
495.84
Further acquisition (247.92) 495.84/40*20
NCI at 31 Dec 2015 247.92

Group Reserves:
Retained Earnings 1,066
Post acq 155.40
Impairment (5.64)
Impairment of Long term Rec (1.64)
NCA held for sale impairment (20.00)
Error of land transfer (46.00)
1,148.12

Property, plant and equip 1,126.00 (481+735-46+16-60)

Goowill 16.00
Investments 610.61 (1,420 - 564.39 - 260) + (10 + 5)
Long term receivable 20.36 22 - 1.64
Current assets 3,753 2,142 + 1,636 - 25
Non current assets HFS 65.00 (60+25-20)
 5,590.96

Share capital 1,120

Group reserves 1,148.12
Other reserves 102.00
NCI 247.92
OCE (12.08)
Non-current liab 511.00
Current liab 2,458.00 1,514+954-10
Liab associated with NCA HFS 10.00
Contingent liab recorded 6.00
5,590.96

OCE 12.08
[Link] NCI 247.92
Investment 260.00

Entry Investment` 54.00

made Gain 54.00

Investment` 54.00
To be
made Land 46.00
Gain 8.00

Adjust GR - Gain 46.00

ment Land 46.00

Impairment testing:
Carrying amount of net assets at 31 Dec 1,194
Goodiwll 25.39
Carrying amount of Sub 1,219
Recoverable amount 1,210
Impairment (9.39)
Amortized Cost

Discontinue

ng and presentation

tive jaga se nikal k ek line item mein le aayein

NCA HELD FOR SALE
9 - 260) + (10 + 5)
Case 1: 100% Disposal - Entire Disposal

Separate Books
Investment 2,000,000
Cash

Disposal:
Cash 3,040,000
Investment
Gain on disposal

Retained earnings of parent:

Gain on dispisal 1,040,000
Post acq 1,840,000
Gain of seperates books (1,040,000)
Loss of consolidated books (800,000)
1,040,000

Net Assets:
At Acq At disp
1-Jan-18 30-Jun-20
share capital 1,000,000 1,000,000
Retained earning 1,200,000 3,500,000
2,200,000 4,500,000
Post acq 2,300,000
Parent 1,840,000
NCI 460,000

Goodwill:
Consideration 2,000,000
Net Assets (1,760,000)
240,000

NCI:
Share of NCI 440,000
Post acq 460,000
900,000

Assets - liab 2,200,000

NCI - PERTAINS TO NCI 440,000

Parent share 1,760,000
goowill 240,000
2,000,000

Practice Quesiton:

Net Assets of subsidiary Dops:

 1-Jan-17 30-Jun-18
At Acq At Disp
share capital 2,000,000 2,000,000
Retained earnings 3,000,000 9,089,000
Building 500,000 350,000
5,500,000 11,439,000

Post Acq 5,939,000

Parent 80% 4,751,200
NCI 20% 1,187,800

Goodwill:
Dops Cops
Consideration 5,000,000 7,000,000
Net Assets 80% (4,400,000) (8,313,200)
600,000 (1,313,200)

NCI:
Dops Cops
NCI Share 1,100,000 3,562,800
Post Acq 1,187,800 882,750
2,287,800 4,445,550
Derecognize

Group Reserves:
Retained Earnings 23,950,000
Post Acq
- Dops 4,751,200
 - Cops 2,059,750
Reversal of Sep books gain (5,950,000) Adjustment
Consolidated books gain 1,198,800 (4,751,200)
BPG 1,313,200
27,322,950

For understanding
Jab separate books ka gain reverse kar k aap consolidated
books ka gain record kartey hain tou us se 2 kaam hotey
hain:
1. Gain consolidated books ka reh jata hau
2. and actual kamai GR mein ajati hai

Balance Sheet:
Property, plant and equipment 19,820,000
Inventory 1,974,500
Trade Receivable 2,607,800
Cash and bank 16,267,200
40,669,500

Share capital 1,000,000

Group Reserves 27,322,950
NCI 4,445,550
Long term loans 4,000,000
Trade and other payable 3,901,000
40,669,500
 Consolidated Books
Investment ki jagah Assets & liabilities of Subsidiary + Goodwill
2,000,000 NCI

Paisa tou yehi hai

2,000,000
1,040,000 kya consolidated books mein investment thi ?
Jawab --> No
Consolidated books mein - Assets, Liabilities, Gw and NCI

Assets & Liabilties = Equity or Net Assets

Net Assets measns equity mein izafa hoga

Step 1: Calculate net assets of subsidiary at the date of disposal

Setp 2: Calculate Goodwill at the date of disposal
Step 3: Calculate NCI till the date of disposal
Step 4: Calculate gain/loss on disposal of subsidiary
Step 5: Derecognize sep books gain and recog consolidated book

Consolidated books gain:

Consideration
 Net assets
NCI
Goowill
CA of Assets and liab
Loss on disposal

Net Assets of subsidiary Cops:

 31-Mar-18 31-Dec-18
At Acq At Rep
share capital 3,000,000 3,000,000
Retained earnings 8,496,000 11,496,000
Inventory 80,000 40,000
Land 300,000 300,000
URP - inventory - (17,500)
11,876,000 14,818,500
Post Acq 2,942,500
Parent 70% 2,059,750
Nci 30% 882,750

BPG

Separate Books Gain:

Consideration 12,000,000
Investment (5,000,000)
7,000,000
Tax 15% (1,050,000)
5,950,000 included in RE as separate books gain

consolidated Books Gain:

Consideration 12,000,000
Net Assets (11,439,000) (9,151,200)
Goodwill (600,000)
NCI 2,287,800
Tax (1,050,000)
Consolidated 1,198,800
Books gain
ooks
of Subsidiary + Goodwill +

nt thi ?

lities, Gw and NCI

y at the date of disposal

f disposal

of subsidiary
recog consolidated books gain

3,040,000
(4,500,000)
900,000
(240,000)
(3,840,000)
(800,000)

(1,840,000)
as separate books gain
Disposal that remain associate or normal investment:

Things to remember:
1. 80% se 50% disposed net assets means asset and liabilities will be derecogn
Steps for consolidation:
1. Calculate net assets of subsidiary at the date of disposal of dispo
2. Caclulate NCI at of subsidiary disposed at the date of disposal
3. Calculate goodwill of subsidiary disposed at the date of Disposal
4. Calculate separate books gain for derecognition
5. Calculate consolidated books gain for recognition
6. Recognize remaining investment in consolidated books at "fair v

Net Assets of Subsidiary:

Suhaibwansham
1-Jan-17 30-Jun-18
At Acq At Disposal
Share capital 2,000,000 2,000,000
Retained Earnings 3,500,000 14,658,000
5,500,000 16,658,000
Post Acq 11,158,000
Parent 80% 8,926,400
NCI 20% 2,231,600

Share of equity 5,330,560

Post acq associate share

Goodwill: Suhaibwansham
Consideration 5,000,000
Net Assets 80% (4,400,000)
 600,000

NCI: Suhaibwansham
Share of nci 1,100,000
Post Acq 2,231,600
3,331,600

Group Reserves:
Retained Earnings 33,650,000
Post Acq
- Suhaibwansham 8,926,400
-Ahadwansham 3,127,600
URP - P - S (17,500)
Less: Gain on disposal of Separate books (7,650,000)
Add: Gain on diposal of consol books 1,223,600
Bargain purchase gain on associate 830,560
Share of undistributed profit 1,120,000
41,210,660
Separate books Gain:

% Acquired 80%
Disposed % 60%
48% disposed 48.00%

Remaining holding 32.00% Remains associate

Separate books gain

Consideration 12,000,000
Investment (3,000,000) (5,000,000x60%)
Gain on disposal 9,000,000
Tax 15% (1,350,000)
Gain on disposal 7,650,000 already in RE

Consolidated books gain:

Consideration 12,000,000
Net Assets (16,658,000)
NCI 3,331,600
Goodwill (600,000)
Tax (1,350,000)
Loss on disposal (3,276,400)
Gain on initial Recog 4,500,000
1,223,600

Investment in associate 4,500,000

Gain on recognition

Property, plant and equipment 19,820,000

Goodwill 3,721,600
Investment in associate 6,450,560
Inventory 1,982,500
Trade Receivable 2,607,800
Cash and bank 22,435,200
57,017,660

Share capital 1,000,000

Group Reserves 41,210,660
NCI 6,174,000
Long term loans 4,000,000
Trade and other payable 4,633,000
57,017,660
ities will be derecognised 100%

e of disposal of disposed subsidiary

e date of disposal
the date of Disposal

ated books at "fair value"

nsham Suhaibwansham
31-Dec-18 31-Mar-18
At Rep At Acq
2,000,000 Share capital 3,000,000
18,158,000 Retained Earnings 12,732,000
20,158,000 Inventory 80,000
Land 300,000
16,112,000
Post Acq
Parent 70%
6,450,560 NCI 30%
1,120,000

Ahadwansham
15,000,000
(11,278,400)
 3,721,600

Ahadwansham
4,833,600
1,340,400
6,174,000

7,650,000

4.5m - 5,330,560 Recon:

Adjustment (6,426,400)

Post Acq Reversal

(8,926,400)

Post Acq reverse 8,926,400

2,500,000
sociate
4,500,000
uhaibwansham
31-Dec-18
At Rep
3,000,000
17,232,000
48,000
300,000
20,580,000
4,468,000
3,127,600
1,340,400
Adjustment Value - net

Fair value gain

2,500,000

Fair value gain of investment remaining

Bee Limited --> CEE limited
Holding
252 90%
280
CEE LIMITED
At Acq At Rep
Share capital 2,800 2,800 Share Cap
Retained Earn 350 1,200 Retained Earning
Cont liab (7) -
URP - Stock - (2.24) Post Acq
3,143 3,998 Parent 80%
Post Acq 854.76 NCI 20%
Parent 90% 769.28
NCI 10% 85.48 Share of equity

Goodwill: Cee Tee

Consideration 3,900.00 1,200.00
Net Assets Share (2,828.70) (880.00)
1,071.30 320.00
Impairment (107.13)
964.17

NCI: Cee Tee

NCI SHARE 314.30 220.00
Post Acq 85.48 150.00
399.78 370.00

Group Reserves:
Retained Earnings 15,800
Post Acq
- Cee 769.28
- Tee 600
Impairment (107.13)
Reversal of Sep books (1,100)
Consolidated books gain 850
Share of profit - associate 70
16,882
disposal working:

Separate books Gain:

Consideration 2,000
Investment CA (900.0) 1200x75%
Gain on disposal 1,100.00

80%
Consolidated books gain: -60.0%
20%

Consideration 2,000
Net Assets (1,850)
Goodwill (320)
NCI 370
Fv of remaining invest 650
Gain on disposal 850

PPE 78,400
Goodwill 964.17
Investment in associate 720 (650+70)
Stock in trade 25,797.76
Trade and other Rec 19,288
Cash and bank 1,500.0
126,669.93

Share capital` 44,300.0

Group Reserves 16,882
NCI 399.78
Long term loan 36,400.00
Trade and other payable 28,688.0
126,669.93
 TEE LIMITED
At Acq At Disp At Rep
1,000 1,000 1,000
100 850 1,200
1,100 1,850 2,200
750
600
150

370 440
Share of profit 70
Recon:
Adjustment - net (250)

(600) 350
post acq Fv Gain
Disposed that remain subsidary

Net Assets of Subsidary:

Shares total of Rs. 10 each 10,000

Price / share at acq 40
Acquired on Jan 1 2018 80%
Share acquired 8,000
Profit for the year 500,000
Disposed 20% on june 30, 2018 for Rs. 150,000

At Acq At Disposal At Rep

Share capital 100,000 100,000 100,000
Retained earnings 200,000 450,000 700,000 120000
300,000 550,000 800,000 500,000
Parital 110,000 650,000 200000
Full NA + Goodwill 130,000 130,000 320000
Goodwill:
Partial Full Partial
Consideration 320,000 320,000 Cash 150,000
Fair value of NCI - 80,000 NCI 110,000
320,000 400,000 GR 40,000
Net Assets (240,000) (300,000)
80,000 100,000 Full
20,000 Cash 150,000
NCI: NCI 130,000
Partial Full GR 20,000
Share / FV 60,000 80,000
Post Acq till disp 50,000 50,000
On june 30, 2017 110,000 130,000
Disposal 110,000 130,000
220,000 260,000
Post acq 6 months 100,000 100,000
320,000 360,000

Shuru se he hota tou full GW:

Fair value 4,000 x 40 160,000
Post acquistion 40% shuru se 200,000
360,000

By Akash Mukesh Kumar, ACA

Disposed that remain subsidary

Investment 320,000
Cash 320,000

case 1 Cash 150,000

Investment 80,000
Gain 70,000
case 1 Cash 150,000
Investment 80,000
Gain 70,000
Case 1 Case 2
Group reserves: Group reserves:
Re of parent 70,000 Re of parent 70,000
Reversal (70,000) Reversal (70,000)
Gain of cons books 40,000 Gain of cons b 20,000

By Akash Mukesh Kumar, ACA

IFRS 11:

Joint Arrangements

Joint venture And

Joint Control

50% 100 Ope

Sep legal status
A company Assets

Joint Control
Equity
B company Liab
Sep legal status

Net Assets of subsidiary:

