1

Below are the Balance Sheets of Alpha, Beta and Gamma Ltd for the year to 31 December 2007 Alpha Beta Gamma Plant Assets Investment in: Beta Gamma Inventory A/R Cash Total Assets A/P 450 300 153 197 180 50 1330 200 80 50 -

110 95 63 348 40

50 30 40 170 14

Share capital Retained earnings Total liabilities and equity Notes: i) ii) iii)

700 430 1330

200 108 348

100 56 170

Alpha bought 75% of the share capital of Beta on 1/1/2006 when Betas retained earnings were 60 Alpha bought 80% of the share capital of Gamma on 1/1/2007 when Gammas retained earnings were 32. The inventory of Alpha includes inventory bought from Beta for 50. Beta sold this inventory at cost plus a 25% mark-up. All the inventory remains unsold by Alpha. in 1/1/2007, Alpha sold a fixed asset to Beta for 80. It had originally bought it in 2001 for 100. It used straight-line depreciation based on a life of ten years (including full year depreciation in year of purchase). Beta depreciates this asset over its remaining life using straight line method. The A/R of Alpha includes 10 due for Beta. Beta paid back this amount on 22 December 2007, but Alpha has not entered this into its accounts yet. The goodwill on the acquisition of Gamma has been impaired by an estimated 50% in 2007.

iv)

v)

v)

Required: (a) Prepare the Group Consolidated Balance Sheet for the year to 31 December 2007

A Plant assets Investment 300+153 Goodwill Inventory A/R Cash Total A/P 197 180 50 1330 200 450

B 80

G 50

75% B

25% 80%G 20% G B

group

110 50 95 63 30 40

348 170 40 14

NCI Share Cap RE Total 700 430 1330 200 100 108 56 348 170