Exam 7: Advanced Interpretation of Company and Group Accounts

The Statements of Financial Position for company P and company S are shown below: At the time of the acquisition,the net asset value of S was £50,000.This was £40,000 share capital plus £10,000 retained earnings.If company P owns 75% of Company S,then the consolidated Statement of Financial Position will include,as well as 100% of the assets and liabilities of both companies:

The Statements of Financial Position for company P and company C are shown below: At the time of the acquisition,the net asset value of C was £100,000.This was made up entirely of £100,000 share capital.If company P owns 100% of Company C,then the consolidated Statement of Financial Position will show a Total Assets figure of:

The following segmental information is provided for Powerage Ltd. Audio America Audio Europe Visual America Visual Europe £ £ £ £ Sales 600 360 70 120 Operating profit 18 20 17 16 Net operating assets 240 300 30 40 Which segment would you suggest needs to become more profitable?

A company with interest cover of 10 is less safe than a company with interest cover of 2

A company is about to buy another company,but this would result in "negative goodwill".For example,Company A pays £2m for Company S which has net assets of £3m.However,the fair value of the net assets of S is actually only £2.1m Which of the following is the correct treatment of this situation?