ML
At Acq At Disp A Rep
1-Jul-14 1-Jul-16 30-Jun-17
Share capital 2,200 2,200 2,200
Share premium 900 900 900
Retained Earnings 1,400 2,500 3,200
 4,500 5,600 6,300
Post Acq 1,100 700
Parent 880 420
NCI 220 280

Goodwill: ML BL
Consideration 4,400 7,500
Net Assets 80% (3,600) (7,680) Bal fig
800 (180)
Imapirment (160)
640

NCI: ML
Share of NCI 900 Share of NCI
Post acq till July 1, 2016 220 Post Acq - June 2017
1,120
disposal to NCI 1,120
2,240
Post Acq 2017 280
NCI at Disposal / Rep 2,520

Group reserves:
RE of Parent 6,189
Post Acq:
- ML till 2016 880
- ML till 2017 420
- BL 2,057.40
Bargain purchase gain 180
Impairment of GW (160)
Reversal of Sep books gain
- First disposal (88)
- Second Disposal (1,001)
Recognition of gain cons
- First disposal 68
- Second Disposal 486
9,031.40

Disposal Workings/Adjustments:

Separate Books

Cash 1,188
1-Jul-16 Investment 1,100
Gain on disposal 88
Reverse

Cash 2,926
30-Jun-17 Investment 1,925
Gain on disposal 1,001
Reverse

Inventoy sale by BL - SL
BL - SL
Sales 50
Cost (40)
Profit subsidiary 10

SL URP 4
Purcahsed at 50
NV loss (6)
44

Joint Operations Accounting:

Unit constructed 1,550

Share of SL 620 Cost of investment - appearing in bo

Operations P&L
Total Share IF P&L
Revenue 1,100 40% 440

Power Gen cost (670) 40% (268)

Operating Exp (130) 40% (52)
300 40% 120

Total Share BL'S share

PPE to be recognized 1,550
Dep exp (155)
1,395 40% 558

Day 1:

PPE 620
1-Jul-16
 1-Jul-16
Investment 620

Year end
Dep Exp 62
30 June, 2017
PPE 62

Net PPE 558

Receivable from JO 120

30 June, 2017
Income fro JO 120

Balance sheet:
Property, plant and equipment 28,233.00
Investment in associate 1,980
Receivable from Joint Operator 120
Stock in trade 4,160
Trade and other receivable 4,000
Cash and Bank 3,500
41,993.00

share capital 20,000.00

Share premium 1,000.00
Group Reserves 9,031.40
NCI 6,491.60
Trade and other payable 5,470.00
41,993.00
rangements

Joint Operations

Operation/venture
Separate legal status - Joint ve
ts 200

ty

Separate legal status "nahi hai

BL
At Acq At rep
1-Jul-15 30-Jun-17
Share capital 10,000 10,000
Retained Earnings 2,600 6,000
Building 200 175
URP - BL - SL - (4)
Income from JO - 58
7,680 / 60 x 100 12,800 16,229
Post Acq 3,429
Parent 2,057.40
Nci 1,371.60

BL
5,120.00
1,371.60
6,491.60
Consolidated Books
Cash 1,188
1-Jul-16 NCI
Gain on disposal

Cash 2,926
Investment at FV 1,980
NCI 2,520
30-Jun-17
goodwill
Net Assets
Gain on disposal

Consideration 2,926
Net Assets (6,300)
Goodwill (640)
NCI 2,520
 Fv of remaining investment 1,980
486
Add

nt - appearing in books

to be recorded in Net Assets of BL

to be recorded in PPE
to be recorded in BS
status - Joint venture - "Equity accounting"

status "nahi hai" - Joint operation - Proporionate consolidation

 1,120
68
Recog

640
6,300
486
Complex Group
Case 1:
ABC LIMITED

80% Control 100%

Consol XYZ LIMITED

75% Control 100%

Consol DZB LIMITED

Case 2:
ABC LIMITED

60% Control 100%

Consol XYZ LIMITED

75% Control 100%

Consol DZB LIMITED

Effective holding:
Parent NCI
XYZ Limited 80% 20%
DZB Limited 60% 40% (Direct NCI of DZB = 25%) + (75% x 20%)

indirect holding adjust

Effective holding:
Parent NCI
XYZ Limited 60% 40%
DZB Limited 45% 55% (25% direct NCI) + ( 75%* 40%)

indirect holding adjust

25%) + (75% x 20%)

g adjustment

5%* 40%)

g adjustment
indirect holding adjustmen
ustment
D-Shape Group:
Case 1:
A
Jan-19 70%

B 40%
Jan-18 20% Jul-19
Consolidation
C

Case 2:
A
Jan-19 55%

B 40%
Jan-18 15% Jul-19
Consolidation
C
 Effective Holding:
Parent NCI
Subsidiary B 70% 30%
Control Subsidiary C 54% 46%
60%
Direct NCI
Share of B subsidiary's NCI

Effective Holding:
Parent NCI
Subsidiary B 55% 45%
Control Subsidiary C 48.25% 51.75%
55%
Direct NCI
8.250% Share of B subsidiary's NCI
40%
6%
46%

45%
6.8%
52%
Group Structure:

Case 1:
ABC
60%
Jan-02
XYZ
70%
1-Jan-03
DXY

Net Assets of Subsidiary:

XYZ
At Acq At Rep
Share cap 100 100
Retained earning 45 90
145 190

Post Acq 45
Parent 60% 27
Nci 40% 18

Goodwill:
XYZ
Consideration 142 Consideration
Net Assets 60% (87) Net Assets 52%
 55

NCI:
XYZ
Share of NCI 58.00 Share of NCI
Post Acq 18 Post Acq
Indirect Holding Adj (40)
36.00

Group Reserves:
Retained earnings of parent` 560.00
Post Acq 40.00
600.00

Balance Sheet:
PPE 850.00
GW 111.20
Current assets 360.00
1,321.20

Share capital 400.00

Group Reserves 600.00
NCI 91.20
Current Liab 230.00
1,321.20
 Effective Holding:

Subsidiary XYZ
Control Subsidiary C
10% 80%
1-Jan-03
Consolidation

DXY
At Acq
Share cap 50
Retained earning 40
90

Post Acq 25
Parent 52% 13
Nci 48% 12

DXY
103.00 (43 + 100 x 60%)
(46.80)
 56.20

DXY
43.20
12
55.20
Holding:
Parent NCI
60% 40%
52% 48%

Direct NCI 20%

Share of B subsidiary's NCI 28%
48%

Y
At Rep
50
65
115
 DL
1-Jan-08 75%

GL
47%
1-Jul-13
SL

1-Jul-09
Associate
2,175
30%

Net Assets:
GL
At Acq At Rep
Share capital 7,000 7,000
Retained Earnings 2,500 2,790
Land - fv adj 30 -
9,530 9,790
Post Acq profit 260
Parent 195
Nci 65

Goodwill:
GL
Consideration 7,500.00 Consideration
Net assets 75% (7,147.50) Net assets 65%
352.50

NCI:
GL
Share of NCI 2,382.50 Share of NCI
Post Acq 65.00 Post Acq
Indirect holding Adj (700.00)
1,747.50

Group Reserves:
Retained Earnings of parent 7,500
Post Acq 253.50
Loss on remeasurement of investment (375)
Bargain purchase gain 6.50
Adjustment of error (3.56)
7,381

Non-current assets 21,500.00

Goodwill 352.50
Current Assets 16,525.00
38,378

Share capital 9,000

Reserve for issuance of shares 12.00
Group reserves 7,381
NCI 3,882.50
Non-current liabilities 9,991.55
Current Liabilities 8,110.00
38,377

Cash flow at 10% PV at 12%

1 2013 25 22.32
2 2014 25 19.93
3 2015 275 195.74
238

Op Int 12% Cash

2013 238 28.56 (25)
2014 242 28.99 (25)
2015 246 29.46 (25)

Entry to be made:
Cash 250
TFC payable 238
 Equity 12

Int exp 28.56

Cash 25
TFC pay 3.56
Entry made:
Cash 250
TFC pay 250

Int exp 25
Cash 25

Adjusting entry:

Int Exp / GR 3.56

TFC pay 8.45
Equity 12.00

Sep Books CA 120

SP 170
Gain 50

Consolidated books
CA 150
SP 170
Gain 20
 Effective Holding:

GL Subsidiary
30% 1-Jul-09 SL Subsidiary

1-Jul-13
Subsidiary
1,800
fair value (375) GR
Loss

SL
At Acq At Rep
Share capital 3,000 3,000
Retained Earnings 3,010 3,100
6,010 6,100
Post Acq 90
Parent 58.50
Nci 31.50

SL
sideration 3,900.0 (1,800 + 2,800 x 75%)
assets 65% (3,906.5)
(6.50) BPG GR

SL
e of NCI 2,103.50
31.50
2,135.00
closing
241.55 -240 25 25 275
245.54 12%
250.00
 Parent NCI
75% 25%
65.000% 35%

1-Jul-13
sidiary
1,800
IAS 21 Kehta hai --> Foreign currency transaction and Balances should be translated/converted
and presented in "Presentational Currency".

Summary of Foreign Currency

ITEMS

Monetary Items Non-Monetary Items

1. Cash
2. Receivable
3. Payable
Exchange gain/(loss) parked in P&L
Carried at Cost Carried at Fair value

Revalue for Both

Fair value Foreign

changes exchanges

Fair value changes may Exchange gain will

be parked in OCI or P&L be parked where
fair value changes of
non-monetary item
parked
Example:

Parent Subsidiary

? Account Re $ 5,000

Sales $ 5,000

Rates: PKR / Dollar

Average for the year 25
Reporting date rate 30

Account receivable 150,000

Retained earnings 125,000

OCI - Exchange Gain 25,000 (30 - 25 = 5 x 5,000)
150,000
Foreign Subsidary

Question 1: (No Fair value and intra group adjustment)

Desi Co. acquired 80% shares of Videshi Co. on january 1, 2018 for $ 55,000. Financial statements of these
companies at acquisition date and reporting date are as follows:

January 1, December 31, December 31,

2018 January 1, 2018 2018 2018
Desi Co. Videshi Co. Desi Co. Videshi Co.
PKR USD PKR USD
Property, plant and equipment 2,000,000 $ 50,000 1,600,000 $ 40,000
Investments (at cost) 6,050,000 $ - 6,050,000 $ -
Inventory 800,000 $ 20,000 750,000 $ 15,000
Cash 1,200,000 $ 10,000 5,000,000 $ 35,650
10,050,000 $ 80,000 13,400,000 $ 90,650

Share capital of Rs. 10 each / $1 each 1,000,000 $ 10,000 1,000,000 $ 10,000

Retained earnings 5,000,000 $ 40,000 6,331,250 $ 78,605
Liabilities 4,050,000 $ 30,000 6,068,750 $ 2,045
Total equity and liabilities 10,050,000 $ 80,000 13,400,000 $ 90,650

Details of exchange rate:

PKR / USD
January 1, 2018 110.00
Average rate for the year 2018 122.50
December 31, 2018 135.00

Statement of Profit or Loss for the year ended December 31, 2018:

Desi Co. Videshi Co.

PKR USD
Sales 2,500,000 $ 80,000
Cost of sales - 625,000 $ -20,000
Gross profit 1,875,000 $ 60,000
Operating Expenes - 250,000 $ -12,500
Investment income 150,000 $ 7,650
Profit before tax 1,775,000 $ 55,150
Taxation - 443,750 $ -16,545
Profit after tax 1,331,250 $ 38,605

Required:
1. Prepare consolidated Balance Sheet at Acquistion and Reporting Date.
2. Prepare Statement of profit or loss for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Foreign Subsidary

Question 2: (No Fair value Adjustment)

Paki Co. acquired 85% shares of Foreign Co. on January 1, 2018 for $ 46,000. Financial statements of these
companies at acquisition date and reporting date are as follows:

January 1, December 31, December 31,

2018 January 1, 2018 2018 2018
Paki Co. Foreign Co. Paki Co. Foreign Co.
PKR USD PKR USD
Property, plant and equipment 3,500,000 $ 45,000 2,800,000 $ 36,000
Investments (at cost) 4,830,000 $ - 4,830,000 $ -
Inventory 800,000 $ 14,500 750,000 $ 12,500
Cash 1,200,000 $ 5,000 5,000,000 $ 35,500
10,330,000 $ 64,500 13,380,000 $ 84,000

Share capital of Rs. 10 each / $1 each 500,000 $ 10,000 500,000 $ 10,000

Retained earnings 5,000,000 $ 35,000 6,907,250 $ 72,135
Liabilities 4,830,000 $ 19,500 5,972,750 $ 1,865
Total equity and liabilities 10,330,000 $ 64,500 13,380,000 $ 84,000

Details of exchange rate:

PKR / USD
January 1, 2018 105.00
Average rate for the year 2018 108.00
December 31, 2018 111.00

Statement of Profit or Loss for the year ended December 31, 2018:

Paki Co. Foreign Co.

