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Scenario: On 1 January 20X4, Quantum Robotics Co acquired 80% of the equity share capital of Nano Assembly Ltd. Consideration consisted of $500,000 cash paid immediately and a further $200,000 payable on 1 January 20X6 (discount rate 10%, PV = $165,289). At acquisition, Nano Assembly's share capital was $100,000 and retained earnings were $350,000. The fair value of the non-controlling interest (NCI) at acquisition was $120,000. A fair value exercise at acquisition identified plant with a fair value $40,000 above its carrying amount (remaining life 4 years). During the year, Nano Assembly sold components to Quantum Robotics for $80,000, at a mark-up of 25%. Half of these remained in inventory at 31 December 20X4. At 31 December 20X4, Nano Assembly's retained earnings were $450,000.
Question: What is the total fair value of the consideration transferred by Quantum Robotics Co for the acquisition? (Enter numbers only)
ACCA · Question 46 · Preparing Simple Consolidated Financial Statements
Scenario: On 1 January 20X4, Quantum Robotics Co acquired 80% of the equity share capital of Nano Assembly Ltd. Consideration consisted of $500,000 cash paid immediately and a further $200,000 payable on 1 January 20X6 (discount rate 10%, PV = $165,289). At acquisition, Nano Assembly's share capital was $100,000 and retained earnings were $350,000. The fair value of the non-controlling interest (NCI) at acquisition was $120,000. A fair value exercise at acquisition identified plant with a fair value $40,000 above its carrying amount (remaining life 4 years). During the year, Nano Assembly sold components to Quantum Robotics for $80,000, at a mark-up of 25%. Half of these remained in inventory at 31 December 20X4. At 31 December 20X4, Nano Assembly's retained earnings were $450,000.
Question: How is the intra-group sale of $80,000 treated in the consolidated Statement of Profit or Loss?
Scenario: On 1 January 20X4, Quantum Robotics Co acquired 80% of the equity share capital of Nano Assembly Ltd. Consideration consisted of $500,000 cash paid immediately and a further $200,000 payable on 1 January 20X6 (discount rate 10%, PV = $165,289). At acquisition, Nano Assembly's share capital was $100,000 and retained earnings were $350,000. The fair value of the non-controlling interest (NCI) at acquisition was $120,000. A fair value exercise at acquisition identified plant with a fair value $40,000 above its carrying amount (remaining life 4 years). During the year, Nano Assembly sold components to Quantum Robotics for $80,000, at a mark-up of 25%. Half of these remained in inventory at 31 December 20X4. At 31 December 20X4, Nano Assembly's retained earnings were $450,000.
Question: How is the intra-group sale of $80,000 treated in the consolidated Statement of Profit or Loss?
Answer options:
Deduct $80,000 from consolidated Revenue only.
Deduct $80,000 from both consolidated Revenue and consolidated Cost of Sales.
Deduct $40,000 from consolidated Revenue and Cost of Sales, as half remains in inventory.
No adjustment is needed in the Statement of Profit or Loss.
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