Ressassment Example 7 Slides 50

A Ltd
$000
Property, plant and equipment 1,000.00

Inventories 1,300.00

Bills and debtors 4,400.00

Cash at bank 2,000.00

Current liabilities (1,000.00)

FV of nest assests 7,700.00

FV of consideration 5,000.00

Negative goodwill 2,700.00

Example 8 Slides 53
On 1.7.X1, H purchased 1,500 shares from S's existing shareholders at $3/shares by cash

Total no. of shares issued by S was 2,000

H will pay additional $900 to existing shareholders of S in 20X4 if S can sustain existing profitabilit
for 2 years from 1.7.X1. It is likely S could achieve this

FV of NCI on 1.7.X1 was $1,700

BV$
Property, plant and equipment 3,000.00
Development cost -
Investment properties 1,200.00
Inventory 1,500.00
Accounts receivable 1,400.00
Cash 300.00
Total assets 7,400.00
Total recognized liabilities 2,500.00
Contingent liabilities recognized -
Total liabilities 2,500.00
 Net assets 4,900.00
Share capital 2,000.00
Retained profit 2,900.00
4,900.00
 Require
A Ltd B Ltd A. accounting treatment of negative goodwill in A and B fro
$000 $000 It seems not logical that A will sale the buiness in which the
1,000.00 5,000.00
B. After the ressassement, "Bills and debtors" in A should b
1,300.00 3,700.00 Provide the journal to recognize negative goodwill.

2,100.00 2,600.00 The negative goodwill reduced to $400

Dr. Business purcahse - A Ltd
2,000.00 1,200.00 Cr. Gain from bargain purchase

(1,000.00) (3,000.00) Dr. Business purcahse - B Ltd

Cr. Gain from bargain purchase
5,400.00 9,500.00

5,000.00 8,500.00 C. If recoverable amount of business significantly increase

next year, what could H Ltd do?
400.00 1,000.00
NOTHING to do

ders at $3/shares by cash Require

A. Compute percentage of shareholding

Shareholding percentage =
if S can sustain existing profitability .

B. Compute the consideration transferred

Consideration transferred =
FV$ FV Adj$
2,800.00 (200.00) C. Goodwill and analyze the goodwill for H and NCI respec
1,000.00 1,000.00
2,600.00 1,400.00 Goodwill = Consideration transferred + NCI - 100% of FV n
600.00 (900.00) 5,400 + 1,700 - 5,600 =
1,300.00 (100.00)
300.00 - Goodwill for H = 5400 - 5600*75%
8,600.00 1,200.00 = 1200
2,500.00 -
500.00 500.00 Goodwill for NCI =1,700 - 5,600*25%
3,000.00 500.00 = 300
5,600.00 700.00
ive goodwill in A and B from H's point of view
ale the buiness in which the monetary assets $5,400, which is less than sales price $5,000 from H.

and debtors" in A should be $2,100.

negative goodwill.

400.00
ain from bargain purchase 400.00

1,000.00
ain from bargain purchase 1,000.00

ness significantly increase

1500 / 2000 75%

1500*3 +900 5400

dwill for H and NCI respectively

erred + NCI - 100% of FV net asset

1500

0 - 5600*75%

0 - 5,600*25%
 Example 1 Wholly owned subsidiary

H Ltd acquired 100% of the equity shares of S Ltd on 31.12.x1

Statements of financial position as at 31.12.X1 of H Ltd and S Ltd wer

H Ltd ($) S Ltd ($)

Investment in S Ltd 350.00
Non-current assets 500.00 200.00
Net current assets 250.00 120.00
1,100.00 320.00

Financed by:
Ordinary shares @$1 400.00 100.00
Retained profit 700.00 220.00
1,100.00 320.00

STEP 3 Consolidation Worksheet

H Ltd ($) S Ltd ($)

asset Dr. = increase Investment in S Ltd 350.00
asset Cr. = decrease Non-current assets 500.00 200.00
Goodwill
Net current assets 250.00 120.00
1,100.00 320.00

