FAR-II Group Accounts BY MAH CAF-5

Ex-1 MAH
on 1-1-20 P bought 900 shares of S by paying Rs 12000 to ex owners of S
The balance of S as on 1-1-20 are given below
Rs.
Share Capital [Rs.10 per share ] 10,000.00
share premium 2,000.00
Retaiend Earnings 500.00
Revalaution Surplus 400.00
on 1-1-20 The FV of all asssets & liabilities of S are same Except Land whose carrying value is Rs 700 and FV is Rs 800
NCI is measured at proportionate of FV of Net Assets of S @ acquisition
Required
A % Ownership of P in S & % of ownership of NCI in S
B Net Assets @ FV
C Goodwill
D Value of NCI @ acquisition date
Ex-2 MAH
on 1-1-20 P bought 720 shares of S by paying Rs 11000 to ex owners of S

The balance of S as on 1-1-20 are given below

AH
At Acquisition date , NCI is measured @ FV

Required

Ex-3 MAH
on 1-1-20
A
B
C
D
Share Capital [Rs.10 per share ]
share premium
Retaiend Earnings
Revalaution Surplus

Net Assets @ FV
Goodwill
Value of NCI @ acquisition date
S
Rs.
12,000.00
1,200.00
1,000.00

% Ownership of P in S & % of ownership of NCI in S

P bought 810 shares of S by paying Rs 15000 to ex owners of S

800.00
on 1-1-20 The FV of all asssets & liabilities of S are same Except Land whose carrying value is Rs 500 and FV is Rs 550

Market value per share on 1-1-20

P
Rs per share

17.00
15.00

The balance of S as on 1-1-20 are given below

Rs.
Share Capital [Rs.10 per share ] 9,000.00
share premium 500.00
Retaiend Earnings 1,200.00
Revalaution Surplus 300.00
M
on 1-1-20 The FV of all asssets & liabilities of S are same Except Land whose FV exceed CV By Rs.100
Market value per share on 1-1-20 Rs per share

P 15.00
S 11.00

Required
A % Ownership of P in S & % of ownership of NCI in S
B Net Assets @ FV
C Goodwill
D Value of NCI @ acquisition date
Under the following assumption
1.00 IF NCI is measured @ FV
2.00 IF NCI is measured @ proportionate of FV of net assets of S

Mirza Ali Hassan, FCA 1 MAH NOTES SERIES-1

FAR-II Group Accounts BY MAH CAF-5

Ex-4 MAH
Following are the balance sheets as at June 30, 2019:
P S
---------- Rs.--------
Non-current assets
Property, plant & equipment 60,000 60,000
Investment in S 4,000 -

P S
Equity ---------- Rs.--------
Share capital (Rs. 10 per share) 45,000 24,000
Share premium 4,500 2,400
Other reserves 9,000 6,000
Retained earnings 49,500 25,600
Non-current liabilities
Debentures - 20,000

Other Information

AH
P acquired 1800 shares of S on 1st July 2018 when other reserves were Rs. 3,000 and retained earnings were Rs. 8,200

The cost of investment comprised of Following

(A)
(B)
('C)
(D)

(E)
Cash
Rs.
4,000.00
1 share of P shall be issued for every 3 of S acquired
Rs. 14000 shall be paid after two years on 1st July 2020. Discount Rate is 10%
RS.10,000 shall be paid after 3years if share price of S maintains within range of Rs.[12-18].
Its Fair Value on 1st July 2018 is Rs.7000
A land was also given and its NBV was Rs.1000 and Fair Value on 1st july 18 was Rs.1300

Fair Value per share on 1st July 2018

P
12.00
S
13.00
P has recorded only cash paid in its separate Financial Statement as cost of investment
Required :
Compute Goodwill & make adjustment in balances given
M

Mirza Ali Hassan, FCA 2 MAH NOTES SERIES-1

FAR-II Group Accounts BY MAH CAF-5

Goodwill Format (NCI @ Proportionate Basis)

Cost of Investment 32,000.00

DEBIT SIDE [Debit + Credit -] [A] 32,000.00

Share Capital [Rs.10 per share ] 20,000.00

PRE RESERVES 9,500.00
Fv Adj
500.00
-
[Net Assets of S @ acquisition '@ Fair value 30,000.00
CREDIT SIDE [Debit - Credit +] x 90%

[B] 27,000.00

Goodwill / [Bargain Purchase Gain)[A-B] 5,000.00

Goodwill Format (NCI @ FV)

Cost of Investment 32,000.00

AH
DEBIT SIDE [Debit + Credit -]
Fair valur of NCI @ Acq Date

[Net Assets of S @ acquisition '@ Fair value

CREDIT SIDE [Debit - Credit +]
[A]

Share Capital [Rs.10 per share ]

PRE RESERVES
Fv Adj

[B]

Goodwill / [Bargain Purchase Gain)[A-B]

NOTES MAH Group Financial Statements

6,000.00
38,000.00

20,000.00
9,500.00

500.00
-

30,000.00

8,000.00

1.00 Parent company prepares its own separate Financial statements

1.00 Subsidiary company prepares its own separate financial statements
2.00 Parent company is also responsible for preparation of Consolidated Financial statements
3.00 CFS are prepared by adding assets & liabilities of Parent [P] & Subsidiary [S]
4.00 CFS are prepared with an objective that these are not two companies but one group compnay
5.00 All Reserves [ Share premium ,Retained earnings,other reserves , Revaluation reserve] of Subsidiary
@ acquisition date are called Pre Acquisiiton Reserves
6.00 Increase / Decrease in Reserves of S after Acquisition is called Post Acquisition Reserves
M
7.00 Non Controlling Interest [NCI ] is part of equity in CSOFP
Consolidation Basic Principals/rules SOFP
In Question we will be given with SOFP of P & SOFP of S and along with othe information