Sales 3,500,000 80,000
Cost of sales - 875,000 - 20,000
2,625,000 60,000
Operating Expenes - 257,000 - 11,500
Investment income 175,000 4,550
2,543,000 53,050
Taxation - 635,750 - 15,915
Profit after tax 1,907,250 37,135

Required:
1. Prepare consolidated Balance Sheet at Acquistion and Reporting Date.
2. Prepare Statement of profit or loss for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Foreign Subsidary

Question 3: (With Fair value and intra group adjustment but no dividend adjustment)
Local Co. acquired 70% shares of international Co. on january 1, 2018 for $ 39,000. Financial statements of
these companies as at December 31, 2018 are as follows:
December 31, December 31,
2018 2018
Local Co. International
Co.
PKR USD
Property, plant and equipment 1,600,000 $ 40,000
Investments (at cost) 4,485,000 $ -
Inventory 750,000 $ 15,000
Cash 5,000,000 $ 58,750
11,835,000 $ 113,750

Share capital of Rs. 10 each / $1 each 1,000,000 $ 15,000

Retained earnings 6,419,563 $ 77,255
Liabilities 4,415,438 $ 21,495
Total equity and liabilities 11,835,000 $ 113,750
Details of exchange rate:
PKR / USD
January 1, 2018 115.00
April 1, 2018 117.00
Average rate for the year 2018 127.50
August 1, 2018 133.00
December 31, 2018 140.00

Statement of Profit or Loss for the year ended December 31, 2018:
Local Co. International
Co.
PKR USD
Sales 3,500,000 $ 90,000
Cost of sales - 875,000 $ -22,500
Gross profit 2,625,000 $ 67,500
Operating Expenes - 918,750 $ -11,500
Investment income 186,500 $ 8,650
Profit before tax 1,892,750 $ 64,650
Taxation - 473,188 $ -19,395
Profit after tax 1,419,563 $ 45,255

Further information:
1. Retained earnings of International Co. at the date of acquistion was $ 32,000. There is no change is share
capital of subsidary since the date of acquistion.

By Akash Mukesh Kumar, ACA

Foreign Subsidary

2. At acquistion fair value of all assets and liabilities of were equal to its carrying amount, except for a plant
whose fair value exceeded its carrying amount by $ 2,500. Remaining useful life of plant assesed to be 5
years.

3. During the year on April 1, 2018, Local Co. sold goods at a price of $ 3,000 to International company. These
goods were purchased locally at a price of Rs. 250,000. 25% of the inventory still held by international
company as at December 31, 2018.

4. During the year on August 1, 2018, International Co. sold goods at a price of $ 2,500 to Local Co. These
goods were purchased locally at a price of $ 1,500. 35% of the inventory still held by Local Co. as at
December 31, 2018.

Required:
Prepare consolidated Balance Sheet and P&L as at and for the year ended December 31, 2018.

Question 4: (With Fair value and intra group adjustment but no dividend adjustment)
Muzamil Co. acquired 75% shares of Bhutto Co. (US Based) on January 1, 2018 for $ 34,000. Financial
statements of these companies as at December 31, 2018 are as follows:

December 31, December 31,

2018 2018
Muzammil Co. Bhutto Co.

PKR USD
Property, plant and equipment 1,600,000 $ 40,000
Investments (at cost) 4,114,000 $ -
Inventory 750,000 $ 15,000
Cash 5,000,000 $ 35,650
11,464,000 $ 90,650

Share capital of Rs. 10 each / $1 each 1,000,000 $ 12,000

Retained earnings 6,911,000 $ 68,605
Liabilities 3,553,000 $ 10,045
Total equity and liabilities 11,464,000 $ 90,650

Details of exchange rate:

PKR / USD
January 1, 2018 121.00
June 1, 2018 127.00
Average rate for the year 2018 136.50
September 1, 2018 133.00
December 31, 2018 152.00

By Akash Mukesh Kumar, ACA

Foreign Subsidary

Statement of Profit or Loss for the year ended December 31, 2018:

Bhutto Co.
Muzammil Co.
PKR USD
Sales 3,564,000 $ 80,000
Cost of sales - 891,000 $ -20,000
Gross profit 2,673,000 $ 60,000
Operating Expenes - 375,000 $ -12,500
Investment income 250,000 $ 7,650
Profit before tax 2,548,000 $ 55,150
Taxation - 637,000 $ -16,545
Profit after tax 1,911,000 $ 38,605

Further information:
1. Retained earnings of Bhutto Co. at the date of acquistion was $ 30,000. There is no change is share capital
of subsidary since the date of acquistion.

2. At acquistion fair value of all assets and liabilities of were equal to its carrying amount, except for a
building whose fair value exceeded its carrying amount by $ 3,000. Remaining useful life of building assesed
to be 4 years.

3. During the year on June 1, 2018, Muzammil Co. sold goods at a price of $ 1,500 to Bhutto company. These
goods were purchased locally at a price of Rs. 125,000. 20% of the inventory still held by Bhutto company as
at December 31, 2018.

4. During the year on September 1, 2018, Bhutto Co. sold goods at a price of $ 2,700 to Muzammil Co. These
goods were purchased locally at a price of $ 2,000. 40% of the inventory still held by Muzamil Co. as at
December 31, 2018.

Required:
Prepare consolidated Balance Sheet and P&L as at and for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Foreign Subsidary

Question 5:
Arfeen Co. acquired 60% shares of Rajput Co. (US Based) on January 1, 2018 for $ 33,500. Financial
statements of these companies as at December 31, 2018 are as follows:
December 31, December 31,
2018 2018
Arfeen Co. Rajput Co.
PKR USD
Property, plant and equipment 1,600,000 $ 40,000
Investments (at cost) 4,087,000 $ -
Inventory 750,000 $ 26,650
Dividend receivable 120,600 $ 3,500
Cash 5,000,000 $ 28,650
11,557,600 $ 98,800

Share capital of Rs. 10 each / $1 each 1,000,000 $ 15,000

Retained earnings 7,310,450 $ 76,749
Dividend payable - $ 1,500
Other Liabilities 3,247,150 $ 5,551
Total equity and liabilities 11,557,600 $ 98,800
Details of exchange rate:
PKR / USD
January 1, 2018 122.00
March 1, 2018 126.00
Average rate for the year 2018 132.00
September 1, 2018 134.00
December 31, 2018 142.00

Statement of Profit or Loss for the year ended December 31, 2018:
Arfeen Co. Rajput Co.
PKR USD
Sales 4,540,000 $ 94,560
Cost of sales - 1,135,000 $ -23,640
Gross profit 3,405,000 $ 70,920
Operating Expenes - 445,000 $ -12,500
Investment income 120,600 $ 7,650
Profit before tax 3,080,600 $ 66,070
Taxation - 770,150 $ -19,821
Profit after tax 2,310,450 $ 46,249

Further information:

By Akash Mukesh Kumar, ACA

Foreign Subsidary

1. Retained earnings of Rajput Co. at the date of acquistion was $ 32,000. There is no change is share capital
of subsidary since the date of acquistion.

2. At acquistion fair value of all assets and liabilities of were equal to its carrying amount, except for a
building whose fair value exceeded its carrying amount by $ 2,500. Remaining useful life of building assesed
to be 4 years.

3. During the year on March 1, 2018, Arfeen Co. sold goods at a price of $ 2,100 to Rajput company. These
goods were purchased locally at a price of Rs. 185,000. 35% of the inventory still held by Rajput company as
at December 31, 2018.

4. During the year on September 1, 2018, Rajput Co. sold goods at a price of $ 2,350 to Arfeen Co. These
goods were purchased locally at a price of $ 1,800. 45% of the inventory still held by Arfeen Co. as at
December 31, 2018.

5. On September 1, 2018 Rajput Co. declared interim cash dividend of 10% but received on January 2, 2019.
Arfeen limited recorded dividend receivable at initial declaration. No further adjustment regarding exchange
gain has been made.

6. Impairment test revealed that goodwill of Rajput Limited has been impaired by 5%.

Required:
Prepare consolidated Balance Sheet and P&L as at and for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Foreign Subsidary

Question 6:
Lal Co. acquired 70% shares of Khanchandani Co. (US Based) on July 1, 2018 for $ 53,000. Financial
statements of these companies as at December 31, 2018 are as follows:
December 31, December 31,
2018 2018
Lal Co. Khanchandi Co
PKR USD
Property, plant and equipment 1,600,000 $ 40,000
Investments (at cost) 6,625,000 $ -
Inventory 750,000 $ 26,650
Dividend receivable 144,900 $ 4,260
Cash 5,000,000 $ 28,650
14,119,900 $ 99,560

Share capital of Rs. 10 each / $1 each 1,000,000 $ 10,000

Retained earnings 7,848,988 $ 87,152
Dividend payable - $ 1,500
Other Liabilities 5,270,913 $ 908
Total equity and liabilities 14,119,900 $ 99,560
Details of exchange rate:
PKR / USD
January 1, 2018 122.00
July 1, 2018 125.00
Average rate for the year 2018 135.00
August 1, 2018 136.50
September 1, 2018 138.00
December 31, 2018 145.00

Statement of Profit or Loss for the year ended December 31, 2018:
Lal Co. Khanchandi Co.
PKR USD
Sales 5,465,000 $ 105,600
Cost of sales - 1,366,250 $ -26,400
Gross profit 4,098,750 $ 79,200
Operating Expenes - 445,000 $ -15,600
Investment income 144,900 $ 8,760
Profit before tax 3,798,650 $ 72,360

By Akash Mukesh Kumar, ACA

Foreign Subsidary

Taxation - 949,663 $ -21,708

Profit after tax 2,848,988 $ 50,652

Further information:

1. At acquistion fair value of all assets and liabilities of were equal to its carrying amount, except for a Plant
whose fair value exceeded its carrying amount by $ 1,500. Remaining useful life of Plant assesed to be 5
years.

3. During the year on August 1, 2018, Lal Co. sold goods at a price of $ 2,250 to Khanchandi company. These
goods were purchased locally at a price of Rs. 230,000. 45% of the inventory still held by Khanchandani
company as at December 31, 2018.

3. During the year on September 1, 2018, Khanchandi Co. sold goods at a price of $ 2,500 to Lal Co. These
goods were purchased locally at a price of $ 2,100. 30% of the inventory still held by Lal Co. as at December
31, 2018.

4. On September 1, 2018 Khanchandi Co. declared interim cash dividend of 15% but received on January 2,
2019. Lal limited recorded dividend receivable at initial declaration. No further adjustment regarding
exchange gain has been made.

5. Impairment test revealed that goodwill of Khanchandi Limited has been impaired by 10%.

6. Income and expenses of subsidary are deemed to accrue evenly.

Required:
Prepare consolidated Balance Sheet and P&L as at and for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Net Assets of subsidiary: "Videshi Co"

At Acq At rep
Share capital $ 10,000 $ 10,000
Retained earnings $ 40,000 $ 78,605
$ 50,000 $ 88,605

Post Acquisition $ 38,605

Parent $ 30,884 3783290
NCI $ 7,721

Step 2: Goodwill:
FX rate
Consideration $ 55,000 110
Net Assets 80% $ (40,000) 110
$ 15,000 110

Step 3: NCI
Share of net assets at acquisiton
Post Acquisition

Group Reserves:
Retained earnings of parent
Post Acquisition

Balance Sheet as at January 1, 2018

Property, plant and equipment

Goodwill
Inventory
Cash

Share capital of Rs. 10 each / $1 each

Group reserves
NCI
Liabilities

Balance Sheet as at "31 Dec 2018":

Property, plant and equipment

Goodwill
Inventory
Cash

Share capital
Group Reserves
NCI
Exchange reserves
Liabilities

Exchange gain / loss:

Net Assets Rate

Opening $ 50,000 110.00
Profit` $ 38,605 122.50
$ 88,605
FTY OCI FX Gain
Closing $ 88,605 135

$ amount Rate
Goodwill $ 15,000 110
$ 15,000 135

Total parent reserves

Unadjusted P&L Intro group adjustments

Sales 12,300,000
Cost of sales (3,075,000)
Gross profit 9,225,000
Operating Expenes (1,781,250)
No intra group adjustments
Investment income 1,087,125
Profit before tax 8,530,875
Taxation (2,470,513)
Profit after tax 6,060,363
 Other comprhensive income
Total comprehensive income

Profit attributable to:

Other comprehensive income attributable to:

Total Attributable:
Parent
NCI

Distribution of profit:
Subsidiary sep books profit 4,729,113
No incremental adjustments -
4,729,113
Shre of nci 945,822.50
 PKR FX rate At Rep OCI gain
6,050,000
(4,400,000)
1,650,000 135 2,025,000 375,000

FX rate PKR
$ 10,000 110 1,100,000
$ 7,721 122.5 945,823
After post acq 2,045,823
OCI FTY 346,513
2,392,335
6,331,250
3,783,290 (30,884 $ x 122.50)
10,114,540

7,500,000
 1,650,000
3,000,000
2,300,000
14,450,000 $ 80,000 $ 15,000

1,000,000
5,000,000
1,100,000
7,350,000
14,450,000 $ 30,000
$ 50,000 110

$ 95,000
$ (30,000)
$ 65,000

7,000,000
2,025,000
2,775,000
9,812,750
21,612,750

1,000,000
10,114,540
2,392,335
 1,761,050
6,344,825
21,612,750

PKR Parent NCI

5,500,000
4,729,113 3,783,290 945,822.50
10,229,113
1,732,563 1,386,050 346,513
11,961,675

$ 1,650,000
$ 2,025,000
$ 375,000
ent reserves 1,761,050

o group adjustments Adjusted

12,300,000
(3,075,000)
9,225,000
(1,781,250)
ra group adjustments
1,087,125
8,530,875
(2,470,513)
6,060,363
mprhensive income 2,107,563
mprehensive income 8,167,925