Equity Dr. = decrease Financed by:

Ordinary shares @$1 400.00 100.00
Retained profit 700.00 220.00
1,100.00 320.00

STEP 4 Statement of Consol

H Ltd and its subsidiaries

Consolidated statement of financial position as at 31.12.X1
Asset $
Non-current assets
Goodwill on consolidation 30.00
Other non-cureent assets 700.00

Net current assests 370.00

 Total net assets 1,100.00
Equity
Equity attributed to owners of the parent
Ordinary shares 400.00
Retained profit 700.00
1,100.00

Example 3 Pre-acquistion
- H Ltd acquired 100% of the equity shares of S Ltd on 31.12.X1 when

Statements of financial position as at 31.12.X4 of two companies are

H Ltd ($) S Ltd ($)

Investment in S Ltd 350.00
Non-current assets 500.00 200.00
Net current assets 250.00 120.00
1,100.00 320.00

Financed by:
Ordinary shares @$1 400.00 100.00
Retained profit 700.00 220.00
1,100.00 320.00

(Ignore the goodwill for NCI)

Prepare the consolidated statement of financial position of H Ltd
and its subsidiaries as at 31.12.X1

STEP 3 Statement
H Ltd and its subsidiaries
Consolidated Statement of financial position as at 31.12.X1
$
Assets
Non-current assets
Goodwill on consolidation 70.00
Other non-current assets 700.00
Net current assets 370.00
Total assets 1,140.00
Equity
Equity attributed to owners of the parent
Ordinary Shares 400.00
Retained Profit 740.00
 Total Equity 1,140.00

Example 4 Partly owned and pre

- H Ltd acquired 80% of the equity shares of S Ltd on 31.12.X1 when

Statements of financial position as at 31.12.X4 of two companies are

H Ltd ($) S Ltd ($)

Investment in S Ltd 200.00
Non-current assets 500.00 180.00
Net current assets 100.00 110.00
800.00 290.00

Financed by:
Ordinary shares @$1 400.00 100.00
Retained profit 400.00 190.00
800.00 290.00

(Ignore the goodwill for NCI)

Prepare the consolidated statement of financial position of H Ltd
and its subsidiaries as at 31.12.X1

STEP 3 Consolidation Worksheet

H Ltd ($) S Ltd ($)

Investment in S Ltd 200.00
Non-current assets 500.00 180.00
Goodwill - -
Net current assets 100.00 110.00
800.00 290.00
Equity
Ordinary Shares 400.00 100.00
Retained Profit 400.00 190.00
NCI - -
800.00 290.00

STEP 4 H Ltd and its subsidiaries

Consolidated Statement of financial position as at 31.12.X1
$
Assets
Non-current assets
Goodwill on consolidation 8.00
Other non-current assets 680.00
Net current assets 210.00
Total assets 898.00
Equity
Equity attributed to owners of the parent
Ordinary Shares 400.00
Retained Profit 440.00
Non-controlling interest 58.00
Total Equity 898.00
on 31.12.x1
H Ltd and S Ltd were was follows.

STEP 1
Compute the goodwill
Goodwill = Cost + NCI - FV of Net asset
350 + 0 -320 = 30

STEP 2
Journal Entries
Dr. Ordinary Share 100
Dr. Retained Profit 220
Dr. Goodwill 30
Cr. Invesment is S Ltd 350

Dr. Cr. Consol

350.00 - internal transactions
700.00 so Consol = $0
30.00 30.00
370.00
1,100.00

100.00 400.00
220.00 700.00
1,100.00

as at 31.12.X1
d on 31.12.X1 when S Ltd had retained profit amounting to $180.

wo companies are as follows:

STEP 1 Compute the goodwill

Goodwill = difference of Ordinary Shares and Retained Profits

Dr. Ordinary Shares 100

Dr. Retained Profit 180
Dr. Goodwill (difference) 70.00
Cr. Investment in S Ltd

STEP 2 Worksheet
H Ltd S Ltd
Investment in S Ltd 350.00
Non-current assets 500.00 200.00
sition of H Ltd Goodwill
Net current assets 250.00 120.00
1,100.00 320.00

Oridnary Shares 400.00 100.00

as at 31.12.X1 Retained Profit 700.00 220.00
1,100.00 320.00
on 31.12.X1 when S Ltd had retained profit amounting to $140.

wo companies are as follows:

STEP 1 Journal

Dr. Ordinary Shares 100 * 80% 80

Dr. Retained Profit 140 * 80% 112
Dr. Goodwill (difference) 8
Cr. Investment in S Ltd

Dr. Ordinary Shares 100 * 20% 20

Dr. Retained Profit 140 * 20% 28

Cr. Non-controlling Interest

sition of H Ltd Dr. Retained Profit (190-140)*20% 10

Cr. Non-controlling interest

Dr. Cr. Cosol

200.00 -
680.00
8.00 8.00
210.00
898.00

80,20 400.00
112, 28, 10 440.00
48,10 58.00
898.00

as at 31.12.X1
Example 2 Partly owned subsidiary
Ignore the goodwill for NCI = we use NCI net-asset optio
H Ltd acquired 80% of the equity shares of S Ltd on 31.12.x1
Statements of financial position as at 31.12.X1 of H Ltd and S Ltd were was follo

H Ltd ($) S Ltd ($)

Investment in S Ltd 250.00
Non-current assets 400.00 230.00
Net current assets 200.00 70.00
850.00 300.00

Financed by:
Ordinary shares @$1 500.00 100.00
Retained profit 350.00 200.00
850.00 300.00

STEP 3 Consolidation Worksheet

H Ltd ($) S Ltd ($)

Investment in S Ltd 250.00
Non-current assets 400.00 230.00
Goodwill - -
Net current assets 200.00 70.00
850.00 300.00
Equity
Ordinary Shares 500.00 100.00
Retained Profit 350.00 200.00
NCI - -
850.00 300.00

STEP 4 Statement of Consol

H Ltd and its subsidiaries
Consolidated statement of financial position as at 31.12.X1
Asset $
Non-current assets
Goodwill on consolidation 630.00
Other non-cureent assets 10.00
 Net current assests 270.00
910.00
Equity
Equity attributed to owners of the parent
Ordinary shares 500.00
Retained profit 350.00
850.00
Non-controlling interest 60.00
910.00

ined Profits

350.00

Dr. Cr. Consol

350.00 -
700.00
70.00 70.00
370.00
1,140.00

100.00 400.00
180.00 740.00
1,140.00
200

48

10
 se NCI net-asset option

nd S Ltd were was follows.

STEP 1
Compute Goodwill
Goowill = Cost + NCI - FV net asset
250+300*20%-300 = 10.00

STEP 2
Journal
Dr. Ordinary 100*80% 80.00
Dr. Retained 200*80% 160.00
Dr. Goodwill 10.00
Cr. Investment in S Ltd 250.00

Dr. Ordinary 100*20% 20.00

Dr. Retained 200*20% 40.00
Cr. NCI 60.00

Dr. Cr. Cosol

250.00 -
630.00
10.00 10.00
270.00
910.00

80 , 20 500.00
160, 40 350.00
60 60.00
910.00

at 31.12.X1
Set A
3.10 Statement of financial position as at 31.12.X1 of H Ltd and S Ltd were as follow
H Ltd S Ltd
$ $
Investment in shares of S Ltd 280.00
Non-current assets 300.00 200.00
Net current assets 100.00 50.00
680.00 250.00

Financed by:
Ordinary Shares 200.00 100.00
Retained Profit 480.00 150.00
680.00 250.00

