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Chapter 14

Example 14.4

The draft statements of financial position of Stelling, Kamara and Merse at
31 December 20X4 are as follows:
Stelling Kamara Merse
$000 $000 $000
Investment in subsidiary (at cost) 210 140 –
Other assets 490 315 228
–––– –––– ––––
700 455 228
–––– –––– ––––

Share capital ($1 shares) 350 175 88
Retained earnings 175 105 52
Other liabilities 175 175 88
–––– –––– ––––
700 455 228
–––– –––– ––––

You ascertain the following:

Stelling acquired 131,250 $1 shares in Kamara on 1 January 20X4 for
$210,000 when the retained earnings of Kamara amounted to $69,000.

Kamara acquired 70,400 $1 shares in Merse on 30 June 20X4 for
$140,000 when the retained earnings of Merse amounted to $42,000; they had
been $35,000 on the date of Stelling's acquisition of Kamara.

Goodwill has suffered no impairment.

Produce the consolidated statement of financial position of the
Stelling Group at 31 December 20X4. It is group policy to value the non-
controlling interest using the proportion of net assets method.

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