1.00 All Assets of S will be added in Assets of P

2.00 Investment in share capital of S By P shall never be presented in CSOFP because it is
eliminated / adjusted in Goodwill calculation
3.00 All Liabilities of S will be added in Liabilities of P
4.00 Share capital of S shall never be presented in CSOFP because it is eliminated / adjusted in
goodwill calulation
5.00 All reserves of S shall never be presented in CSOFP because pre -reserves are adjsuted in goodwill
calculation and Post reserves are distributed
6.00 CSOFP share capital & share premium of only Parent shall be presented
7.00 Goodwill shall be presented as an asset [NCA] in CSOFP

Mirza Ali Hassan, FCA 3 MAH NOTES SERIES-1

 FAR-II Group Accounts BY MAH CAF-5

P S
PPE 500.00 50.00
Investment in S 100.00 -
Current Assets 400.00 30.00
Share Capital 700.00 40.00
RE[1-1-19] 120.00 10.00
Current Liabilities 80.00 5.00
Sales 800.00 300.00
Cost of Sales 600.00 250.00
Admin expenses 50.00 10.00
Tax expense 10.00 5.00
Divided Declared & paid 40.00 10.00

AH
M

Mirza Ali Hassan, FCA 4 MAH NOTES SERIES-1

FAR-II Group Accounts BY MAH CAF-5

Acquisition date 01-01-19

S Disclosed Contingent Liability of Rs. 1o in its Separate Financial Statements
on 1-1-19 P's Legal Counsel estimated its Value @ Rs.

Case # 1 8 Such Liability is still disclosed in S Financial statement

On 31-12-19 Value of Such liability is Rs.11

Case # 2 on Dec 31 2019, S has made provision of Rs 6 in its Separate FS

Case # 3 on Dec 31 2019, S has made provision of Rs 15 in its Separate FS

AH
Case # 4 on 30th Nove 2019 S made payment and settled it at Rs 7
M

Mirza Ali Hassan, FCA 5 MAH NOTES SERIES-1

FAR-II Group Accounts BY MAH CAF-5

Ex-1 01-01-18 P Bought 40% shares in A for Rs 1000

On 1-1-18 A has following balance of Equity

Share Capital 1,200.00

RE 400.00
Other reserve 100

on 31-12-19 A has following balances on 31-12-19 P has following balances on 31-12-19 S has following balances
Investment in A 1000
Share Capital 1,200.00 Share Capital 5,000.00 Share Capital 2,500.00
RE 710.00 RE 4,300.00 RE 1,800.00
Other reserve 120 Other reserve 1000 Other reserve 1200

Other information
(i) Seller /Buyer Sale Closing stock held Margin/Mark up
with Buyer
P to A 100 30.00 20% Mark up
A to P 80 28.00 30% Margin
(ii) Investment In associate is impaired by Rs 25 as on Dec 31 2019
(iii) On 1st July 2018 , P sold Equipment to A having NBV of Rs 20 on that date for Rs 30. Remaining life of Equipement on date of sale is 5 years.
(iv) On 1st February 2018 , A sold Plant to P having NBV of Rs 24 on that date for Rs 36. Remaining life of Plant on date of sale is 4 years.

AH(v) P acquired 80% shares of S Many years ago when RE of S was Rs1000 and and other reserves were Rs 900

Required :Determine the following to be reported in CSOFP as on Dec 31 2019

IIA
RE
OR
M

Mirza Ali Hassan, FCA 6 MAH NOTES SERIES-1

FAR-II Group Accounts BY MAH CAF-5

30-06-20
SOCI
P A S
Sales 1,000.00 400.00 800.00
Cost of Sales (700.00) (280.00) (580.00)
Gross Profit 300.00 120.00 220.00
Admin expense (100.00) (10.00) (60.00)
Selling expenses (50.00) (20.00) (15.00)
Other income 75.00 10.00 30.00
Finance cost (25.00) (40.00) (20.00)
PBT 200.00 60.00 155.00
TAX (50.00) (10.00) (15.00)
PAT 150.00 50.00 140.00
OCI
Revaluation gain 10.00 6.00 10.00
TCI
160.00 56.00 150.00
Other information

AH
(A)
(B)
('C)
(D)
(E)
(F)
(H)
Required :
Accounting year 1st July 2019 -30 June 2020
P Invested in A on 1st September 2018 and bought 30% shares and there was bargain purchase gain of Rs.5 on investment
Other income of P include dividend income of Rs.3 that was received from A
Investment in Associate is impaired by Rs 4
After Investment in A, P Sold goods to A of Rs 50 and 40% goods are unsold and mark up is 20%
After Investment in A, A Sold goods to P of Rs 80 and 70% goods are unsold and mark up is 30%
P Invested in S on 1st July 2017 and bought 80% shares
Prepare CSOCI for the year 30th June 2020
M

Mirza Ali Hassan, FCA 7 MAH NOTES SERIES-1