The following statements of financial position were extracted from the books of two companies as at December 31, 2018 DrummondClarke $$Non-current assets: Property, Plant & Equipment150,00022,000Investments: Shares in Clarke54,000 204,000 Current assets428,00066,000 632,00088,000 Equity: Share capital160,0008,000Share premium40,00012,000Retained earnings80,00018,000 280,00038,000Current liabilities352,00050,000 632,00088,000 Drummond acquired all the share capital of Clarke one year ago when the retained earnings of Clarke stood at $4,000 on the day of acquisition.Goodwill is calculated using the proportion of net asset method.There has been no impairment of Goodwill since acquisition. Required:Prepare the consolidated statement of financial position of Drummond as at December 31, 2018.

fair value of assets=Net assets-Change in retained earnings =88000-50000-(18000-4000) =24000

Answered: The following statements of financial…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The following statements of financial position were extracted from the books of two companies as at December 31, 2018

	Drummond	Clarke
	$	$
Non-current assets:
Property, Plant & Equipment	150,000	22,000
Investments: Shares in Clarke	54,000
	204,000
Current assets	428,000	66,000
	632,000	88,000

Equity:
Share capital	160,000	8,000
Share premium	40,000	12,000
Retained earnings	80,000	18,000
	280,000	38,000
Current liabilities	352,000	50,000
	632,000	88,000

Drummond acquired all the share capital of Clarke one year ago when the retained earnings of Clarke stood at $4,000 on the day of acquisition.
Goodwill is calculated using the proportion of net asset method.
There has been no impairment of Goodwill since acquisition.

Required:

Prepare the consolidated statement of financial position of Drummond as at December 31, 2018.

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