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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
80,000.00
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
4,000.00
7,000.00
Required;
Prepare the consolidated balance sheet of H Ltd and S Ltd as at 31 December 20X2
Solution
NON-CURRENT ASSETS
Property, plant and equipment (35+45)
80,000
Goodwill
5,000
85,000
Inventory (16+12)
28,000
Accounts receivable(8+9)
17,000
1,000
46,000
131,000
Ordinary share capital
70,000
30,000
100,000
10% Loan stock
10,000
Bank overdraft
3,000
Accounts payables
18,000
21,000
TOTAL EQUITY AND LIABILITIES
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)
Investment in S
45,000
OSC (40,000 x 100%)
40,000
_____
Goodwill (balance figure)
Balance c/d
H Ltd..
11,000
S Ltd..
19,000
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