P acquired 70% of the ordinary shares of S an year ago when the retained earnings of S were
$1600. The purchase consideration was through a share exchange of 2 shares in P for every 5
shares acquired in S. The company also paid a cash of $1.4 per acquired share. At the date of
acquisition, the share price of P was $4/ share and of S was $2.5/share.
P also acquired 30% shares in A by paying a cash amount of $2.2 per acquired share. At the
date of acquisition, A had a share capital of $1000.
Summarised statements of financial position for the year to 31 March 2014
P
$
S
$
Non-current
assets
Tangibles
Investment
3000
3810
3000
-
Current assets
Inventory
Receivables
Bank
Total assets
1500
300
170
8780
300
1200
300
4800
Equity and
Liabilities
Share capital
Retained earnings
Current liability
Total E&L
3280
3500
2000
8780
1500
2600
700
4800
Adjustments:
1. At the date of acquisition, S’s Building had a market value of $700 and a book value of
$500. The building had a remaining life of 5 years.
2. P owed S an amount of $100 in respect of group trading.
3. P has a policy of valuing non-controlling interest at fair value at the date of acquisition.
For this purpose the share price of S at this date should be used.
4. By the year end, the impairment of goodwill on acquisition was found to be $50. Also,
the investment made by P in A was impaired by $20.
5. During the year P sold goods to P and made a profit of $40. All the goods were unsold
by S at the year end.
6. After acquisition, A made a profit of $500 in the post acquisition period.
Required:
Prepare consolidated SOFP for the year ended 31 March 2014.