Parent 5,114,540 Bal fig

NCI 945,822.50
me attributable to:
Parent 1,761,050
NCI 346,512.50

6,875,590.00
1,292,335.00
8,167,925.00

Parent
NCI
PPE inventory cash
 Assets
$ 95,000 10,450,000 4,000,000 14,450,000

Liab
3,300,000 4,050,000 7,350,000
5,500,000 7,150,000
7,150,000

$ 7,150,000
Net Assets of Subsidiary:

At Acq At Rep
Share capital $ 15,000 $ 15,000
Retained earnings $ 32,000 $ 76,749
Fair value adjust:
Building $ 2,500 $ 1,875
URP - S = P - $ (247.50)
49,500 93,376.50
Post Acq 43,877
Add: Dividend $ 1,500
45,376.50

Goodwill: $
Consideration $ 33,500
Net Assets 60% $ (29,700)
$ 3,800

NCI: $ Rate
Share of NCI 40% $ 19,800 122
Post Acq only profit

Share of NCI's dividend

Other comprehensive income's share

Group Reserves: PKR

Retained earnings of parent 7,310,450
URP - P - S (27,860)
Post Acquistion profit 3,593,818.80
Dividend Share of parent (120,600)
Impairment (25,080)
FX gain on dividend not recorded 7200
10,737,929
Exchange Gain/Loss working:

$ Rate
Net Assets at Acq 49,500.00 122.00
Profit - FTY Sub $ 45,376.50 132.00
Less: Dividend $ (1,500) 134.00
$ 93,376.50
OCI FTY
Closing $ 93,376.50 142.00

$ Rate
Goodwill $ 3,800 122.00
Impairment (190.00) 132.00
$ 3,610
OCI FTY
$ 3,610 142.00

1-Sep Div Rec 120600

Div income

Div Rec 7200

FX gain
 $ 900.00 134.00
$ 900.00 142.00

Property, plant and equipment 7,546,250

Goodwill 512,620
Inventory 4,471,295
Dividend receivable 497,000
Cash 9,068,300
22,095,465

Share capital 1000000

Group Resevers 10,737,929
NCI 5,303,785.20
Exchange reserves 933,159
Dividend payable 85,200
Other Liabilities 4,035,392
22,095,465
 URP - S sale to P
SP $ 2,350
Cost $ (1,800)
$ 550
URP $ 247.50

$ 44,749
$ 1,500
$ 46,249
$ (625)
$ (247.50)
$ 45,376.50
PKR
2,415,600.00
2,395,879.20
4,811,479.20
(80,400.00)
572,706.00
5,303,785.20

$ 1,500.00 $ 900.00
 SP 264,600 $ 2,100 x 126
COGS (185,000)
Total Profit 79,600
URP 27,860

PKR Parent NCI

6,039,000
5,989,698 3,593,818.80 2,395,879.20
(201,000) (120,600) (80,400)
11,827,698
1,431,765 859,059 572,706
13,259,463

PKR Parent NCI

463,600
(25,080) (25,080)
438,520
74,100 74,100
512,620

120600

7200
 120600
127800
7200

(120,600 + 7,200 - 127,800 + 3,500 x 142)

 WL
90% 1-Jan-15

GL
1-Apr-16
80%
YL

Net Assets of subsidiary:

GL
1-Jan-15 31-Dec-16
At Acq At Rep
Share capital 1,500 1,500 Share capital
Retained earnings 3,500 7,900 Retained earnings
5,000 9,400
Post Acq 4,400 Post Acq
Parent 3,960 Add: Dividend
NCI 440 Profit of YL

Goodwill:
GL

Consideration 4,200
Net Assets 90% (4,500)
BPG (300) GR
NCI:
GL
Share of NCI 500.00
Post Acquistion profit 440.00
Indirect H. Adjust (459.00)
Adjustment of Fx gain (81.00) (810 x 10%)
Elimination of rent income (6.00)
Elmination of IP gain (15.00)
379.00
Group reserves:
Retained earnings 9,500.00
Post Acq GL 3,960.00
Post Acq YL 2,359.80
Dividend from YL (382.95)
FX gain adj of GL books (729.00) (810 x 90%)
Fv adjustment on cons 259.50
Bargain purchase gain 300.00
Elimination of rent exp 6.00
Elimination of FV gain IP (135.00)
Dep exp not charged (32.50)
15,105.85

Foreign exchange working:

$ Rate PKR
Net Assets $ 315 17.00 5,355.00
Profit $ 142.50 18.00 2,565.00
Dividend $ (22.50) 18.50 (416.25)
$ 435.00 7,503.75
OCI - FX reserves 1,196.25
Closing value $ 435.00 20 8,700.00

1-Jan-15 1-Apr-16
20%
1,200
300
1,500 Subsidiary means GL ne investment
usi din ki fair value pe hai
$ Rate
270 17.00
Reversed -->
270 20.00

Shares April FV

4.5 $ 23.00

Property, plant and equip 25,200.00 14900

Goodwill 1,134.00
Investment proprty -
curent assets 15,260.00
41,594.00

Share capital 11,400.00

Group reserves 15,105.85
NCI 1,075.00
Reval surplus 182.50
FX reserves 1,270.65
Current Liabilities 12,560.00
41,594.00

P WL Subs GL
Investment property

Rent income 60
EXP (60.00) GR
54.00
Adjust 6.00 90%
- 54.00

NCI 6
GR 6

Subs cost 650

 Fv 800
FV gain 150
Recorded by sub
Cost 650.00
Dep (32.50)
617.50
FV 800.00
182.50
Made
Investment property 650
Cash 650

Investment property 150

FV gain 150

GR 135.00
NCI 15.00
Investment property 150.00

PPE 800.00
Dep exp 32.50
Investment prperty 650
Reval surplus 182.50
 Effective holding:

GL
20% 1-Jan-16 YL

YL
1-Apr-16 31-Dec-16
At Acq At Rep
e capital $ 225 $ 225
ined earnings $ 90 $ 210
$ 315 $ 435
$ 120.00
Dividend $ 22.50
$ 142.50

YL
$
Parent direct investment $ 103.50 20% wali
Parent indirect investment $ 243.00 (270$ x 90%)
$ 346.50
Net Assets 92% $ (289.80)
 $ 56.70

$ 56.70

YL

NCI at Acq $ 25.20 17.00 428.40

Post Acq $ 11.40 18.00 205.20
Dividend $ (1.80) 18.50 (33.30)
600.30
FX reserves 95.70
696.00

Parent NCI
 2,359.80 205.20
(382.95) (33.30)

1,100.55 95.70

GL ne investment ki hai who

pe hai
PKR
4,590 Cost of investment
810
5,400

Total dollar Rate PKR Carried atFair value

value gain
$ 103.50 17 1,759.50 1,500 259.50

3000 6500
Sub RE

10%
6.00
 To be made
PPE 650.00
Cash 650.00

Dep exp 32.50

PPE 32.50

PPE 182.50
Reval surplus 182.50
Parent NCI
90% 10%
92% 8%

Rate
1,759.50
4,131.00
5,890.50 (4,926.60) 963.90
Rate PKR
17.00 963.90
170.10 Parent share
20.00 1,134.00
Consolidated Statement of changes in equity basics

Question 1: ( No Intra Group adjustments and no dividend by subsidary )

Company A acquired company B's 80% shares several years ago when retained earnings of B were Rs. 100,000
and share capital was Rs. 100,000

Share capital of Company A as at december 31, 2017 were Rs. 400,000

Current year end is December 31, 2018.

Profit for the year ended December 31, 2018:

Company A 500,000
Company B 800,000 2,700

Retained earnings as at December 31, 2018:

Company A 2,500,000 ###

Company B 3,500,000

Required:
Preapre statement of changes in equity for the year ended December 31, 2018.

Question 2: ( No Intra Group adjustments and no dividend by subsidary )

Company A acquired company B's 70% shares several years ago when retained earnings of B were Rs. 500,000
and share capital was Rs. 300,000

Share capital of Company A as at december 31, 2017 were Rs. 600,000

Current year end is December 31, 2018.

Profit for the year ended December 31, 2018:

Company A 900,000
Company B 1,200,000

Retained earnings as at December 31, 2018:

Company A 3,500,000
Company B 5,250,000

Required:
Preapre statement of changes in equity for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Consolidated Statement of changes in equity basics

Question 3: ( With Intra Group adjustments and no dividend by subsidary )

Company A acquired company B's 70% shares on January 1, 2016 when retained earnings of B were Rs.
500,000 and share capital was Rs. 300,000

Share capital of Company A as at december 31, 2017 were Rs. 600,000

Current year end is December 31, 2018.

Profit for the year ended December 31, 2018:

A B
Sales 1,000,000 1,400,000
COGS (200,000) (280,000)
800,000 1,120,000
Operating expenses (160,000) (224,000)
Investment income 240,000 336,000
Finance cost (120,000) (168,000)
PBT 760,000 1,064,000
Tax (228,000) (319,200)
532,000 744,800
Other information:
1. Company A sold goods worth Rs. 75,000 to Company B at a margin of 25%. 50% of the goods are still held in
inventory of company B.

2. Company B sold goods worth Rs. 125,000 to Company A at a Markup of 25%. 20% of the goods are still held
in inventory of company A.

3. At acqusition building were excess of its carrying amount by Rs. 500,000 remaining useful life of building at
the date of acqusition was 10 years.

4. During the year impairment review indicated that goodwill of company B has been impaired by Rs. 25,000.

Retained earnings as at December 31, 2018:

Company A 3,500,000
Company B 5,250,000

Required:
Preapre statement of changes in equity for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Consolidated Statement of changes in equity basics

Question 4: ( With Intra Group adjustments and no dividend by subsidary )

Company A acquired company B's 70% shares on January 1, 2016 when retained earnings of B were Rs.
600,000 and share capital was Rs. 300,000

Share capital of Company A as at december 31, 2017 were Rs. 600,000

Current year end is December 31, 2018.

Profit for the year ended December 31, 2018:

A B
Sales 1,500,000 2,100,000
COGS (300,000) (420,000)
1,200,000 1,680,000
Operating expenses (240,000) (336,000)
Investment income 360,000 504,000
Finance cost (180,000) (252,000)
PBT 1,140,000 1,596,000
Tax (342,000) (478,800)
798,000 1,117,200
Other information:
1. Company A sold goods worth Rs. 175,000 to Company B at a margin of 35%. 40% of the goods are still held
in inventory of company B.

2. Company B sold goods worth Rs. 250,000 to Company A at a Margin of 20%. 25% of the goods are still held
in inventory of company A.

3. At acqusition building were excess of its carrying amount by Rs. 1,000,000 remaining useful life of building
at the date of acqusition was 5 years.

4. During the year impairment review indicated that goodwill of company B has been impaired by Rs. 50,000
( partial goodwill method ).

Retained earnings as at December 31, 2018:

Company A 4,500,000
Company B 6,750,000

Required:
Preapre statement of changes in equity for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

Consolidated Statement of changes in equity basics

Question 5: ( With Intra Group adjustments and dividend by subsidary )

Company A acquired company B's 70% shares on January 1, 2016 when retained earnings of B were Rs.
700,000 and share capital was Rs. 300,000

Share capital of Company A as at december 31, 2017 were Rs. 600,000

Current year end is December 31, 2018.

Profit for the year ended December 31, 2018:

A B
Sales 2,500,000 3,500,000
COGS (500,000) (700,000)
2,000,000 2,800,000
Operating expenses (400,000) (560,000)
Investment income 600,000 840,000
Finance cost (300,000) (420,000)
PBT 1,900,000 2,660,000
Tax (570,000) (798,000)
1,330,000 1,862,000
Other information:
1. Company A sold goods worth Rs. 275,000 to Company B at a margin of 25%. 50% of the goods are still held
in inventory of company B.

2. Company B sold goods worth Rs. 125,000 to Company A at a Margin of 30%. 35% of the goods are still held
in inventory of company A.

3. At acqusition building were excess of its carrying amount by Rs. 2,000,000 remaining useful life of building
at the date of acqusition was 10 years.

4. During the year impairment review indicated that goodwill of company B has been impaired by Rs. 70,000
( partial goodwill method ).

5. During the year Company B Declared a dividend of 20%.

Retained earnings as at December 31, 2018:

Company A 5,400,000
Company B 8,100,000

By Akash Mukesh Kumar, ACA

Consolidated Statement of changes in equity basics

Required:
Preapre statement of changes in equity for the year ended December 31, 2018.

Question 6: ( With Intra Group adjustments and dividend by subsidary + new subsidiary acquired)

Babu limited (BL) acquired Lal chand's (LC) limited 80% shares on January 1, 2017 by paying Rs. 1,200,000
when retained earnings of LC limitd were Rs. 500,000 and share capital was Rs. 400,000. There is no change in
share capital of LC limited since the date of acquisiton.

Share capital of BL as at December 31, 2020 were Rs. 900,000

Share capital of SL as at December 31, 2020 were Rs. 600,000 (no change since acquisition)

Profit for the year ended December 31, 2020:

BL limited LC limited SL Limited

Sales 2,500,000 3,500,000 2,800,000
COGS (500,000) (700,000) (560,000)
Gross profit 2,000,000 2,800,000 2,240,000
Operating expenses (400,000) (560,000) (448,000)
Investment income 600,000 840,000 672,000
Finance cost (300,000) (420,000) (336,000)
PBT 1,900,000 2,660,000 2,128,000
Tax (570,000) (798,000) (638,400)
Profit after tax 1,330,000 1,862,000 1,489,600
Other information:

1. On january 1, 2017 all assets of LC limited were equal to its carrying amount except building whose fair value
exceeded its carrying amount by Rs. 500,000. Remaining useful life of building at that date was 5 years.

