B407F Week 6 PPY solution

B407F Week 6 PPY solution - B407F Week 6-Consolidated...

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B407F Week 6 -Consolidated Statement of Income (II) Review Exercise (HKICPA Module A Dec 2010) Solution Consolidation elimination entries Debit (HK$000) Credit (HK$000) (1) Share Capital 16,000 Intangible assets 2,500 Retained earnings at acquisition 12,000 Goodwill 1,200 Investment in SFL 25,600 NCI (30,500 x 20%) 6,100 (W1-Elimination of investment in subsidiary) (2) Retained Earnings – Amortization 500 Accumulated amortization – intangible assets 500 (2,500/10) x 2 years = 500 (W2- amortization on revalued intangible assets) (3) Retained Earnings 400 Inventories 400 (W3–Elimination of opening inter-company sale of inventory $1,200 – $800) (4) Retained Earnings 1,780 NCI 1,780 (21,800 – 12,000 – 500 (Amortization) – 400( Opening inv)) = 8,900 x 20% (W4- retained earnings to NCI) (5) Statement of income 250 Accumulated Amortization on intangible 250 (W5-Current amortization on revalued intangible assets) (6) Sales 4,800 Cost of sales (purchases) 4,800 Cost of sales (closing inventories)(4,800-3,200) x 40% 640 Inventories (Statement of financial position) 640 Inventories (opening inventories) 400 Profit for the year (cost of sales) 400
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