H Ltd acquired 100% of ordinary shares of S Ltd on 31.12.X1

Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X1

3.20 Statement of financial position as at 31.12.X1 of H Ltd and S Ltd were as follow
H Ltd S Ltd
$ $
Investment in shares of S Ltd 190.00
Non-current assets 310.00 200.00
Net current assets 200.00 100.00
700.00 300.00

Financed by:
Ordinary Shares 100.00 150.00
Retained Profit 600.00 150.00
700.00 300.00

H Ltd acquired 60% of ordinary shares of S Ltd on 31.12.X1

Ignore the goodwill for non-controlling interests
Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X1
 3.30 On 30.06.X9, H Ltd acquired 70% of the equity interests of S Ltd.
At acquisition date, the statement of financial position of H Ltd and S Ltd were

H Ltd S Ltd
$ $
Propperty, Plant and equipment, net 38,500.00 6,800.00
Investment in S Ltd 11,500.00
Inventory 8,500.00 1,850.00
Accounts receivable, net 12,200.00 3,600.00
Cash 1,000.00 800.00
Total assets 71,700.00 13,050.00

Provision 500.00 200.00

Accounts and other payables 6,000.00 1,500.00
Total liabilities 6,500.00 1,700.00
Net assets 65,200.00 11,350.00

Share capital 20,000.00 5,000.00

Retained earnings 45,200.00 6,350.00
Equity 65,200.00 11,350.00

Assuming carrying amount of identifiable net assets of S Ltd was close to fair value on the
date of acquistion. The fair value of 30% equity interest of S Ltd held by NCI was $4,700
Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X9
 3.70 Statement of financial position as at 31.12.X5 of H Ltd and S Ltd were as follow
H Ltd S Ltd
$ $
Investment in shares of S Ltd 280.00
Non-current assets 400.00 300.00
Net current assets 200.00 50.00
880.00 350.00

Financed by:
Ordinary Shares 200.00 100.00
Retained Profit 680.00 250.00
880.00 350.00

H Ltd acquired 100% of ordinary shares of S Ltd on 31.12.X1

when the retained profit os S ltd amounted to $150.
There was no change in share capital since 20X0.
There was no impairment of the goowill since it acquisition.
Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X5
S Ltd were as follow: STEP 1 Goodwill

Dr. Ordinary Shares 100.00

Dr. Retained Profit 150.00
Dr. Goodwill 30.00
Cr. Investment in S Ltd 280.00

STEP 2 Consolidation Worksheet

H Ltd S Ltd
Investment in S Ltd 280.00
Non-current assets 300.00 200.00
Goodwill
Net current assets 100.00 50.00
680.00 250.00

Oridnary Shares 200.00 100.00

Retained Profit 480.00 150.00
680.00 250.00

S Ltd were as follow: STEP 1 Goodwill

Dr. Ordinary Shares 150*60% 90.00

Dr. Retained Profit 150*60% 90.00
Dr. Goodwill 10.00
Cr. Investment in S Ltd

Dr. Ordinary Shares 150*40% 60.00

Dr. Retained Profit 150*40% 60.00
Cr. NCI

STEP 2 Consolidation Worksheet

H Ltd S Ltd
Investment in S Ltd 190.00
Non-current assets 310.00 200.00
Goodwill
Net current assets 200.00 100.00
700.00 300.00
 Oridnary Shares 100.00 150.00
Retained Profit 600.00 150.00
NCI
700.00 300.00

STEP 1 Journal
Ltd and S Ltd were as follow: Dr. Ordinary Shares 5000*70% 3,500.00
Dr. Retained Profits 6350*70% 4,445.00
Dr. Goodwill 3,555.00
Cr. Investments in S Ltd

