Consolidated Financial Statements

Alpha Co owns 40% of the voting shares of Beta Co. Alpha Co also has the contractual right to appoint 4 of the 5 directors on Beta Co's board. How should Alpha Co account for its investment in Beta Co in its consolidated financial statements?

During the year, Parent Co sold goods to Sub Co for $120,000. Parent Co applies a mark-up of 20% on cost. At the year-end, one-quarter of these goods remained in Sub Co's inventory. What is the provision for unrealized profit (PUP) that must be eliminated in the consolidated financial statements?

In a consolidated statement of financial position, how are intra-group receivable and payable balances treated?

SECTION A Parent Co sells goods to its 75% owned subsidiary, Sub Co, at a markup of 25% on cost. During the year, Parent Co sold goods worth $500,000 to Sub Co. At the year-end, Sub Co still held 40% of these goods in its inventory. What is the provision for unrealized profit (PUP) that must be eliminated in the consolidated financial statements?

SECTION C Nexus Holdings Co acquired 80% of the equity share capital of CyberDyne Co on 1 January 20X6. The consideration consisted of cash of $5,000,000 and the issue of 1 million shares in Nexus Holdings. The market value of Nexus shares on 1 January 20X6 was $3.50 per share. At the date of acquisition, the retained earnings of CyberDyne were $2,500,000 and its share capital was $1,000,000. The fair value of CyberDyne's identifiable net assets was equal to their carrying amounts, with the exception of a specialized patent which had a fair value $600,000 in excess of its carrying amount. The patent had a remaining useful life of 5 years at the acquisition date. Nexus Holdings measures Non-Controlling Interest (NCI) at fair value. The fair value of the 20% NCI at 1 January 20X6 was $1,800,000. During the year ended 31 December 20X6, CyberDyne sold goods to Nexus Holdings for $800,000 at a margin of 20%. Half of these goods remained in Nexus Holdings' inventory at the year-end. Goodwill was tested for impairment at 31 December 20X6 and was found to be impaired by 10%. Draft the calculation for the following items as they would appear in the Consolidated Statement of Financial Position of Nexus Group as at 31 December 20X6: 1. Goodwill 2. Provision for Unrealized Profit (PUP) 3. The fair value adjustment and its subsequent amortization Show all workings clearly.