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Consolidated Financial Position Analysis

The document provides financial information for Grace plc and its subsidiaries Poise plc and Leisure plc as of October 31, 2012. It includes: 1) Statements of financial position for each company. 2) Additional information on acquisitions of shares in subsidiaries, fair values of assets, intragroup transactions, and dividends. 3) A requirement to prepare a consolidated statement of financial position for Grace plc as of October 31, 2012 and explain why fair values are used in consolidation.

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Lesa Robinson
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755 views2 pages

Consolidated Financial Position Analysis

The document provides financial information for Grace plc and its subsidiaries Poise plc and Leisure plc as of October 31, 2012. It includes: 1) Statements of financial position for each company. 2) Additional information on acquisitions of shares in subsidiaries, fair values of assets, intragroup transactions, and dividends. 3) A requirement to prepare a consolidated statement of financial position for Grace plc as of October 31, 2012 and explain why fair values are used in consolidation.

Uploaded by

Lesa Robinson
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Comprehensive Problem 10% of Final Grade The Following information relate to the Grace plc group of companies as at 31 October

2012. The summarized statements of financial position of these three companies at 31 October 2012 were as follows: Non-current Assets Grace plc $000 2,140 1,452 200 350 213 234 4,589 500 3,215 3,715 500 262 112 4,589 Poise plc $000 1,063 500 100 212 127 26 2,028 200 1,330 1,530 300 151 47 2,028 Leisure plc $000 720 108 82 19 929 100 510 610 200 92 27 929

Property plant equipment Investment in subsidiary at cost Other investments Current assets Inventory Trade receivables Cash and bank Total assets Equity shares k1 shares Retained earnings Total equity Non-current liabilities Deferred tax Current liabilities Trade payables Taxation payable Total equity and liabilities Additional Information

1. On 1 November 2011 Grace Plc. acquired 160 million of the equity shares and voting rights of Poise plc 2. Poise plc. Acquired 75 million of the equity shares and voting rights of Leisure plc on 1 November 2008 3. At the dates of share purchases the following information is known: Company earnings Date Equity shares Retained $000 $,000 Poise plc 1 November 2009 200 560 Poise plc 1 November 2011 200 800 Leisure plc 1 November 2009 100 240 Leisure plc 1 November 2011 100 1. With the following exceptions the fair value of assets of investee companies closely approximated their book value at the relevant acquisition dates: Company Asset Book Values Fair Value $,000 $,000

2.

3. 4. 5.

Poise plc Inventory* 147 197 Poise plc Equipment** 200 400 *all of this inventory had been sold by 31 October 2012 **this equipment was purchased in 2010 and is depreciated over its five year life on a straight line basis. It is still held by Poise plc. During 2012, the following intra group trading took place: Selling company Buying company Sale at transfer price Profit on sales $,000 Poise plc Grape plc 280 40% on cost Poise plc has levied a management charge of $10 million per annum on Leisure plc for services which it provides. In 2012 Leisure plc has neither paid this charge nor accrued it as outstanding The dividends payable were declared before the statement of financial position date and are therefore included as liabilities. No dividends receivable has been accrued by parent companies. In the year of purchase a full years depreciation is provided in respect of non-current assets and no deprecation is provided in the year of disposal. Required: a. Prepare a Consolidate Statement of Financial Position of Grace plc as at 31 October 2013 (20 marks) b. Explain why the fair value of a companys assets is used in the preparation of consolidated financial statement(5 marks) (Total 25 Marks)

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