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Chapter 18

Example 18.1

Basil is an entity whose functional and presentational currency is the dollar ($).
On 1 January 20X7, Basil acquired 80% of the share capital of Manuel, an
entity whose functional currency is the euro (€). Manuel’s reserves at this date
were €3,200. Basil paid €16,800 for the investment in Manuel.

Statements of financial position at 31 December 20X8

Basil Manuel
$ €
Non-current assets 48,000 20,000
Investment in Manuel 3,360
Current assets 28,640 12,000
–––––– ––––––
80,000 32,000
–––––– ––––––
Equity
Share capital 40,000 12,000
Reserves 16,000 11,200
–––––– ––––––
56,000 23,200
–––––– ––––––
Current liabilities 24,000 8,800
–––––– ––––––
80,000 32,000
–––––– ––––––
Exchanges rates have been as follows:

€: $1
1 January 20X7 5
31 December 20X7 3
31 December 20X8 2
Average for the year ended 31 December 20X8 2.5
It is Basil’s policy to measure NCI at fair value at the date of acquisition and the
fair value of the non-controlling interest in Manuel was deemed to be €3,600 at
this date. Goodwill had been reviewed for impairment as at 31 December 20X7
but none had arisen. At 31 December 20X8, it was determined that goodwill
should be impaired by €800.

Required:

Prepare the consolidated statement of financial position of the Basil
group as at 31 December 20X8.

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