2. On April 1, 2020 BL acquired 75% shares of Shahzar limited (SL) for Rs. 3,000,000. Fair value of all assets of
SL limited were equal to its carrying amount on April 1, 2020 except for a plant whose fair value exceeded its
carrying amount by Rs. 220,000. Remaining useful life of the plant on 4 years.

3. BL limited sold goods worth Rs. 275,000 to LC limited on August 1, 2020 at a margin of 30%. 50% of the
goods are still held in inventory of LC limited.

4. LC limited sold goods worth Rs. 125,000 to BL limited at a markup of 25%. 40% of the goods are still held in
inventory of company BL. SL limited also sold goods to BL limited at a price of Rs. 120,000 at a markup of 20%.
BL sold 60% inventory till December 31, 2020.

5. During the year impairment review indicated that goodwill of LC has been impaired by 10%.

By Akash Mukesh Kumar, ACA

Consolidated Statement of changes in equity basics

6. During the year on Sept 1, 2020, LC limited Declared interim dividend of 15%.

Retained earnings as at December 31, 2020:

BL Limited 5,400,000
LC limited 8,100,000
SL Limited 4,526,500
Required:
Preapre statement of changes in equity for the year ended December 31, 2020.

By Akash Mukesh Kumar, ACA

Question 1:

Statement of changes in equity:

Share capital Group Reserves NCI Total

Opening as at January 1, 2018 (W1) 400,000 4,080,000 560,000 5,040,000
Profit for the year (W2) - 1,140,000 160,000 1,300,000
Balance as at December 31, 2018 400,000 5,220,000 720,000 6,340,000

Confirmation:

GR:
Re closing of parent 2,500,000
PAF 2,720,000
5,220,000

NCI:
Share 40,000
PAF 680,000
720,000

W1: Calculation of Opening Group reserves and NCI:

At Acq At Op At Rep
Share capital 100,000 100,000 100,000
Retained earnings 100,000 2,700,000 3,500,000
200,000 2,800,000 3,600,000
Change 2,600,000 3,400,000
Parent 80% 2,080,000 2,720,000
NCI 20% 520,000 680,000

Group reserves:
Retained earnings of parent at opening 2,000,000
Post acquisition proft 2,080,000
4,080,000

NCI:
Share 40,000
PAF 520,000
560,000

W2: Profit attributable:

Consolidated profit 1,300,000

NCI Share 800,000 x 20% 160,000
Parent (Bal fig) 1,140,000
Question 2:

Statement of changes in equity:

Share capital Group Reserves NCI Total

Opening as at January 1, 2018 (W1) 600,000 5,085,000 1,305,000 6,990,000
Profit for the year (W2) - 1,740,000 360,000 2,100,000
Balance as at December 31, 2018 600,000 6,825,000 1,665,000 9,090,000

Confirmation:

GR:
Re closing of parent 3,500,000
PAF 3,325,000
6,825,000

NCI:
Share 240,000
PAF 1,425,000
1,665,000

W1: Calculation of Opening Group reserves and NCI:

At Acq At Op At Rep
Share capital 300,000 300,000 300,000
Retained earnings 500,000 4,050,000 5,250,000
800,000 4,350,000 5,550,000
Change 3,550,000 4,750,000
Parent 70% 2,485,000 3,325,000
NCI 30% 1,065,000 1,425,000

Group reserves:
Retained earnings of parent at opening 2,600,000
Post acquisition proft 2,485,000
5,085,000

NCI:
Share 240,000
PAF 1,065,000
1,305,000

W2: Profit attributable:

Consolidated profit 2,100,000

NCI Share 1,200,000 x 30% 360,000
Parent (Bal fig) 1,740,000
Question 3:

Statement of changes in equity:

Share capital Group Reserves NCI Total

Opening as at January 1, 2018 (W1) 600,000 5,701,640 1,561,560 7,863,200
Profit for the year (W2) - 987,985 199,440 1,187,425
Balance as at December 31, 2018 600,000 6,689,625 1,761,000 9,050,625

Confirmation:

GR:
Re closing of parent 3,500,000
PAF 3,216,500
Impairment (25,000 x 70%) (17,500)
URP inventory (75,000x25%x50%) (9,375)
6,689,625

NCI:
Share 390,000
PAF 1,378,500
Impairment 25,000 x 30% (7,500)
1,761,000

W1: Calculation of Opening Group reserves and NCI:

At Acq At Op At Rep
Share capital 300,000 300,000 300,000
Retained earnings 500,000 4,505,200 5,250,000
Fv Adjust Building 500,000 400,000 350,000
URP - - (5,000)
1,300,000 5,205,200 5,895,000
Change 3,905,200 4,595,000
Parent 70% 2,733,640 3,216,500
NCI 30% 1,171,560 1,378,500

Group reserves:
Retained earnings of parent at opening 2,968,000
Post acquisition proft 2,733,640
5,701,640

NCI:
Share 390,000
PAF 1,171,560
1,561,560

W2: Profit attributable:

Unadjusted P&L Adjustments Adjusted P&L

Sales 2,400,000 (200,000) 2,200,000
COGS (480,000) 200,000 (14,375) (294,375)
1,920,000 1,905,625
Operating expenses (384,000) (50,000) (25,000) (459,000)
Investment income 576,000 - - 576,000
Finance cost (288,000) - - (288,000)
PBT 1,824,000 1,734,625
Tax (547,200) - - (547,200)
PAT 1,276,800 1,187,425

Consolidated profit 1,187,425

NCI Share (W3) 199,440
Parent (Bal fig) 987,985

W3: NCI Share:

Subsidary profit 744,800
Adjustments:
Fv Dep (50,000)
Impairment (25,000)
URP (5,000)
Adjusted profit 664,800
NCI share 30% 199,440

Question 4:

Statement of changes in equity:

Share capital Group Reserves NCI Total

Opening as at January 1, 2018 (W1) 600,000 7,084,960 2,019,840 9,704,800
Profit for the year (W2) - 1,356,790 271,410 1,628,200
Balance as at December 31, 2018 600,000 8,441,750 2,291,250 11,333,000

Confirmation:
GR:
Re closing of parent 4,500,000
PAF 4,016,250
Impairment (50,000)
URP inventory (175,000x35%x40%) (24,500)
8,441,750
NCI:
Share 570,000
PAF 1,721,250
2,291,250

W1: Calculation of Opening Group reserves and NCI:

At Acq At Op At Rep
Share capital 300,000 300,000 300,000
Retained earnings 600,000 5,632,800 6,750,000
Fv Adjust Building 1,000,000 800,000 600,000
URP - - (12,500)
1,900,000 6,732,800 7,637,500
Change 4,832,800 5,737,500
Parent 70% 3,382,960 4,016,250
NCI 30% 1,449,840 1,721,250

Group reserves:
Retained earnings of parent at opening 3,702,000
Post acquisition proft 3,382,960
7,084,960

NCI:
Share 570,000
PAF 1,449,840
2,019,840

W2: Profit attributable:

Unadjusted P&L Adjustments Adjusted P&L

Sales 3,600,000 (425,000) 3,175,000
COGS (720,000) 425,000 (37,000) (332,000)
- 2,843,000
Operating expenses (576,000) (200,000) (50,000) (826,000)
Investment income 864,000 - - 864,000
Finance cost (432,000) - - (432,000)
PBT 2,736,000 2,449,000
Tax (820,800) - - (820,800)
PAT 1,915,200 1,628,200

Consolidated profit 1,628,200

NCI Share (W3) 271,410
Parent (Bal fig) 1,356,790
W3: NCI Share:
Subsidary profit 1,117,200
Adjustments:
Fv Dep (200,000)
URP (12,500)
Adjusted profit 904,700
NCI share 30% 271,410
Question 5:

Statement of changes in equity:

Share capital Group Reserves NCI Total

Opening as at January 1, 2018 (W1) 600,000 7,848,600 2,219,400 10,668,000
Profit for the year (W2) - 2,337,838 494,663 2,832,500
Dividend - - (18,000) -
Balance as at December 31, 2018 600,000 10,186,438 2,696,063 13,500,500

Confirmation:
GR:
Re closing of parent 5,400,000
PAF 4,890,813
Impairment (70,000)
URP inventory (275,000x25%x50%) (34,375)
10,186,438
NCI:
Share 600,000
PAF 2,096,063
2,696,063

W1: Calculation of Opening Group reserves and NCI:

At Acq At Op At Rep
Share capital 300,000 300,000 300,000
Retained earnings 700,000 6,298,000 8,100,000
Fv Adjust Building 1,000,000 800,000 600,000
URP - - (13,125)
2,000,000 7,398,000 8,986,875
Change 5,398,000 6,986,875
Parent 70% 3,778,600 4,890,813
NCI 30% 1,619,400 2,096,063

Group reserves:
Retained earnings of parent at opening 4,070,000
Post acquisition proft 3,778,600
7,848,600
NCI:
Share 600,000
PAF 1,619,400
2,219,400

W2: Profit attributable:

Unadjusted P&L Adjustments Adjusted P&L

Sales 6,000,000 (400,000) 5,600,000
COGS (1,200,000) 400,000 (47,500) (847,500)
4,800,000 4,752,500
Operating expenses (960,000) (200,000) (70,000) (1,230,000)
Investment income 1,440,000 (42,000) - 1,398,000
Finance cost (720,000) - - (720,000)
PBT 4,560,000 4,200,500
Tax (1,368,000) - - (1,368,000)
PAT 3,192,000 2,832,500

Consolidated profit 2,832,500

NCI Share (W3) 494,663
Parent (Bal fig) 2,337,838
W3: NCI Share:
Subsidary profit 1,862,000
Adjustments:
Fv Dep (200,000)
URP (13,125)
Adjusted profit 1,648,875
NCI share 30% 494,663
Question 6:
Statement of changes in equity:
Share capital Group Reserves NCI Total
Opening as at January 1, 2020 (W1) 900,000 8,468,400 1,379,600 10,748,000
NCI of SL acquired during the year 1,057,325
Profit for the year 2020 (W2) - 3,607,287.5 617,388 4,224,675
Dividend - - (12,000) -
Balance as at December 31, 2020 900,000 12,075,688 3,042,313 14,972,675

Confirmation:
GR:
Re closing of parent 5,400,000
PAF 6,552,963
Impairment (8,000)
URP inventory (41,250)
BPG 171,975
12,075,688
NCI:
Share 280,000
PAF 1,438,000
1,718,000

W1: Calculation of Opening Group reserves and NCI:

LC Limited:
At Acq At Op At Rep
Share capital 400,000 400,000 400,000
Retained earnings 500,000 6,298,000 8,100,000
Fv Adjust Building 500,000 200,000 100,000
URP - - (10,000)
1,400,000 6,898,000 8,590,000
Change 5,498,000 7,190,000
Parent 80% 4,398,400 5,752,000
NCI 20% 1,099,600 1,438,000

SL Limited:
At Acq At rep
Share capital 600,000 600,000
Retained earnings 3,409,300 4,526,500
Fv Adjust Building 220,000 178,750
URP - (8,000)
4,229,300 5,297,250
Change 1,067,950
Parent 75% 800,962.50
NCI 25% 266,988

Group reserves:
Retained earnings of parent at opening 4,070,000
Post acquisition proft till Dec 2019 LC 4,398,400
8,468,400
NCI of LC:
Share 280,000
PAF 1,099,600
1,379,600

NCI of SL:
Creation during the year 25% 1,057,325
Post acquisition 266,987.5
1,324,313

Goodwill/BPG:
LC SL
Cons 1,200,000 3,000,000
Net asset 80% / 75% (1,120,000) (3,171,975)
80,000 (171,975) BPG
Impairment 10% (8,000)

W2: Profit attributable:

Unadjusted P&L Adjustments Adjusted P&L

Sales 8,100,000 (520,000) 7,580,000
COGS (1,620,000) 520,000 (59,250) (1,159,250)
Gross profit 6,480,000 6,420,750
Operating expenses (1,296,000) (149,250) (1,445,250)
Investment income 1,944,000 (48,000) 171,975 2,067,975
Finance cost (972,000) - - (972,000)
PBT 6,156,000 6,071,475
Tax (1,846,800) - - (1,846,800)
Profit after tax 4,309,200 4,224,675
 Consolidated profit 4,224,675
NCI Share (W3) 617,388
Parent (Bal fig) 3,607,288
W3: NCI Share:
LC SL
Subsidary profit 1,862,000 1,117,200
Adjustments:
Fv Dep (100,000) (41,250)
URP (10,000) (8,000)
Adjusted profit 1,752,000 1,067,950
NCI share 20%, 25% 350,400 266,987.50
Calculation of goodwill PL: Calculation of goodwill LL:
80% 70%
Consideration 1,000 Consideration 550
NA (55+800) x 80% (684) NA (670) x 70% (469)
316 81
Impairment (50) Impairment (7)
266 74

Calculating consolidated Gain:

