Consolidated Financial Statements – Basic Group Structures

Question 1
Green Co. owns the following investments in other companies:
Equity shares Non-equity shares held
Violet Co 80% Nil
Amber Co 25% 80%
Black Co 45% 25%
Green Co also has appointed five of the seven directors of Black Co.
Which of the following investments are accounted for as subsidiaries in the consolidated accounts of Green
Co Group? Justify your answer by discussing the eligibility of each of the companies in turn.

Question 2
Bay Ltd acquired 80% of the equity shares of Hope Ltd for a consideration of Ghc500,000. The fair value of
the net assets of Hope Ltd at the date of acquisition Ghc400,000. The fair value of Non-controlling interest at
that is Ghc100,000. Calculate goodwill using:
a. Proportionate of Net Assets Method
b. Fair value or Full Method

Question 3
Red Co acquired 80% of Blue Co.’s 40,000 GHC1 ordinary share capital on 1 January 2012 for a
consideration of GHC 4 cash per share. At acquisition, net assets were valued at GHC 145,000 and the fair
value of the non-controlling interest was GHC 50,000. Calculate Goodwill using
c. Proportionate of Net Assets Method
d. Fair value or Full Method

Question 4
JayJoy acquired 160m Kobby’s 200m shares on 31 Dec, 2017 for a consideration of Ghc350m. The fair value
the net assets in Kobby at that date is Ghc300m and the value of the non-controlling interest in Kobby at the
date of acquisition is Ghc60m.
a. Proportionate of Net Assets Method
b. Fair value or Full Method

Question 5
On 1 January 2014, Plastik acquired 80% of the 9 million GHC 1 equity shares of Subtrak. The consideration
was satisfied by a share exchange of two shares in Plastik for every three acquired shares in Subtrak. At the
date of acquisition, shares in Plastik and Subtrak had a market value of GHC 3 and GHC 2.50 each
respectively. Plastik would also pay cash consideration of 27.5 pesewas on 1 January, 2015 for each
acquired share in Subtrak. Plastik has a cost of capital of 10% per annum. Retained earnings of Subtrak
amounted to GHC 4 million at the date of acquisition and GHC 14 million at reporting date. Goodwill was
impaired at 10%. Compute Goodwill at 31 December 2015 using
a. Proportionate of Net Assets Method
 b. Fair value or Full Method
c. Prepare extracts of NCI account and Group Retained Earnings at reporting date
Question 6
The statement of financial positions of two companies are as follows

Gamsey Adigba
GHC GHC
Non – current assets
Tangible 100,000 100,000
Investment in Adigba 300,000

Current assets
Inventory 40,000 200,000
Receivables 60,000 100,000
Cash at bank 200,000 200,000
700,000 600,000

Ordinary shares (GHC 1) 160,000 100,000

Retained earnings 240,000 200,000
Equity 400,000 300,000

Non-current liabilities 100,000 200,000

Current liabilities 200,000 100,000
700,000 600,000

Additional information
Gamsey has today, acquired all the shares in Adigba for GHC 300,000.

REQUIRED
Prepare the consolidated statement of financial position of Gamsey.

QUESTION 7
The statement of financial positions of two companies
Kedua Lumuni
GHCm GHCm
Investment in Lumuni 500
Assets 600 650
1,100 650

Ordinary shares (GHC1) 400 200

Retained earnings 400 300
Equity 800 500
 Liabilities 300 150
1,100 650

ADDITIONAL INFORMATION

Kedua has today acquired all the shares in Lumuni for GHC500m.

REQUIRED
Prepare the consolidated statement of financial position for Kedua.

QUESTION 8
The statement of financial positions of two companies are as follows

Cayla Nayla
GHC GHC
Non-current assets
Tangible 100,000 250,000
Investment in Nayla 400,000

Current assets 300,000 350,000

800,000 600,000

Ordinary shares (GHC1) 250,000 200,000

Retained earnings 250,000 100,000
Equity 500,000 300,000

Non-current liabilities 140,000 170,000

Current liabilities 160,000 130,000
800,000 600,000

ADDITIONAL INFORMATION
Cayla acquired 150,000 shares in Nayla on 1/1/2016 when the retained earnings of Nayla were GHC60,000
and the value of the NCI in Nayla was GHS65,000.

REQUIRED
Prepare the consolidated statement of financial position for Cayla as at 31/12/2016.