Financial Accounting: Consolidated Financial Statement and Qualitative Characteristics of Financial Information

FINANCIAL ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Question 1 A................................................................................................................................4
b. Making financial information useful through required level of reliability, relevance and
comparability...............................................................................................................................6
Question 2........................................................................................................................................8
(a).................................................................................................................................................8
B.................................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Financial accounting is a practice of recording to the financial transaction of the business.
This project will emphasis over the consolidated financial statement of the company. Further the
performance of business will monitor. Professional ethics of accountant will also disclose in this
report.
MAIN BODY
Question 1 A
Particulars Amount
Non – current assets
Property plant & equipment (160000 + 50000) 210000
Goodwill 20000
230000
Current assets (30000 + 10000) 40000
TOTAL ASSETS 270000
Equity & liabilities
Ordinary shares at £ 1 each 100000
Retained profits 158000
Non – controlling interest 12000
TOTAL OF EQUITY & LIABILITIES 270000
Working notes:
1. Calculation of Net assets for the Subsidiary Co. i.e., Cee plc
Particulars At acquisition (as at At Reporting date Post - acquisition

31st December 2018) (31st December
2020)
Equity shares 20000 20000 0
Retained earnings 30000 40000 10000
Fair value of net
assets of subsidiary
50000 60000 10000
2. Calculation of Non – controlling interest on the date of acquisition
= fair value of net assets on 31st December 2018 that is, at acquisition × % share of NCI
= 50000 * 20%
= 10000
Goodwill = (Consideration paid by the Pee plc to Cee plc at the time acquisition of 80% of the
controlling interest + fair value at acquisition of NCI) – Fair value of net assets as at 31st
December 2018
Goodwill = (60000 + 10000) – 50000 = 20000
Calculation of NCI on the reporting date as at 31st December 2020
NCI on reporting date (31st December 2020) = NCI at acquisition that is, on 31st December 2018
+ NCI’s share in the post - acquisition profit
= 10000 + 20% * 10000 = 12000.
Retained earnings of the group to be shown in the consolidated statement of financial
position as at 31st December 2020
Parent’s (Pee Ltd.) retained earnings as at the reporting date (31 December 2020) + Subsidiary’s
(Cee Ltd.) proportionate share of post - acquisition profit
= 150000 + 80% * 10000 = 158000.
Consolidated financial positon allow the organisation to present the accumulate financial
position of the organisation in front of the stakeholders. This statement is prepared for the group
which comprise with the firm that is investing or acquiring and the organisation in which the
investment has made. Non-controlling interest is the ownership and right of which company do
not hold any power to access as this is the right and ownership secured by the company in which
investment has been made (Kadirbayevich, 2021). IN the current case study Pee Plc is
acquiring ownership and share in the Cee Plc. The acquisition has been made of 80% that is huge