Consideration 1,300
NA at Disp (1,109) (800+270+78/12*6)
NCI at Disposal 221.80
GW (266)
147

Separate books gain:

Consideration 1,300
Cost (1,000)
300
Profit from discontinued 39
Gain on disposal Consol 147
186
Consolidated P&L:
Adjustment
Unadjusted Gain on disp Div Total
Sales COGS Impai
Sep books income
Sales 7,186 (60.00) - 7,126
Cost of sales (4,588) 60.00 (4) (4,532)
2,598 2,594
Op exp (1,402) (7.00) (1,409)
Investment income 740 (300) (42) 398
PBT 1,936 1,583
Income tax (417) (417)
Profit from cont 1,519 1,166
Profit from dis cont 186 186
1,352
Attributable to:
Parent (Bal Fig) 1,324.50
NCI 27
NCI 1 calculation LL:
Subsidary profit 69 21
Less:
URP on sale of stock (4) (1)
65 20
30% share of NCI 20
NCI 2 calculation PL:
Subsidary profit 39
NCI share 20% 8
Calculating Op group Reserves:
PL Recon:
At Acq At Disp RE Closing Parent 2,830
Sh Cap 800 800 PA PL 203 ((270+(78*50%))-55)*80%
RE 55 270 Impair (50)
855 1,070 Impair (7)
Change 215 PA LL 4 9 x 70% - 4 x70%
80% Share 172.00 Gain on Disp ind books (300)
Impairment (50.00) Gain on Disp Cons books 147
122.00 2,827
Op parent 2,380
 2,502
Statement of changes in Equity:

Attributable to Equity holders of Parent Entity

NCI Total
Share Cap Group Reserves Total
Balance as on july 1 2011 10,000 2,502.00 12,502.00 214 12,716
Dividend Paid FTY - (1,000) (1,000) (18) (1,018.00)
Profit for the year - 1,325 1,325 27 1,352
Purchase of subsidary - - - 201 201
Disposal of subsidary - - - (222) (222)
10,000 2,827 12,827 203 13,029
Changes in Group structure Changes - disposal that remaing associate Profit or loss

Following are the statement of profit or loss for Rajper limmited, Hamza limited and Muzammil limited as at
December 31, 2020:

Rajper Hamza Muzammil

Sales 2,652,000 3,182,400 2,545,920
Cost of sales (795,600) (954,720) (763,776)
Gross profit 1,856,400 2,227,680 1,782,144
Selling and Distribution (129,948) (155,938) (124,750)
Admin expenses (132,600) (159,120) (127,296)
Other operating expenses (212,160) (254,592) (203,674)
Profit from operations 1,381,692 1,658,030 1,326,424
Finance cost (167,076) (200,491) (160,393)
Investment Income 1,010,400 636,480 509,184
Profit before tax 2,225,016 2,094,019 1,675,215
Tax (667,505) (628,206) (502,565)
Profit after tax 1,557,511 1,465,813 1,172,651

Further information:
1. Rajper limited acquired 70% shares of Hamza limited and 65% shares of Muzammil limited on January 1,
2018 and January 1, 2019 respectively.

Details of acquisition and disposal:

Hamza Muzammil Rajper
Share capital ( of Rs. 10 each ) 1,000,000 2,000,000 6,000,000
Retained earnings at acquistion 600,000 900,000 N/A
Retained earnings at December 31, 2020 2,652,300 3,162,300 4,006,528
Details of share price:
Share price at January 1, 2018 25 12
Share price at January 1, 2019 30 18
Share price at April 1, 2020 31 25

2. During the year 2020 impairment testing of Muzammil limited has been carried out and it is revealed that
goodwill of Hamza limited has been impaired by 15%.

3. Hamza limited sold goods to Rajpper at a price of Rs. 120,000 at a Markup of 20%. 60% of the goods are still
held in inventory of Rajper.

4. On April 1, 2020 Rajper limited sold its 55% in Muzammil limited.

5. During the year ended December 31, 2020 Hamza Limited declared dividend of 15%.

6. Group policy is to measure NCI at its proportionate share.

Required:
Prepare Consolidated Statement of profit or loss for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

 Profit from
S-P Impairment Dividend Gain on disp Adjusted
Unadjusted P&L disc op
Sales 5,834,400 (120,000) - - - - - 5,714,400
Cost of sales (1,750,320) 120,000 (12,000) - - - - (1,642,320)
Gross profit 4,084,080 - - - - - - 4,072,080
Selling and Distribution (285,886) - - - - - - (285,886)
Admin expenses (291,720) - - - - - - (291,720)
Other operating expenses (466,752) - - (94,500) - - - (561,252)
Profit from operations 3,039,722 - - - - - - 2,933,222
Finance cost (367,567) - - - - - - (367,567)
Investment Income 1,646,880 - - - (105,000) (500,500) - 1,041,380
Share of profit from associate - - - - - - -
Profit before tax 4,319,035 - - - - - - 3,607,035
Tax (1,295,711) - - - - - - (1,295,711)
Profit from continuing 3,023,325 - - - - - - 2,311,325
Profit from Disc continuing - - - - - - 304,335 304,335
Consolidated profit 2,615,659.57

Parent (bal fig) 2,076,908.6

Hamza Limited: NCI 538,751.0
Sepreate books 1,465,813
Adjustments:
URP inventory (12,000)
Adjusted profit 1,453,813
Share of NCI 30% 436,144.03

Muzammil limited:
3 months profit sep books 293,162.69
NCI share 35% 102,606.94

Net assets of subsidiary:

Hamza limited Muzammil limited
Jan 1 2018 Dec 31 2019 June 30 2020 Jan 1 2019 Dec 31 2019 1-Apr-20
At acq At op At disposal At acq At op At disposal
Share cpaital 1,000,000 1,000,000 1,000,000 Share cpaital 2,000,000 2,000,000 2,000,000
Retained earnings 600,000 1,336,486.56 2,652,300 Retained earnings 900,000 1,989,649.25 2,282,811.94
URP - inventory - - (12,000)
1,600,000.00 2,336,486.56 3,640,300.00 2,900,000 3,989,649 4,282,812
Post acq 736,486.56 2,040,300 Post acq 1,089,649 1,382,812
Parent 515,540.59 1,428,210 Parent 708,272.01 898,827.76
NCI 220,945.97 612,090 NCI 381,377.24 483,984.18

Goodwill:
Hamza Muzammil NCI: Opening
Consideration 1,750,000 2,340,000 Hamza Muzammil
Net assets (1,120,000) (1,885,000) Share 480,000 1,015,000
630,000 455,000 Post acq 220,945.97 381,377.24
Impairment 15% (94,500) 700,945.97 1,396,377.24
Net Goodwill 535,500
Group reserves opening: NCI: Disposal/Closing
Re of parent opening 2,449,017 Hamza Muzammil
Post acq Hamza 515,540.6 Share 480,000 1,015,000
Post acq muzammil 708,272.01 Post acq 612,090.0 483,984.18
3,672,829 1,092,090 1,498,984
Total shares Acquired 65% Disposed Remaining % remaining
200,000 130,000 71,500 58,500 29.25%
Separate books gain: Consolidated books gain:
Consideration 1,787,500 Consideration 1,787,500
Cost (1,287,000) NA (4,282,812)
500,500 NCI 1,498,984
GW (455,000)
(1,451,328)
FV of remaining holding 1,462,500 (58,500 x 25)
Add: 3 m profit 293,163
Profit from disc operations 304,335
Statement of changes in equity:
Group reserves Closing direct:
Share capital Group reserves NCI Total Retained eanings closing parent 4,006,528
Opening 6,000,000 3,672,829.4 2,097,323.20 11,770,153 Post hamza 1,428,210
Profit - 2,076,908.6 538,751.0 2,615,660 Post muzammil 898,828
Disposal of sub - - (1,498,984.2) (1,498,984) Impairment (94,500)
Dividend to NCI - - (45,000) (45,000) Adjustment of disposal (489,328)
6,000,000.00 5,749,738.00 1,092,090.00 12,841,828 5,749,738
Changes in Group structure Changes - Entire disposal Profit or loss

Following are the statement of profit or loss for A Company, B Company and C Company as at December 31,
2018:

A B C
Sales 1,500,000 1,800,000 2,160,000
Cost of sales (450,000) (540,000) (648,000)
Gross profit 1,050,000 1,260,000 1,512,000
Selling and Distribution (73,500) (88,200) (105,840)
Admin expenses (75,000) (90,000) (108,000)
Other operating expenses (120,000) (144,000) (172,800)
Profit from operations 781,500 937,800 1,125,360
Finance cost (94,500) (113,400) (136,080)
Investment Income 780,000 360,000 432,000
Profit before tax 1,467,000 1,184,400 1,421,280
Tax (440,100) (355,320) (426,384)
Profit after tax 1,026,900 829,080 994,896

Further information:
1. Company A acquired Company B's 80% and Company C 70% shares on January 1, 2016 and January 1, 2017
respectively.

Details of acquisition and disposal:

B C
Share capital ( of Rs. 10 each ) 1,000,000 2,000,000
Retained earnings at acquistion 500,000 800,000
Retained earnings at December 31, 2018 1,500,000 2,010,000
Details of share price:
Share price at January 1, 2016 25 12
Share price at January 1, 2017 30 18
Share price at June 30, 2018 31 25

2. During the year 2018 impairment testing of C has been carried out and it is revealed that goodwill of C has
been impaired by 10%.

3. C sold goods to A at a price of Rs. 150,000 at a margin of 40%. 50% of the goods are stil held in inventory of
A.

4. On June 30, 2018 A company sold its entire shareholding in B.

5. During the year ended December 31, 2018 C company declared dividend of 10%.

6. Group policy is to measure NCI at its proportionate share.

7. Retanined earnings of A as at December 31, 2018 3,000,000 and share capital Rs. 6,000,000.
Required:

By Akash Mukesh Kumar, ACA

Changes in Group structure Changes - Entire disposal Profit or loss

Prepare Consolidated Statement of profit or loss for the year ended December 31, 2018.

By Akash Mukesh Kumar, ACA

 Profit from
C -A Impairment Dividend Gain on dispo discontinues Adjusted
operations
Sales 3,660,000 (150,000) - - - - - 3,510,000
Cost of sales (1,098,000) 150,000 (30,000) - - - - (978,000)
Gross profit 2,562,000 - - - - - - 2,532,000
Selling and Distribution (179,340) - - - - - - (179,340)
Admin expenses (183,000) - - - - - - (183,000)
Other operating expenses (292,800) - - (56,000) - - - (348,800)
Profit from operations 1,906,860 - - - - - - 1,820,860
Finance cost (230,580) - - - - - - (230,580)
Investment Income 1,212,000 - - - (140,000) (480,000) - 592,000
Profit before tax 2,888,280 - - - - - - 2,182,280
Tax (866,484) - - - - - - (866,484)
Profit from continuing operations 2,021,796 - - - - - - 1,315,796
Profit from Discontinued operations - - - - - - 426,172 426,172
1,741,968

Profit attributable:

Parent (bal fig) 1,369,591.2

Company B: NCI 372,376.8
Sepreate books profit of 6 months 414,540
Share of NCI 20% 82,908

Company C:
Sepreate books profit 994,896
Adjustments:
URP inventory (30,000)
964,896
NCI share 30% 289,468.80

Net assets of subsidiary:

B C
Dec 31 2017 June 30 2018 Dec 31 2017 Dec 31 2018
At acq At op At disposal At acq At op At disposal
Share cpaital 1,000,000 1,000,000 1,000,000 Share cpaital 2,000,000 2,000,000 2,000,000
Retained earnings 500,000 670,920 1,085,460 Retained earnings 800,000 1,215,104 2,010,000
1,500,000 1,670,920 2,085,460 URP - inventory - - (30,000)
Post acq 170,920 585,460 2,800,000 3,215,104 3,980,000
Parent 136,736 468,368 Post acq 415,104 1,180,000
NCI 34,184 117,092 Parent 290,572.80 826,000.00
NCI 124,531.20 354,000.00
Goodwill:
B C NCI: Opening
Consideration 2,000,000 2,520,000 B C
Net assets (1,200,000) (1,960,000) Share 300,000 840,000
800,000 560,000 Post acq 34,184.00 124,531.20
Impairment 10% (56,000) 334,184.00 964,531.20
Net Goodwill 504,000
NCI: Disposal/Closing
Group reserves opening: B C
Re of parent opening 1,973,100 Share 300,000 840,000
Post acq B 136,736.0 Post acq 117,092.0 354,000.00
Post acq C 290,572.80 417,092 1,194,000
2,400,409

Separate books gain: Consolidated books gain:

Consideration 2,480,000 Consideration 2,480,000
Cost (2,000,000) NA (2,085,460)
480,000 NCI 417,092
GW (800,000)
11,632
Add: 6 m profit 414,540
Profit from disc operations 426,172
Statement of changes in equity:
Group reserves Closing direct:
Share capital Group reserves NCI Total Retained eanings closing parent 3,000,000
Opening 6,000,000 2,400,408.8 1,298,715.20 9,699,124 Post acquisition B 468,368
Profit - 1,369,591.2 372,376.8 1,741,968 Post acquisition C 826,000
Disposal of sub - - (417,092.0) (417,092) Impairment (56,000)
Dividend to NCI - - (60,000) (60,000) Adjustment of disposal (468,368)
6,000,000.00 3,770,000.00 1,194,000.00 10,964,000 3,770,000
Cash flow:

