1Prepare the consolidated statement of financial position of Austin Ltd as at 31

Question

1Prepare the consolidated statement of financial position of Austin Ltd as at 31 December 20X7.

The statement of financial position of two companies at 31 December 20X7 are as follows: Austin LtdReed Ltd E '000) £('000) Non-current assets PPE Investments: Shares in Reed Ltd 80 Current assets Total assets 92 58 150 13 21 Equity Called up share capital Retained earnings Total equity Liabilities Total equity and liabilities 100 30 130 20 150 15 21 Points to note: 2. Austin Ltd controls the assets and liabilities of Reed Ltd. The B/S 3.Austin Ltd's investment is cancelled against the net assets (ie. 4.The remaining net assets are owned by the non-controlling 5.All of Reed Ltd's retained earnings are pre-acquisition. Austin Ltd acquired 80% of Reed Ltd on 31 December 20X7. reflects this assets less liabilities) of Reed Ltd at acquisition. interest.

Explanation / Answer

Share of Austin in Net assets of Reed $ in 000 80% holding of share capital of REED(10*80%) 8 Pre acquisition Retained earnings Share (5*80%) 4 Total share 12 Less: Cost of Investment 12 GOODWILL/CAPPITAL RESERVE NIL Minority Interest 20% share in Share capitalof REED (10*20%) 2 Share in Pre acquisition Retained earning (5*20%) 1 Total Minority Interest 3 Consolidated Financial Statement Non Current Assets: PPE (80+8) 88 Current Assets: (58+13) 71 Total Assets 159 Equity Called up capital 100 Retained earnings 30 Total Equity 130 Liabilities (20+6) 26 Minority Interest 3 Total Liabilities 159

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