Question:
Aisha Limited acquired 150,000 shares of Sania limited on 1 July 2017. Their
financial position at 30 June 2019 are as under:
Aisha Sania
Limited Limited
Building 830,000 1,980,000
Equipment 525,000 750,000
Land 1,220,000 1,150,000
Investment 4,200,000 320,000
Receivable 1,510,000 759,000
Stock 982,000 315,000
9,267,000 5,274,000
Share Capital 4,500,000 2,500,000
Retained Earnings 2,917,000 1,984,000
Liabilites 1,850,000 790,000
9,267,000 5,274,000
Other Information:
1. Profit earned by the Sania Limited for the year ended 30 June 2018 and 2019 were
285,000 and 195,000.
2. On acquisition all fair value of assets and liabilites were equal to their carrying
amount except:
Excess amount of Remaining
Description
its carring amount Life
Land 200,000 N/A
Building 375,000 15 yrs
Equipment 150,000 8 yrs
3. At the date of acquisition Sania limited has a customer list which is developed over
the years. Fair value of its is Rs:90,000 and remaining life of 10 years.
4. At the time of acquisition, Sania Limited had recorded a provision of Rs. 100,000
against a claim of Rs. 600,000 filed against the company. According to Aisha
Limited’s lawyer, the fair value of the liability was Rs. 400,000. During the year, Sania
Limited recorded a further expense of Rs. 200,000.
5. On 1 August 2018, Sania Limited Declared a cash dividend of 10%.
6. On 1 July 2018, Aisha Limited sold invenetory to Sania Limited Worth Rs: 90,000
at a margin of 30%. Till the year end 30 June 2019, 50% of the inventory is still in the
books of Sania Limited. At 30 June 2019 Aisha Limited books shows a recievable of
50,000 while the sania Limited books shows a payble of 20,000 the diffience is due to
the stock intransit which is send goods by sania limited to aisha Limited charging a
markup of 25% at cost.
7. Fair value of NCI at 1 July 2017 is 980,000.
8. At 30 June 2019 the Goodwill of sania Limited is impaired by 15%.
Required:
Prepare Conolidated Balance Sheet as at 30 June 2019.
Solution:
Shares Purchased 150,000
Total Shares 250,000
Holding Percentage 60%
At Acq At Rep
Share Capital 2,500,000 2,500,000
Retained Earnings 1,754,000 1,984,000
Land 200,000 200,000
Building 375,000 325,000
Equipment 150,000 112,500
Customer List 90,000 72,000
Liab (300,000) (100,000)
Unrealised profit (6,000)
4,769,000 5,087,500
Goodwill:
Fv by parent 4,200,000
NCI Fv 980,000
5,180,000
Net Assets (4,769,000)
Goodwill 411,000
Imp (61,650)
Net Goodwill 349,350
Post Acq 318,500
Parent 60% 191,100
NCI 40% 127,400
Grtoup Reserves:
Parent 2,917,000
Post Acq 191,100
Imp of Goodwill (36,990)
Unrealised Profit (13,500)
3,057,610
NCI:
Fv of NCI 980,000
Post Acq 127,400
Imp of Gw (24,660)
1,082,740
Consolidated Books:
Building 3,135,000
Equipment 1,387,500
Land 2,570,000
Investment 320,000
Receivable 2,219,000
Stock 1,283,500
Stock in transit 24,000
Intangible Assets 421,350
11,360,350
Share Capital 4,500,000
Group Reserves 3,057,610
NCI 1,082,740
Liab 2,720,000
11,360,350