Balance sheet --> consolidated

P&L --> consolidated
- Share of Parent
- Share of NCI
Group reserves
Dividend 20 Op
Profit
Parent share

120
Closing xxx

NCI
Dividend 15 Op
Profit

35
Closing xxx
Investment in associate
Op 500,000 Dividend received from associate
Share of profit 200,000

cl
 Cost 500,000

At Acq
Sh cap 1,000,000
RE 900,000
1,900,000
475,000

Undistributed
P&L
Consolidated P&L

PBT 4000

Less: Adjustment
Gain on disposal -4000

Proceeds from disposal 19000

LBT (3,000.0)
Adjustment
Loss on disp 3,000.0
 Proceeds from disp 12000

Cash 12,000.00

Sales 500000

Less: Increase in receivable -50000

Cash 450000

Inventory Purchased (300,000)

COGS (240,000)

increase in inventory (60,000.0)

Cash outflow (300,000)

Increase in Receivable Less

Decrease in Receivable Add

Increase in inventory Less

Decrease in inventory add
Increase in payable Add
Decrease in Payable Less

Statement of Cashflows
For the year ended 2014

Operating Activities
Profit before tax 163

Adjustments:
Share of profit from assocaite (30)
Dep Exp 30
Working Capital Changes
Increase in Current Assets (20)
Increase in Current Liab 10
Cash from operations 153
Tax paid (55)
Net Cash From Operations 98

Investing Activities:
Purchase of PPE (80)
Dividend Received from Assocaite 25
(55)
Financing Activities
Dividen paid to NCI (3)
Dividen paid by Parent to P sh (25)
(28)
Net cash Inflow 15
Op balance 15
30
NCI
Dividend 3 Op 90
Profit 10

Closing 97

Group Reserves
Dividend 25 Op 140
Profit 98

Closing 213
 xxx 100
xxx 40

xxx 30
xxx 20

eived from associate 25,000

675,000
At Rep
1,000,000
1,600,000
2,600,000
650,000

175,000
25000 P&L
200,000 800,000 x 25%
200,000
675,000

CA 15000
SP 19000 12000
4000 -3000
 Rec

Cash paid

Cl
Inventory 60,000.0

Sale ki zyada paisey miley kum

Pichley saal ka paisa is saal receive hua hai

Khareedi zyada to cash gaya zyada use ki kum tou COGS kum
Pichley saal ki inventory is saal use ki hai tou cash outflow is saal nahi hai but
Khareeda use kiya P&L mein cahrge bhi hogaya but Pay nahi hua
Pichley saal ki payment is saal ho rahi hai jis ka cash mein impact hai but cogs

Fixed Asset
Op 300
Addition 80
Bal fig

Assocaite
Op 75
Share of profit 30
 Cl Op
50000 0

Op
0

ou COGS kum
sh outflow is saal nahi hai but sirf COGS ka Charge hai
 but Pay nahi hua
cash mein impact hai but cogs mein nahi hai kyun k P&L banta hai For the year

Fixed Asset
Dep 30

Cl 350
Assocaite
Div from assocaite 25

Cl 80
the year
Case of Acquisiton:

i. Assets and Liabilities aap k ho jatey hain

1. Calculate Goodwill

Goodwill
Op 100 Impair
Addition 20

Cl

Step 2: Prepare Entry for addition of subsidiary:

GW 180.00
PPE 1,000
Stock 300
Cash 150
Rec 200
Accounts payable
NCI create
Cash

Puri Subsidiary k assets and liabilities khareedney ka cash impac

Cash paid
Cash from sub on acq
(1,300) 150
 PPE
OP 15,000
Acq of sub 1,000
Addition 1,000

CL

Goodwill
OP 240 Impair
Gw on acq 180

CL

Working Capital
Cl
500
Rec on acq of sub (200)
300

Increase in Receivabel (200)

Entry of Acquisiton:
GW 600
Fixed Assets 1,000
Stock 300
Debtors 250
Bank 350
Creditors
NCI
Cash
Debenture pay

Cash outflow Cash inflow

(400) 350
share capital + premium
Op
Cash

Cl 3,300

Group Reserves
Dividend 320.0 Op
Profit

Cl 2,280

Dividend payable by parent

Dividend 200.0 Op
 Div declared

Cl 320

Debenture
Op
Sub acq
cash

Cl 2,600

Tax payable
Cash 140.0 Op
Tax exp

Cl 320

TOTAL SINGLE NCI

Div decl 50.0 Op
Profit share
Share of nci Creation
 Cl 1,150

Dividend payable total

Div paid 20.0 Op
Div declared

Cl 50
Fixed Asset
Op 3800 Dep
Sub acq 1,000 Disposal
Addition 3,600

Cl

Goodwil
Op 200 Impair
Sub acq 600

Cl

Operating Activities

PBT 1,780
Adjustments:
Depreciation 410
Gain on disposal of PPE (50)
Impairment 220

Working Capital
Increase in creditor 100
No movement in inventory
Increase in receivable (50)
Cash from operations 2,410
Tax paid (140.0)
Net Cash from operations 2,270

Investing Activities
Cash paid to acquire PPE (3,600)
Cash paid to acquire subsidiary (50)
Proceeds from disposal of PPE 800
(2,850)

Financing Activities:
Proceeds from issuance of Shares 800.0
Dividend paid to Parent Share holders (200.0)
Dividend paid to NCI (20.0)
Proceeds from Debentures 200.0
780.0
Net Cash inflow 200.0
Add: Op cash balance 450.00
650.0
 5 Non - cash expense

115

Assets 1,650
Liab (250)
1,400

Goodwill:
250 consideration
280 Net Assets
1,300

edney ka cash impact sirf yeh hai:

Net Cash outflow

(1,150)
 17000

20 Non - cash expense

400

Op
300

300

Net Assets
Assets 1,900
 Liab (150)
150 1,750
350
400 Goodwil:
1,600 Consideration 2,000
Fv of NCI 350
FV of business 2,350
Net Assets (1,750)
600
Net cash outlfow
(50)

2,500.0
800.0

1,400.0
1,200.0

200.0
 320.0

800.0
1,600.0
200.0

180.0
280.0

550.0
300.0
350.0
20.0
50.0

410
750 Sp 800
CA (750)
50
7240

220

580
Cl Op
400 300
900 900
650 600
1,300.00
(1,120)
180.00
Disposal Of Subsidiary:

Step 1: Consideration
Cash 2,600 Net Assets
Creditor 100 NCI
NCI 625
Assets 2000
Stock 200
Debtors 100
Bank 300
Gain 725

Step 2:
Net cash received from disposal 2,300
PPE
Op 5250 Dep 350
Addition 4840 Dis sub 2000
Dispo 800

Cl 6940

Share cap + premium

OP 3800
Proceeds 700

CL 4500
 Group Reserves
Div Declare 500 OP 2000
Profit 2440

CL 3940

NCI
Disp 625 OP 1200
Div dec 35 Profit 260

CL 800

Div Pay
OP 400
Div paid 435 Profit 535

CL 500

Tax payable
OP 500
Tax paid 450 Profit 550

CL 600
 Investment in asociate
Op 800 Div 100
Profit 250

Cl 950

Operating Activities:
Profit before tax 3,250

Adjustments:`
Share of profit from associate (250)
Dep Exp 350
Gain on disp of PPE (200)
Gain on disp of Subs (725)

Working Capital
No change in creditor -
Stock 100
Trade Debts (50)
Cash from operations 2,475

Tax paid (450)

Net cash from operations 2,025

Investing Activities
Proceeds from disposal of PPE 1,000
Proceeds from disposal of Subs 2,300
Dividend from associate 100
Purchase of PPE (4,840)
(1,440)

Financing Activities
Proceeds from issuance of shares 700
Dividend paid (435)
265
Net Cash inflow for the year 850
add opening balance 200
1,050
Consideration 2,600
Net Assets (2,500)
625
725

SP 1000
CA -800
200
CL OP
200 200
900 1000
700 650
Question: Page-91

Non current assets Group reserves

Op 1700 Dep 220 Divid 480 Op 770
Oci 90
Additions 530 Profit 1190
OCI 120

Cl 2100
Cl 1600

NCI Long Term Loan

Divid 150 Op 370 Op 180
Oci 70
Profit 260
OCI 40

Cl 250
Cl 520

Question: Shughal group Page-93

Step-1: Calculation of Acquisition Entry of Subsidiary:

Goodwill 585 Goodwill:

PPE 208 Consideration 1,268
Stock 612 Net assets (683)
Receivables 500 585
Cash 232

Payables 407
Debentures 312
NCI 149.94 Net cash outflow (1,036)
Cash 1268
 Goodwill PPE
Op - Impair 85 Op 8985 Dep 907
Oci 138 Disp 305
Sub 208
Additions 585 Additions 3038

Cl 500 Cl 11157

Investment in associates Group reserves

Op 280 Divid 10 Divid 445 Op 6359
Profit 2805
Profit 30 Oci 302

Cl 300
Cl 9021

NCI Loan debentures

Divid 19.94 Op 17 Op 1682
Profit 23 Add 312
Add 149.94 Cash 108

Cl 2102

Cl 170

Provisions Tax payable + Defered tax

Cash 134 Op 935 Tax paid 1016 Op 3255
OCI 29
460 For the yea 2038

Cl 1290 Cl 4277
Consolidated Statements of Cash flows for the Year ended Dec 31, 2017:

Profit 2,100

Adjustments:
Depreciation 220
OCI Loss 70
Working capital: CL Op
Increase in Inventory (140) 620 480
Increase in Receivables (140) 940 800
Increase in Payables 10 830 820
2,120
Tax paid (650)
1,470
Investing activities:
Additions in PPE (530)

(530)
Financing Activities:
Dividend by Parent (480)
Dividend by NCI (150)
(630)
Net cash inflows 310
Op cash 160
470
OCI Adjustments 30
500

Consolidated Statements of Cash flows for the Year ended Dec 31, 2017:

Profit 4,866

Adjustments:
Depreciation 907
Income from associate (30)
Goodwill impair 85
Provision Legal 460
Gain on disp (549)
Working capital:
Increase in Inventory (1,397)
 Increase in Receivables (148)
Increase in Payables 673
4,867
Proceeds from disp 854 Tax paid (1,016)
Carrying amount -305 3,851
Gain 549 Investing activities:
Additions in PPE (3,038)
Proceeds from disp of PPE 854
Dividend by associate 10
Acquisition of New sub (1,036)
(3,210)
Financing Activities:
Dividend by Parent (445)
Dividend by NCI (20)
Loan issued 108

(357)

Net cash inflows 284

Op cash 1,044
1,328
OCI Adjustments
1,328
ended Dec 31, 2017:

CL Op
9021 7624
4568 4420
3662 2989

1328
inv -2485
receivables -934
investment -802
current liab
cash received from customers cash received from customers xx
op xx cash paid xx Cash paid to suppliers xx
credit sale xx Cash paid to other parties xx
c/s xx cash generated from operations xx
int paid xx
inventory Tax paid xx
op xx cogs xx net cash used xx
Total purc xx
c/s xx

Cash paid to suppliers

op xx
cash paid xx credit pur xx
c/s xx

Cash paid to other parties

op xx
cash paid xx exp xx
c/s xx
Summer 2021 - Biscotti Limited (25 Marks)

January 1 2017 - STATUS ASSOCIATE - EQUITY ACCOUNTING

April 1 2020 - STATUS SUBSIDIARY - CONSOLIDATION

Treatment ?

