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ACCA F7

Financial Reporting (FR) - Consolidated

Statement - Consideration Practice

财务报告 -合并报表 – 购买成本习题

ACCA Lecturer: Jeff Yu

Copyright © ACCAspace.comACCAspace 中国ACCA特许公认会计师教育平台 2

1

2

3

Introduction

Accounting Treatment

Practice

F7 Consolidated Statements Chapter 3 Contents


Introduction

年份题型

08/06 Shares + Deferred payment

08/12 Shares

09/06 Shares + Loan note + Cash

09/12 Shares

10/06 Shares + Contingent consideration

10/12 Shares + Loan note

11/06 Shares

11/12 Cash + Deferred payment



13/06 Shares + Loan note

13/12 Cash + Contingent consideration


Introduction

年份题型






Cash

Dr. Investment

Cr. Cash

Investment ↑

Cash ↓



Share

Dr. Investment

Cr. Share capital

Share premium

Examples: (08/12)(09/12)(11/06)

Investment ↑

Share capital ↑

Share premium ↑


(08/12)

On 1 April 2008, Pedantic acquired 60% of the equity share

capital of Sophistic in a share exchange of two shares in

Pedantic for three shares in Sophistic. The issue of

shares has not yet been recorded by Pedantic. At the date

of acquisition shares in Pedantic had a market value of $6

each.

Dr. Investment (4000 × 60% × 2/3 × $6) 9,600

Cr. Share capital (4000 × 60% × 2/3 × $1) 1,600

Share premium 8,000


(09/12)

On 1 April 2009 Pandar purchased 80% of the equity shares

in Salva. The acquisition was through a share exchange

of three shares in Pandar for every five shares in Salva.

The market prices of Pandar’s and Salva’s shares at 1 April

2009 were $6 per share and $3.20 respectively.

Dr. Investment (120m × 80% × 3/5 × $6) 345,600

Cr. Share capital (120m × 80% × 3/5 × $1) 57,600

Share premium 288,000


(11/06)

On 1 October 2010 Prodigal purchased 75% of the equity

shares in Sentinel. The acquisition was through a share

exchange of two shares in Prodigal for every three

shares in Sentinel. The stock market price of Prodigal’s

shares at 1 October 2010 was $4 per share.

Dr. Investment (160,000 × 75% × 2/3 × $4) 320m

Cr. Share capital (160,000 × 75% × 2/3 × $1) 80m

Share premium 240m



Loan note

Dr. Investment

Cr. Loan note

Examples: (09/06)(10/12)(13/06)

Investment ↑ Loan note ↑


(09/06)

(i) Investment in Syclop

On 1 April 2007 Pacemaker acquired 116 million shares in

Syclop for an immediate cash payment of $210 million

and issued at par one 10% $100 loan note for every 200

shares acquired.

Dr. Investment 268m

Cr. Cash 210m

Loan note (116/200 × $100) 58m


(10/12)

On 1 June 2010, Premier acquired 80% of the equity share

capital of Sanford. The consideration consisted of two

elements: a share exchange of three shares in Premier

for every five acquired shares in Sanford and the issue of

a $100 6% loan note for every 500 shares acquired in

Sanford. The share issue has not yet been recorded by

Premier, but the issue of the loan notes has been recorded.

At the date of acquisition shares in Premier had a market

value of $5 each and the shares of Sanford had a stock

market price of $3.50 each.


(10/12)

Dr. Investment 12,800

Cr. Share capital (5,000×80%×3/5×$1) 2,400

Share premium (5,000×80%×3/5×$4) 9,600

Loan note (5,000×80%×100/500) 800


(13/06)

On 1 October 2012, Paradigm acquired 75% of Strata’s

equity shares by means of a share exchange of two new

shares in Paradigm for every five acquired shares in

Strata. In addition, Paradigm issued to the shareholders of

Strata a $100, 10% loan note for every 1,000 shares it

acquired in Strata. Paradigm has not recorded any of the

purchase consideration, although it does have other 10%

loan notes already in issue. The market value of Paradigm’s

shares at 1 October 2012 was $2 each.


