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Advance
Financial Accounting
(FIN-611)
VU
LESSON
# 38
GROUP
ACCOUNTS
Rs.
EixamplssetsCase vi ]
Minority Interest
F xed A e - [
1,450
Balance
Sheet as on 31st December
2008
Goodwill
100
P
S
Current
Assets
550
Rs.
Rs.
2,100
Fixed
Assets
1,000
450
Investment in
S.
550
Share
Capital
1,200
Rer e v s
CusrernteAssets
350
150
600
1,900
600
1,800
Minority
Interest
100
1,900
SharrenCLipibillities
Cur e t a
ata
1,200
300
200
Reserves
600
200
2,100
Current
Liabilities
100
100
1,900
600
The Parent
Co. (P) acquired 80%
shares of the Subsidiary Co.
(S) on 31st December
2008
Prepare
the Consolidated Balance
Sheet as at 31/12/2008.
Required:
Eolutione - [ Csee iv]ii ] Minority
Interest, Pre-acquisition Reserves,
Goodwill
Sxampl
- [
Caas
v
Working
Balance
Sheet as on 31st December
2008
P
S
Calculation of
Goodwill
Rs.
Rs.
1Rs.0
Rs.
Fixed
Assets
,00
450
Investment in
S.
Investment
500
500
SharrenCApitets
Cur e t
assal
300
400
150
Reserves
1,200
900
600
500
@
Share
Capital
180%
,200
300
400
Reserves
600
200
Current
Liabilities
100
100
Minority
Interest
100
1,900
600
Simple
calculation of Minority Interest is as
under
The
erar'entuito.o(fP)ubsidiiaey
Compshares MI% e Subsidiary
Co. (S) on 15t 0an20%
2008=when it's reserves
were worth
OwnP s eq Cy S
acqu r r d 80% any @ of
th
s0J x
uary
=
100
Rs.120.
Goodwill impaired with Rs.
33 during the year.
Alternatively we
may split the Balance
sheet of S Co. into the
share of parent company and
the share of minority
interest.
R
quired:
Net amount
of the colPrenarf MIe
Clonsohieatmountlanceinoreetinteatst1/12/2008.
ump oe th wil be t l d
aed Ba of m Sh ity as re 3.
H%
MI%
Fioledion -
etCase vii ]
S x ut Ass [
s
360
90
Current
Assets
120
30
Workings
W-1
Determine
the % of holding by dividing
the number of equity shares
acquired with the
Current
Liabilities
(80)
(20)
H%
80%
total
number of shares of the
subsidiary company
%age
representing the minority
interest is very simple to
calculate, just subtract
H%
100
MI%
20%
from
100
Minority
interest is the figure that
represents the owners'
equity of the minority share
holders in the group.
Therefore it is
shown
separately but within the
owners' equity class
consolidated balance
sheet.
W-2
Consolidated
Balance Sheet
Analysis of
Equity of S Co
As at 31 December
2008
201
Advance
Financial Accounting
(FIN-611)
VU
Pre-
Post-
Fixed
Assets
1,000
450
Acquisition
acquisition
Investment in
S.
500
Dividend
Receivable
40
Share
Capital
300
Nil
Other
Current Assets
360
Reserves
120
80
Current
Assets
400
150
420
80
1,900
600
W-3
Calculation of
goodwill
Rupees
Shate f
investment
r
oCapital
1,500
200
300
Cos
Pre
ervessition equity of S
Co.
Resacqui
600
200
420 x
80%
(336)
Dividend
Payable
70
50
164
Other
Current Liabilities
30
50
Impairment
loss
(33)
Current
Liabilities
100
100
Goodwill
131
1,900
600
W-4
The
ParGnoup R(P) rves
ired 80% shares of the
Subsidiary Co. (S) on 1st
January 2008 when its
reserves were worth
e rt Co.
eseacqu
Rs.120.
Goodwill impaired during the
year Rs. 33.
All
reserves of P Co
600
Post
acquisition reserves of S Co to the
extent of H%
80 x
80%
64
Prepare
the Consolidated Balance
Sheet as at 31/12/2008.
Required:
Impairment
loss
(33)
631
Solution - [
Case viii ]
W-5
W-1
Minority
Interest
Determine
the % of holding by dividing
the number of equity shares
acquired with the
O%ners'
equity of Subsi%ary
Compaota@ um% r of share= of
the subsidia5y 0
ompany
Hw
80di
tny l n MI be
r0 c x
20%
=
s
100
%age
representing the minority
interest is very simple to
calculate, just subtract
H%
MI%
20%
from
100
Post-
acq
Detailed
working
Total
Pre-acq
W-2
Ownernalequity
foEquCy . f S Co
A s' ysis o f S it o
o
500
420
80
Holding -
80%
(400)
(336)
(64)
Pre-
Post-
100
Minority
Interest - 20%
84
16
Acquisition
acquisition
Share
Capital
300
Nil
Reserves
120
80
420
80
W-3
Consolidated
Balance Sheet
Calculation of
goodwill
Rupees
As at 31 December
2008
Rs.
Cost of
investment
420 x
80%
500
Fixed
Assets
1,450
Pre
acquisition equity of S
Co.
(336)
Goodwill
131
164
Current
Assets
550
Impairment
loss
(33)
2,131
Goodwill
131
W-4
Group
Reserves
Share
Capital
1,200
All
reserves of P Co.
600
631
Post
acquisition reserves of S Co to the
extent of
Reserves
1,831
H%
80 x
80%
164
Minority
Interest
00
1,931
Goodwill
impaired
(33)
Current
Liabilities
200
631
2,131
W-5
Minority
Interest
Example - [
Case viii ] Minority Interest,
Inter-Company Dividends
Owners'
equity of Subsidiary Company @
MI%
=
500 x
20%
=
100
Balance
Sheet as on 31st December
2008
P
S
Detailed
working
Pos.t-
Rs
Rs.
Total
Pre-acq
Detailed
working
202
Advance
Financial Accounting
(FIN-611)
VU
acq
40
Owners'
equity of S Co.
500
420
80
10
Holding -
80%
(400)
(336)
(64)
50
Minority
Interest - 20%
100
84
16
W-6
Cancellation
effects of Intra group
Dividend
P
S
Rs.
Rs.
Fixed
Assets
1,000
450
Investment in
S.
500
Dividend
Receivable
40
Other
Current Assets
360
Current
Assets
400
150
1,900
600
Share
Capital
1,200
300
Reserves
600
200
Dividend
Payable
70
50
Other
Current Liabilities
30
50
Current
Liabilities
100
100
1,900
600
Consolidated
Balance Sheet
As at 31 December
2008
Rs.
Rs.
Fixed
Assets
1,450
Goodwill
131
Current
Assets
510
2,091
Share
Capital
1,200
Reserves
631
Minority
Interest
100
Other
current liabilities
80
Dividend
payable by P
70
Dividends
due to minority
10
80
Current
Liabilities
160
2,091
203
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