Previously recognised investment ko fair value pe lekar aatey hain and gain / (loss) GR / P&L

Investment - cost 1,100

At Acq At [Link]
Jan-17 1-Apr-20
share capital 3,000 3,000
Retained earnings 600 1,300
3,600 4,300
share of BL 35% 35%
1,260 1,505
Post Acq Profit 245

Investment Carrying amount 1,345 245 + 1,100

Fair value gain - remeasurement 230 ---> GR / P&L
1,575 105 m shares x 15
Further investment - cost 1,400
Contingent consideration FV 240
Total Consideration - FV - 75% 3,215
Net Assets of CL 1-Apr-20
Share capital 3,000
Retained Earning 1,300
Fv - Adjustments:
Inventory 360
Fv of loan adjustment (56)
Fv of net assets 4,604

Goodwill:
Consideration 3,215
Net Assets 75% (3,453)
Bargain purchase gain (238) ---> GR / P&L

FV of Loan calculation:
31-Mar-21 31-Mar-22
112 112
- 800
Cashflows 112 912
Pv at 10% market rate 102 754
total PV 856

Loan interest at 14%

800 x 14% x 9 / 12 84
856 x 10% x 9 / 12 64
(20) to be reversed from finance cost

BL - DL FOREIGN SUBSIDIARY:

Total amount invested Jan 1 2019 $ 120.00 million

Koi goodwill / BPG na aaney ka matlab yeh hai

Cost of investment = Net assets % of parent share

At Acq At 1st rep At Disp date

1-Jan-19 31-Dec-19 31-Dec-20
Share cap + RE $ 140.00 $ 154.00 $ 172.00
FV ADJ BUILDING $ 10.00 $ 8.00 $ 6.00
Net Assets 100% $ 150.00 $ 162.00 $ 178.00
Post acq profit $ 12.00 $ 16.00

Goodwill:
Consideration $ 120.00
Net Assets 80% $ (120.00)
$ -
Working of Reserves in terms of PKR

$ Value Rate PKR PARENT NCI

Jan 1 2019 $ 150.00 10 1,500
Post Acq profit 2019 $ 12.00 9.5 114 91.20 22.80
1,614
OCI LOSS FTY (156) (124.80) (31.20)
31 Dec 2019 Bal $ 162.00 9 1,458
Post Acq profit 2020 $ 16.00 10.5 168 134.40 33.60
1,626
421 336.80 84.20
31 Dec 2020 Bal $ 178.00 11.5 2,047

NCI CARRYING AMOUNT

NCI AT DATE OF ACQ $ 30.00 10 300

Profit FTY 2019 22.80
OCI FTY 2019 (31.20)
291.60
Profit FTY 2020 33.60
OCI FTY 2020 84.20
409.40

Gain / Loss on disposal of Foreign Subsidiary:

Consideration 2,000

Net Assets (2,047)

NCI 409
OCI RESERVE TO BE REALISED 212.00
Gain on disposal of sub 574.40

Unadjusted P&L Error Cont cons FV ADJ Associate BPG Fv gain Adjusted
Sales 12,200 (2,000) 10,200
Cost of sales (4,895) (216.00) (5,111)
Gross profit 7,305 5,089
Operating Expenses (3,335) (80.00) (3,415)
Operating profit 3,970 1,674
Other income 395 238 230 863
Finance cost (375) 20.00 (355)
Share of prof associate - 79 79
Profit from cont operations 3,990 2,261

Prof disc operation W1 742.40

3,003
Other comprehensive income for the year
OCI on translation of subsidiary 421
Reclassified to P&L upon disposal (212)
209
Profit from discontinued operations: W1

Profit from above reserve working 168.00

Gian on disposal of subsidiary 574.40
742.40
Calculating Value of Investment in EL 60%: Entry made of disposal:

Number of shares of EL 110 Cash 550

Investment 550
Our Acquired shares in EL 66 60%
Total investment 870
Number of shares issued by AL 22 million shares Less: disposed (550)
Share price of AL 105 320
2,310 Entry to be made:

Investment 2,310 Cash 550

Share capital 220 Investment 483
Share Premium 2,090 Gain 67

Correcting entry
Investment 67
Gain 67

disposal check:
Total acquired shares 54.00 million
Out of total 60.00 million
90%

Total 54.00
Disposed (30.00)
24.00
Now we hold 40% at jan 2020 40%

Remaining shares 24.00

Disposed further (9.60)
14.40
Remaining holding 24%

Upon Oct disposal

Cash 208
RE 208

To be made
Cash 208
Investment (432+18) * 9.6 / 24 180
Gain / loss 28
Net Assets of Subsidiary:
EL SL
Jan-20 Dec-20 Jul-17 Jan-20 Oct-20 Dec-20
At Acq At Rep At Acq At disp At disp At Rep
Share Capital 1,100 1,100 Share cap 600 600 600 600
Retained Earnings 2,050 2,470 RE 250 340 385 410
Fair value of adjustments: 850 940 985 1,010
Investment in PL 100 220 Post Acq 90 45 25
Contingent liability (60) (25)Parent 81.00 18.00 6.00
3,190 3,765 Nci 9.00
Post Acq Profit 575
Parent 345
NCI 230

Goodwill: EL SL
Consideration of parent 2,310 Consideration 870
Fv of NCI 110 x 40% x 30 1,320 FV of nci 78
Fv of business 3,630 948
Net Assets (3,190)Net assets (850)
440.00 98
Impairment (30)
68

NCI: EL SL
Fair value of NCI 1,320 FV of nci 78.00
Post Acquistion profit 230 Post acq 9.00
1,550 Impair (3.00)
84.00 NCI AT DISPOSAL DATE
Group Reserves:
Retained Earnings of parent 3,500
Post Acquistion profit 345 ONLY SL Breakup understanding:
Post Acquistion profit of SL 81.00 81.00 (81.00)Post Acq reverse
Impairment of Gw of SL (27.00) (27.00) 27.00 Impairment reverse
Consolidated books gain 58.00 58.00 112.00 45 FVGAIN ON REMEASUREMENT
Share of profit till oct 18.00 112.00 67 Separate books gain reh jaega
Share of profit oct - dec 6.00 58.00
Reversal of wrongly booked (208.00)
Gain on disposal of associate 28.00
3,801.00
Consolidated books gain:
Separate books gain booked:
Consideration 550 consideration 550
Investment (550)
- Net Assets (940)
Goodwill (68)
NCI 84.00
Fair value of remaining invest 432.00 24 remaining shares x 18 share price
58.00 Consolidated books gain

Statement of financial position

as at 31 December 2020

Property, plant and equipment 7,000

Goodwill 440
Investment in associate 1,146 432 + 18 - 180 + 6 + 650 + 220
Current assets 7,280
NCA held for sales 400
16,266

Share capital 3,620

Share premium 3,290
Group reserves 3,801.00
NCI 1,550
Liabilties 4,005
16,266
Net Assets of GL:
At Acq At [Link] At Rep
Share capital 2,000 2,000 2,000
Retained earnings 2,580 2,860 3,280
Fair value adj:
Investment in JV 170 170 170
Land fv adjust 210 210 210
4,960 5,240 5,660
Post acq 280 420
Parent 168.00 315
NCI 112.00 105

Goodwill:
Consideration W1 3,247
Net Assets of Sub (2,976)
271
NCI:
Share of NCI at Acq 1,984.00
Post Acq profit 112.00
NCI Before [Link] Jan 1 2022 2,096.00
Further 15% holding acq (786.00)
1,310.00
Post Acq Jan - June 105.00
1,415.00

Group Reserves:
Retained Earnigns of Parent 6,500.00
Post Acq July - Dec - GL 168.00
Post Acq Jan - June - GL 315.00
Loss on [Link] (104.00)
Reversal of excess interest 30.40
Bargain purchase gain 320.00
Post Acq of CL 246.40
Adjustment of gain on disp (1,616.40)
Post acq share of profit 97.50
5,956.90

GR - loss on [Link] 104.00

NCI 786.00
 Investment 890

W1: Consideration:
Face value 3,000
C/F PV 12%
1 420 375
2 420 335
3 420 299
4 420 267
5 420 238
6 3,420 1,733
3,247

Investment in Subs 3,247

Debenture payable 3,247

Debenture payable 30.40

Interest exp 390
Cash 420

OP Interest Cash Closing

2022 1 3,247 390 (420) 3,216
2023 2 3,216 386 (420) 3,182
2024 3 3,182 382 (420) 3,144
2025 4 3,144 377 (420) 3,101
2026 5 3,101 372 (420) 3,054
2027 6 3,054 366 (420) 3,000
2,273 (2,520)

Interst exp 420

ENTRY MADE
Cash 420

Foreing Subsidiary - CL:

Net Assets
At Acq At Jul 2021 At Rep
Share Capital $ 150.00 $ 150.00 $ 150.00
Retained earning $ 180.00 $ 210.00 $ 235.00 Post Acq $ 25.00
Fv Adj building $ 10.00 $ 8.00 % 30% $ 7.50
$ 340.00 $ 368.00 $ 385.00
$ 28.00
Goodwill:
$ Rate PKR
Consideration $ 240.00 10.00 2,400.00
Net Assets $ 340.00 10.00 (2,720.00)
BPG (320.00)

NCI: $ Rate PKR

Share of NCI $ 68.00 10.00 680.00
Post Acq $ 5.60 11.00 61.60
OCI 141.60
883.20

Reserve working:
$ Rate PKR Parent NCI
Net Assets at Acq $ 340.00 10.00 3,400
Profit / post acq $ 28.00 11.00 308 246.40 61.60
3,708
OCI 708 566.40 141.60
Closing NA $ 368.00 12.00 4,416

Consolidated books gain:

Consideration 2,580.00 215$ x 12 Separate books booked: 2,580.00

Net Assets (4,416) Adjustment in GR: (1,616.40)

NCI 883.20
FV of remaining investment 1,350 Post Acq Reverse (246.40)
OCI RESERVE TRANSLATION 566.40 BPG (320.00)
Consolidated books gain 963.60 Investment in associate 450.00 M2M gain book
Reversal of wrongly booked (2,580.00)
Initially 2,400.00 Gain to be booked 1,080.00
Disposed (1,500.00) (1,616.40)
INVEST CA 900.00 Remaining
FV 1,350
450.00

Separate books actual gain:

Consideration 2,580.00
Disposal (1,500.00)
1,080.00
Associate working:

Initial amount 1,350.00

Post Acq share of profit 97.50
1,447.50

Rate
Dollar value $ 112.50 150 $ / 10 x 30% x 25 12 1,350.00
Add: Post Acq share of profit $ 7.50 13 97.50
$ 120.00 1,447.50
OCI FTY - RESERVE 232.50
$ 120.00 14 1,680.00

Balance sheeet:
Property, plant and equip 9,405.00 Share capital 3,000
Investment in associate 1,680.00 Group Reserves 5,956.90
Investment in JV 820.00 Translation reserve 232.50
Goodwill 270.68 NCI 1,415.00
Current assets 5,745.0 Net pension liab 930
17,920.68 Debenture Payable 3,216
Other payable 3,170.00
17,920.68
 GFL

JAN 1 2020 90%

EL 40% April 1 2020 EQUITY ACCOUNTING

JULY 1 2021 20%

RL
RL BECOMES SUBSIDIARY

Effective holding: Parent NCI

EL till Apr 2021 90% 10%
EL till after April 2021 75% 25%
RL after july 2021 55% 45%

Statement of changes in Equity:

Share Capital Group Reserves NCI OCE Total
Balance as at January 1 2021 900 2,552.00 97.00 - 3,549.00
Partial disposal of Subsidiary - - 185.10 42.90 228.00
Acquistion of RL - - 334.00 - 334.00
Profit for the year - 598.30 69.70 - 668.00
Dividend - (270.00) (7.50) - (277.50)
900.00 2,880.30 678.30 42.90 4,502
Calculation of Opening Group Reserves:

NET ASSETS OF EL NET ASSETS OF RL

At Acq At 31 Dec 2020 At Apr 1 2021 At Acq At 31 Dec 2020 At July 1 2021
Share Capital 500 500 500 Share Capital 400 400 400
Retained Earn 550.00 670 734 Retained earning 176 236 286
1,050.00 1,170.00 1,234.00 576 636 686
Post Acq 120.00 185.10 Disposal Post Acq 60 50
Parent 108.00 Parent's share 24 20
NCI 12.00

Goodwill/BPG:
EL RL
Consideration 795.00 Consideration 468.00 (336 + 176 x 75%)
Fiar value of NCI 85.00 500 / 10 x 10% x 17 FV of NCI 378.00 (40m x 45% x 21)
Fair value of Business 880.00 846.00
Net Assets (Bal fig) 1,050.00 Net Assets (686.00)
Bargain purchase gain (170.00) 160.00
Impairment (16.00)
144.00
Group Reserves as at 31 Dec 2020:

Retained Earnings of parent 2,250.00 as at 31 Dec 2020

Post Acq profit of EL 108.00
Bargain purchase Gain 170.00
Post Acq profit from RL 24.00
2,552.00
NCI as at 31 Dec 2020:

Fair value of NCI 85.00

Post Acq profit of NCI 12.00
97.00

Check of Disposal of 7.5 m shares of EL:

Shares held 45 90%

Sold shares 7.5 15%
Left over 37.5 75%
Case of selling share without losing control

Profit calculation till disposal Date:

Investment property FV 300 JAN 1 2021

FAIR VALUE GAIN BOOKED 40
Investment property FV 340 DEC 31 2021

As far as group is concerned

It would have been considered as PPE 300

Depreciation Expense 15
285
Adjustment in Net Assets / profit FTY (55.00)
Breakup:
Reversal of FV gain (40.00)
Booking of Depreciation (15.00)
(55.00)
Cash 228
NCI 185.10
Other compenent of Equity 42.90

Separate books gain on disposal:

Cash 228
Investment 132.50
gain on disposal - P&L 95.50

RL'S Working:
Carrying amount of Investment in RL
Cost of investment 250.00
Post Acq 2020 - share of profit 24.00
Post Acq 2021 - share of profit 20.00
294.00
Gain on Consolidation 42.00 Remeasurement of Investment in Associate RL now Subsidiary
Fair value of investment 336.00

Unadjusted Impairment Rental Partial Disposal Dividend EL Acq of EL IP adj Adjusted P&L
Sales 2,615.00 - - - - - - 2,615.00
Cogs (1,132.00) - - - - - - (1,132.00)
1,483.00 1,483.00
Operating Exp (978.00) (16.00) 21.00 - - - (15.00) (988.00)
Other income 290.00 - (21.00) (95.50) (22.50) 62.00 (40.00) 173.00
505.00 Adjsuted Profit for the year 668.00

Profit attributable to:

Distribution: Parent 598.30
NCI 69.70
Profit of RL 50.00 100 / 2
NCI's share 45%
NCI's SHARE in RL 22.50
Impairment (7.20) 16 x 45%
15.30 A

Profit of EL 311.00
IP ADJUSTMENT (55.00)
256.00
3 months 64.00 x 10% 6.40
9 months 192.00 x 25% 48.00
54.40 B
Total NCI in Group 69.70