Dr. Ordinary Shares 5000*30% 1,500.00

Dr. Retained Profits 6350*30% 1,905.00
Dr. Goodwill 1,295.00
Cr. NCI

Total Goodwill = 11,500 + 4,700 - 11,350= 4,850.00

H Ltd
$
Propperty, Plant and equipment, net 38,500.00
Goodwill
Investment in S Ltd 11,500.00
Inventory 8,500.00
Accounts receivable, net 12,200.00
fair value on the Cash 1,000.00
NCI was $4,700 Total assets 71,700.00

Provision 500.00
Accounts and other payables 6,000.00
Total liabilities 6,500.00
Net assets 65,200.00

Share capital 20,000.00

Retained earnings 45,200.00
NCI
Equity 65,200.00
S Ltd were as follow: STEP 1 Pre

Dr. Ordinary Shares 100.00

Dr. Retained Profit 150.00
Dr. Goodwill 30.00
Cr. Investment in S Ltd 280.00

STEP 2 Consolidation Worksheet

H Ltd S Ltd
Investment in S Ltd 280.00
Non-current assets 400.00 300.00
Goodwill
Net current assets 200.00 50.00
880.00 350.00

Oridnary Shares 200.00 100.00

Retained Profit 680.00 250.00
880.00 350.00
Dr. Cr. Consol
280.00 -
500.00
30.00 30.00
150.00
680.00

100.00 200.00
150.00 480.00
680.00

190.00

120.00

Dr. Cr. Consol

190.00 -
510.00
10.00 10.00
300.00
820.00
 150.00 100.00
150.00 600.00
120.00 120.00
310.00 310.00 820.00

11,500.00

4,700.00

S Ltd Dr. Cr. Consol

$
6,800.00 45,300.00
4,850.00 4,850.00
11,500.00 -
1,850.00 10,350.00
3,600.00 15,800.00
800.00 1,800.00
13,050.00 78,100.00

200.00 700.00
1,500.00 7,500.00
1,700.00 8,200.00
11,350.00 69,900.00
-
5,000.00 5,000.00 20,000.00
6,350.00 6,350.00 45,200.00
4,700.00 4,700.00
11,350.00 16,200.00 16,200.00 69,900.00
Dr. Cr. Consol
280.00 -
700.00
30.00 30.00
250.00
980.00

100.00 200.00
150.00 780.00
280.00 280.00 980.00
We need to adjust some cash in transits or goods in transit betweeen Parent Co. an
Dr. Goods / Cash in transits
Cr. Current account with S
Example 1 Intragraoup Balance

H Ltd acquired 80% of the equity shares of S Ltd on 31.12.X1 when S Ltd had retained profit a
S Ltd sent a cheque amounting to $80 to H Ltd on 30.12.X7 but H Ltd received the cheque on

Statement of Financial position as at 31.12.X7 of two companies were as follow:

H Ltd S Ltd
$ $
Investment in shares of S Ltd 400.00
Non-current assets 600.00 420.00
Current account with S Ltd 200.00
Net current assets 300.00 100.00
1,500.00 520.00

Financed by:
Ordinary Shares 1,000.00 100.00
Retained Profit 500.00 300.00
Current account with H Ltd 120.00
1,500.00 520.00

Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X7
(Assuming value of goodwill is unchanged and ignoring the goodwill for non-controlling intere

Example 2 Inventory S purchase H

H Ltd acquired 75% of the equity shares of S Ltd on 31.12.X1 when S Ltd had retained profit a
S Ltd sent inventory included $60 of goods purchased from H Ltd, which were invoiced by H L

Statement of Financial position as at 31.12.X6 of two companies were as follow:

H Ltd S Ltd
$ $
Investment in shares of S Ltd 180.00
Non-current assets 600.00 250.00
Loan to S Ltd 150.00
Net current assets 200.00 200.00
1,130.00 450.00

Financed by:
Ordinary Shares 600.00 100.00
Retained Profit 530.00 200.00
Loan from H Ltd 150.00
1,130.00 450.00

Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X6
(Assuming value of goodwill is unchanged and ignoring the goodwill for non-controlling intere

Example 3 Inventory POST H purchase S

H Ltd acquired 75% of the equity shares of S Ltd on 31.12.X1 when S Ltd had retained profit a
H Ltd inventory included $60 of goods purchased from S Ltd were invoiced by S Ltd at a mark

Statement of Financial position as at 31.12.X6 of two companies were as follow:

 H Ltd S Ltd
$ $
Investment in shares of S Ltd 180.00
Non-current assets 600.00 250.00
Loan to S Ltd 150.00
Net current assets 200.00 200.00
1,130.00 450.00

Financed by:
Ordinary Shares 600.00 100.00
Retained Profit 530.00 200.00
Loan from H Ltd 150.00
1,130.00 450.00

Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X6
(Assuming value of goodwill is unchanged and ignoring the goodwill for non-controlling intere

Example 4 DEPRECIATION
H Ltd acquired 80% of issued shares of S Ltd since 20X1
On 1.1.X6, S ltd sold machinery, which it had manufactured at a cost $30,000 to H Ltd for $40
H Ltd depreciated plant and machinery at the rate of 10% per annum, on a straight-line basis

H Ltd S Ltd
Dr. Machineary 40,000.00 Dr. Cash
Cr. Cash 40,000.00 Cr. Sales

Dr. Depreciation expense 4,000.00 Dr. COGS

Cr. Accumulated depreciation 4,000.00 Cr. Inventory

ANSWER
Gross provision of unrealized profit 10,000.00 BUT THIS DID NOT CONTA
Less: Excess provision for depreciation (1,000.00) 10,000*10%
Net provision for unrealized profit 9,000.00

Consolidation:
Dr. Retained Profit 9000*80% 7200
Dr. NCI 9000*20% 1800
Cr. Machinery (net) 9000
1.) Dividend paid 在 收購前 =>減少investment cost (pre)
H Ltd
Dr. Cash
Cr. Investment cost in S Ltd

2.)Dividend paid 在 收購後 =>增加投資收入 (post)

H ltd
Dr. Cash
Cr. Retained Profit

Journal
Dr. Retained Profit 500*80% 400
Cr. Investment in S 400

Dr. Cash in transit 400

Cr. Loan to S ltd 400

Dr. Ordinary Shares 2000*80% 1600

Dr. Retained profit (600-500)*80 80
Dr. Goodwill 20
Cr. Investments in S 1700

Dr. Ordinary Shares 2000*20% 400

Dr. Retained profit 100*20% 20
Cr. NCI 420

Dr. Retained Profit (1300-100)*2 240

Cr. NCI 240

Dr. Loan from H Ltd 900

Cr. Loan to S Ltd 900

Dr. Retained Profit 60*80% 48

Dr. NCI 60*20% 12
Cr. Current net-asset (inve300*20% 60

Example 6
H 80%, RP $300 X6 Dr. Cash in transits

$20 sent by H to S
Dr. Non-current assets
Non-current assets is more than $100 than Book Value
with five-years
Dr. Ordinary Shares
X7 Dr. Retained Profits
Dr. Revaluation reserves
Dr. Goodwill

Dr. Retained Profit

Dr. Current account with H

Consolidation Worksheet

Investment in S Ltd
Non-current assets
Goodwill
Current account with S
Net current assets

Equity
Ordinary Shares
Retained Profit
NCI
Loan from H Ltd

Example 7
H Ltd acquired S ltd in two successive purchases as follows:

Date Cost FV of S % of shares Cum%

1.1.X9 1500 15000 10 10
31.12.X9 12000 20000 60 70
weeen Parent Co. and Child Co.