(13/06)


Cr. Share capital (20,000×75%×2/5×$1) 6,000

Share premium (20,000×75%×2/5×$1) 6,000

Loan note (15,000×100/1,000) 1,500



Deferred cash

Dr. Investment

Cr. Deferred cash

Dr. Finance cost

Cr. Deferred cash

1. Discount 折现 2. Unwinding （注意时间段，可能<一年）

Examples:

(08/06)(11/12)(12/06)(12/12)(14/06)(14/12)(15/06)

Investment ↑ Deferred cash↑


(08/06)

On 1 August 2007 Patronic purchased 18 million of a total of

24 million equity shares in Sardonic. The acquisition was

through a share exchange of two shares in Patronic for

every three shares in Sardonic. Both companies have

shares with a par value of $1 each. The market price of

Patronic’s shares at 1 August 2007 was $5.75 per share.

Patronic will also pay in cash on 31 July 2009 (two years

after acquisition) $2.42 per acquired share of Sardonic.

Patronic’s cost of capital is 10% per annum.


(08/06)


Cr. Share capital (18,000×2/3×$1) 12,000

Share premium (18,000×2/3×$4.75) 57,000

Deferred cash (18,000×2.42/1.21) 36,000

Note: $1 compounded for two years at 10% would be

worth $1·21.

Dr. Finance cost (36,000×10%×8/12) 2,400

Cr. Deferred cash 2,400


(11/12)

On 1 October 2010, Paladin secured a majority equity

shareholding in Saracen on the following terms:

an immediate payment of $4 per share on 1 October 2010;

and a further amount deferred until 1 October 2011 of

$5.4 million. The immediate payment has been recorded in

Paladin’s financial statements, but the deferred payment has

not been recorded. Paladin’s cost of capital is 8% per

annum.


(11/12)


Cr. Cash 32,000

Deferred consideration (5,400×1/1.08) 5,000

Dr. Finance cost (5,000×8%) 400

Cr. Deferred cash 400


(12/06)

On 1 April 2011, Pyramid acquired 80% of Square’s equity

shares by means of an immediate share exchange and

a cash payment of 88 cents per acquired share, deferred

until 1 April 2012. Pyramid has recorded the share

exchange, but not the cash consideration. Pyramid’s cost of

capital is 10% per annum.


(12/06)


Cr. Shares 24,000

Deferred consideration (10,000×80%×0.88/1.1) 6,400

Dr. Finance cost (6,400×10%) 640



(12/12)

On 1 January 2012, Viagem acquired 90% of the equity

share capital of Greca in a share exchange in which

Viagem issued two new shares for every three shares it

acquired in Greca. Additionally, on 31 December 2012,

Viagem will pay the shareholders of Greca $1.76 per share

acquired. Viagem’s cost of capital is 10% per annum.

At the date of acquisition, shares in Viagem and Greca had

a stock market value of $6·50 and $2·50 each, respectively.


(12/12)


Cr. Share capital (10,000×90%×2/3×$1) 6,000

Share capital (10,000×90%×2/3×$5.5) 33,000

Deferred consideration (9,000×$1.76/1.1) 14,400

Dr. Finance cost (14,400×10%×9/12) 1,080



(14/06)

On 1 October 2013, Penketh acquired 90 million of Sphere’s

150 million $1 equity shares. The acquisition was achieved

through a share exchange of one share in Penketh for

every three shares in Sphere. At that date the stock

market prices of Penketh’s and Sphere’s shares were $4

and $2·50 per share respectively. Additionally, Penketh will

pay $1·54 cash on 30 September 2014 for each share

acquired. Penketh’s finance cost is 10% per annum.


