illustration of consolidated balance sheeth ltd

Question

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