Journal Entries
Dr. Cash in Transits
d had retained profit amounting to $200. Cr. Current account with S Ltd
ceived the cheque on 2.1.X8
Dr. Ordinary Shares 100*80%
Dr. Retained Profits 200*80%
Dr. Goodwill
Cr. Investment in shares of S Ltd

Dr. Ordinary Shares 100*20%

Dr. Retained Profits 200*20%
Cr. NCI

Dr. Retained Profits (300-200)*20

Cr. NCI

Dr. Current account with H Ltd

Cr. Current account with S Ltd

Consolidation Worksheet

H Ltd ($)
Investment in S Ltd 400.00
Non-current assets 600.00
non-controlling interests.) Goodwill -
Current account with S Ltd 200.00
Net current assets 300.00
1,500.00
Equity
Ordinary Shares 1,000.00
Retained Profit 500.00
NCI -
Current account with H Ltd
1,500.00

Journal Entries
 Dr. Retained profit
d had retained profit amounting to $120. Cr. Net current assets (inventory)
were invoiced by H Ltd at a mark-up 25% on cost.
Dr. Ordinary Shares 100*75%
Dr. Retained Profits 120*75%
Dr. Goodwill
Cr. Investment in shares of S Ltd

Dr. Ordinary Shares 100*25%

Dr. Retained Profits 120*25%
Cr. NCI

Dr. Retained Profits (200-120)*2

Cr. NCI

Dr. Loan from H Ltd

Cr. Loan to S Ltd

Consolidation Worksheet

H Ltd ($)
Investment in S Ltd 180.00
Non-current assets 600.00
non-controlling interests.) Goodwill -
Loan to S Ltd 150.00
Net current assets 200.00
1,130.00
Equity
Ordinary Shares 600.00
Retained Profit 530.00
NCI -
Loan from H Ltd
1,130.00

d had retained profit amounting to $120.

ed by S Ltd at a mark-up 25% on cost.

Journal Entries
200-120 = 80
 Dr. Retained Profit 80*25% 20
Cr. NCI 20

Dr. Retained Profit 12*75% 9

Dr. NCI 12*25% 3
Cr. Inventory 60*20% 12

NET EFFECT
Dr. Retained Profit 29
Cr. NCI 17
Cr. Inventory 12

non-controlling interests.)

0,000 to H Ltd for $40,000

n a straight-line basis assuming no residual value.
因為沒external party
所以 H and S 的是 unrealized profit
40,000.00 S sold and profit 10,000
40,000.00

30,000.00
nventory 30,000.00

THIS DID NOT CONTAIN DEP

 Example 5 Dividend paid out of pre H 80%, 1.1.X7 Retained pro
The statents of financial position of H Ltd and S Ltd at 31.12.X7
S paid dividend to $500, H
H Ltd S Ltd received from S ltd as inve
$ $
Investment in shares of S Ltd 2,100.00 H inventory included $300
Non-current assets 9,000.00 2,800.00 by S Ltd at a mark-up 25%
Loan to S Ltd 1,300.00
Net current assets 3,000.00 1,800.00 At the year end, Cash in tra
15,400.00 4,600.00

Financed by:
Ordinary Shares 10,000.00 2,000.00
Retained Profit 4,200.00 1,300.00
Other Liabilities 1,200.00 400.00
Loan from H Ltd 900.00
15,400.00 4,600.00

Consolidation Worksheet

H Ltd ($) S Ltd ($) Dr. Cr.

Investment in S Ltd 2,100.00 2,100.00
Non-current assets 9,000.00 2,800.00
Goodwill - 20.00
Loan to S Ltd 1,300.00 1,300.00
Net current assets 3,000.00 1,800.00 400.00 60.00
15,400.00 4,600.00
Equity
Ordinary Shares 10,000.00 2,000.00 2,000.00
Retained Profit 4,200.00 1,300.00 788.00
Other Liabilities 1,200.00 400.00
NCI - 648
Loan from H Ltd 900.00 900.00
15,400.00 4,600.00

