Illustration of consolidated balance sheet, Financial Accounting

Illustration of consolidated balance sheet

H Ltd owned S Ltd since the date of incorporation of S Ltd. The balance sheets of the two  companies
as at 31 December 20X2 is as follows.

 

 

H Ltd

S Ltd

Non Current assets

£

£

£

£

Tangible - PPE

 

         35,000.00

 

            45,000.00

Investment in S Ltd

 

         45,000.00

 

 

 

 

 

         80,000.00

 

            45,000.00

Current assets

 

 

 

 

Inventory

 

          16,000.00

 

      12,000.00

 

Accounts receivables

           8,000.00

 

       9,000.00

 

Cash at bank

 

            1,000.00

         25,000.00

                  -  

            21,000.00

TOTAL ASSETS

 

        105,000.00

 

            66,000.00

 

 

 

 

 

 

Share Capital

 

         70,000.00

 

            40,000.00

Retained profits

 

          11,000.00

 

            19,000.00

 

 

 

          81,000.00

 

            59,000.00

 

 

 

 

 

 

 

 

Non Current Liabilities

 

 

 

 

10% Loan Stock

 

          10,000.00

 

                        -  

 

 

 

 

 

 

Current Liabilities

 

 

 

 

Bank Overdraft

                      -  

 

       3,000.00

 

Accounts Payable

          14,000.00

          14,000.00

       4,000.00

              7,000.00

 

 

 

        105,000.00

 

            66,000.00

 

 

 

 

 

 

Required;

 

 

 

 

 

Prepare the consolidated balance sheet of H Ltd and S Ltd as at 31 December 20X2

 

Solution

 

Consolidate Balance Sheet of H and S Ltd.. As at 31 December 20x2

NON-CURRENT ASSETS

£

£

Property, plant and equipment (35+45)

 

80,000

Goodwill

 

  5,000

 

 

85,000

CURRENT ASSETS

 

 

Inventory (16+12)

28,000

 

Accounts receivable(8+9)

17,000

 

Cash at bank

  1,000

  46,000

TOTAL ASSETS

 

131,000

Ordinary share capital

 

70,000

Retained profits

 

30,000

 

 

100,000

NON-CURRENT LIABILITIES

 

 

10% Loan stock

 

10,000

CURRENT LIABILITIES

 

 

Bank overdraft

3,000

 

Accounts payables

18,000

  21,000

TOTAL EQUITY AND LIABILITIES

 

131,000

 

 

WORKINGS

 

NOTE:

 

H owns S Ltd. since date of incorporation thus:

 

It owns 100% of S Ltd.. (No minority interest)

There are no pre-acquisition profits (all the profits of share capital are distributable)

 

Cost of control

 

£

 

£

Investment in S

45,000

OSC (40,000 x 100%)

40,000

 

_____

Goodwill (balance figure)

  5,000

 

45,000

 

45,000

 

 

Group retained profits

 

£

 

£

Balance c/d

30,000

H Ltd..

11,000

 

_____

S Ltd..

19,000

 

30,000

 

30,000

Posted Date: 12/12/2012 2:42:18 AM | Location : United States







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