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Consolidation Case 1 24 25

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Marcos delCuraIzquierdo
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20 views2 pages

Consolidation Case 1 24 25

Uploaded by

Marcos delCuraIzquierdo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FINANCIAL ANALYSIS

CONSOLIDATION OF FINANCIAL STATEMENTS. CASE 1

The companies A and B belong to a group of companies where A is the parent. Company A purchased
80% of the shares of B on the 1st January X2 at a price of 450.000€. At that moment, the equity of B
was 400.000 € (Capital: 300.000 €. and Retained Earnings: 100.000€)

A has also a stake of 25% in the shares of C. This stake was purchased on the 1st January X5 at a price
of 65.000€. At that time, equity in C was 150.000 € (Capital: 100.000€, Retained Earnings: 50.000€).
On the 31st December X5 the fair value of C is 290.000€

At the moment of B acquisition, the following valuation differences are found in B: one of the
properties has a fair value of 120.000€ when the cost recorded by the company is 100.000€

During the year X5 the following internal transactions have taken place between the companies:

a) "B" sold in February X5 a piece of land to A at a selling Price of 600.000€ The cost of B had been
of 500.000€. On the 31st of December X5 the land is still in the balance sheet of A. .

b) "A" sold inventories to B on the first of January X5 at a selling price of 26.000€. The cost for A had
been 22.000€. During X5 50% of the inventories were sold to third parties. At the end of X5 the
rest of the inventories remain in the warehouse of B.

c) “A” has given a loan to B dated 31st December X5 of 200.000€.

And you are asked to do the following:

1. Record the consolidation adjustments needed for the consolidation


2. Present the Consolidated Balance Sheet on 31.12.X5
3. What is the final amount for the consolidated equity of the group and what does it include?
4. What is the final amount of the consolidated total assets and what does it include?

1
FINANCIAL ANALYSIS

BALANCE SHEETS 31.12.X5


A B

Property Plant and Equipment 1.200.000 365.000


Investment in B 450.000
Investment in C 65.000
Loans to group companies 200.000
Inventories 550.000 235.000
Trade Receivables 35.000 132.000
Cash 120.000 44.000

Total Assets 2.620.000 776.000

Capital 1.000.000 300.000


Retained Earnings A 500.000
Retained Earnings B 174.000
Share Premium 300.000
Other Reserves A 105.000
Long Term Debt 450.000 75.000
Loans group companies 200.000
Short term debt 102.000 22.000
Suppliers 163.000 5.000

Total liabilities plus equity 2.620.000 776.000

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