(14/06)


Cr. Share capital (90,000×1/3×$1) 30,000

Share capital (90,000×1/3×$3) 90,000

Deferred consideration (90,000×$1.54/1.1) 126,000

Dr. Finance cost (126,000×10%×6/12) 6,300



(14/12)

On 1 January 2014, Plastik acquired 80% of the equity

share capital of Subtrak. The consideration was satisfied by

a share exchange of two shares in Plastik for every

three acquired shares in Subtrak. At the date of

acquisition, shares in Plastik and Subtrak had a market

value of $3 and $2·50 each respectively. Plastik will also

pay cash consideration of 27.5 cents on 1 January 2015

for each acquired share in Subtrak. Plastik has a cost of

capital of 10% per annum.


(14/12)


Cr. Share capital (9,000 x 80% x 2/3 x $1) 4,800

Share capital (9,000 x 80% x 2/3 x $2) 9,600

Deferred consideration

(9,000 x 80% x 27·5 cents x 1/1·1) 1,800

Dr. Finance cost (1,800 x 10% x 9/12) 135



(15/06)

On 1 July 2014 Bycomb acquired 80% of Cyclip’s equity

shares on the following terms:

– a share exchange of two shares in Bycomb for every

three shares acquired in Cyclip; and

– a cash payment due on 30 June 2015 of $1·54 per

share acquired (Bycomb’s cost of capital is 10% per annum).

At the date of acquisition, shares in Bycomb and Cyclip had

a stock market value of $3·00 and $2·50 each respectively.


(15/06)


Cr. Share capital (12,000 x 80% x 2/3 x $1) 6,400

Share capital (12,000 x 80% x 2/3 x $2) 12,800

Deferred consideration

(12,000 x 80% x $1.54/1.1) 13,440

Dr. Finance cost (13,440 x 10% x 9/12) 1,008




Contingent consideration

Dr. Investment

Cr. Contingent consideration

Dr. Contingent consideration

Cr. Decrease in contingent consideration

Examples:

(10/06)(13/12)

Investment ↑ Contingent

consideration↑


(10/06)

On 1 April 2009 Picant acquired 75% of Sander’s equity shares in

a share exchange of three shares in Picant for every two

shares in Sander. The market prices of Picant’s and Sander’s

shares at the date of acquisition were $3.20 and $4.50

respectively. In addition to this Picant agreed to pay a further

amount on 1 April 2010 that was contingent upon the post-

acquisition performance of Sander.


(10/06)

At the date of acquisition Picant assessed the fair value of this

contingent consideration at $4.2 million, but by 31 March 2010 it

was clear that the actual amount to be paid would be only $2.7

million (ignore discounting). Picant has recorded the share

exchange and provided for the initial estimate of $4.2 million for

the contingent consideration.


(10/06)


Cr. Share capital (8,000 x 75% x 3/2 x $1.00) 9,000

Share capital (8,000 x 75% x 3/2 x $2.20) 19,800

Contingent consideration 4,200

Dr. Contingent consideration (4,200-2,700) 1,500

Cr. Decrease in contingent consideration 1,500


(13/12)

On 1 April 2013, Polestar acquired 75% of the equity share

capital of Southstar. Southstar had been experiencing

difficult trading conditions and making significant losses. In

allowing for Southstar’s difficulties, Polestar made an

immediate cash payment of only $1.50 per share. In

addition, Polestar will pay a further amount in cash on

30 September 2014 if Southstar returns to profitability

by that date.


(13/12)

The value of this contingent consideration at the date of

acquisition was estimated to be $1.8 million, but at 30

September 2013 in the light of continuing losses, its

value was estimated at only $1.5 million. The contingent

consideration has not been recorded by Polestar. Overall,

the directors of Polestar expect the acquisition to be a

bargain purchase leading to negative goodwill. At the date of

acquisition shares in Southstar had a listed market price of

$1.20 each.


(13/12)


Cr. Cash (6,000 x 75% x 2 x $1.50) 13,500

Contingent consideration 1,800

Dr. Contingent consideration (1,800-1,500) 300

Cr. Decrease in contingent consideration 300

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ACCAspace - 专业财金教育平台 · PDF fileOn 1 April 2008, Pedantic acquired 60% of the equity share ... Viagem acquired 90% of the equity share capital of Greca in a ... On