Cash in transits 20
Cr. Current account with S ltd 20

Non-current assets 100

Cr. Revaluation Reserves 100
Ordinary Shares 1000*80% 800 Dr. Ordinary Shares
Retained Profits 300*80% 240 Dr. Retained Profits
Revaluation reserves 100*80% 80 Dr. Revaluation Resevers
180
Cr. Investment in S ltd 1300

Retained Profit 100*20% 20 Dr. Retained Profit

Cr. NCI 20 Dr. NCI

Current account with H ltd 80

Cr. Current account with S ltd 80

orksheet

H Ltd ($) S Ltd ($) Dr. Cr. Cosol

1,300.00 1,300.00 -
2,200.00 900.00 100.00 3,200.00
- 180.00 180.00
100.00 100.00 -
100.00 580.00 20.00 40.00 660.00
3,700.00 1,480.00 4,040.00

3,000.00 1,000.00 1,000.00 3,000.00

700.00 400.00 352.00 748.00
- 292 292.00
80.00 80.00 -
3,700.00 1,480.00 4,040.00
 80
nt with S Ltd 80

80
160
160
shares of S Ltd 400

20
40
60

20
20

120
nt with S Ltd 120

S Ltd ($) Dr. Cr. Cosol

400.00 -
420.00 1,020.00
- 160.00 160.00
200.00 -
100.00 80.00 480.00
520.00 1,660.00

100.00 100.00 1,000.00

300.00 220.00 580.00
80 80.00
120.00 120.00 -
520.00 1,660.00
 12
sets (inventory) 12

75 Dr. Cash 60
90 Cr. Sales
15 Dr. Cost of goods sold 12
shares of S Ltd 180 Cr. Inventory

25
30 Dr. Inventory 60
55 Cr. Loan from H Ltd

20
20

150
150

S Ltd ($) Dr. Cr. Cosol

180.00 -
250.00 850.00
- 15.00 15.00
150.00 -
200.00 12.00 388.00
450.00 1,253.00

100.00 100.00 600.00

200.00 152.00 578.00
75 75.00
150.00 150.00 -
450.00 1,253.00
 %, 1.1.X7 Retained profit was $600

id dividend to $500, H ltd has taken credit for the dividend

ived from S ltd as investmen income

ventory included $300 of goods purchase form S ltd wich were invoiced
Ltd at a mark-up 25% on cost. => 20%

he year end, Cash in transit from S ltd to H Ltd amounting to $400

Cosol
-
11,800.00
20.00
-
5,140.00
16,960.00

10,000.00
4,712.00
1,600.00
648.00
-
16,960.00
Ordinary Shares 1000*20% 200
Retained Profits 300*20% 60
Revaluation Resevers 100*20% 20
Cr. NCI 280

Retained Profit (100/5*2*80% 32

(100/5*2*20% 8
Cr. current asset 40
60

12

60

60
0

60
Example 2 Inventory

H Ltd acquired 75% of the equity shares of S Ltd on 31.12.X1 when S Ltd had retained profit a
S Ltd sent inventory included $60 of goods purchased from H Ltd, which were invoiced by H L

Statement of Financial position as at 31.12.X6 of two companies were as follow:

H Ltd S Ltd
$ $
Investment in shares of S Ltd 180.00
Non-current assets 600.00 250.00
Loan to S Ltd 150.00
Net current assets 200.00 200.00
1,130.00 450.00

Financed by:
Ordinary Shares 600.00 100.00
Retained Profit 530.00 200.00
Loan from H Ltd 150.00
1,130.00 450.00

Required
Prepare the consolidation worksheet with journal entries for H Ltd
and its subsidiary, S Ltd as at 31.12.X6
(Assuming value of goodwill is unchanged and ignoring the goodwill for non-controlling intere
 Journal
Dr.

td had retained profit amounting to $120.

h were invoiced by H Ltd at a mark-up 25% on cost.

as follow:
r non-controlling interests.)