Question

I feel that the answer in the site is given wrong for the question below, please help:

Ralph Co aquires 80% of Angus Co on 1 January 20X7 for $780,000. At this date the net assets of Angus Co had a book value of $720,000 and a fair value of $750,000. The difference was due to land that was still held at 31 December 20X7. The NCI was measured as a proportion of net assets. Extracts from the statements of financial position of the two companies at 31 December 20X7 were as follows: Ralph $'000 Angus $'000 Property, plant and equipment 1,290 640 Investment 780 - Current assets 370 450 What is consolidated total assets?

£2,960,000

£2,930,000

£2,780,000

£2,742,000

Answer 1

Correct answer is $2,780,000 calculated as follows:-

Calculation of Consolidated Total Assets of Ralph Co.

PARTICULARS	AMOUNT('000)
Property, Plant & Equipment (1,290 + 640 + 30)	1,960
Investment	-
Current Assets (370 + 450)	820
TOTAL ASSETS	2,780

During consolidation all the assets of the other company are added irrespective of the %age of holding, the share which is not held by parent company is represented as Non Controlling Interest in Liabilities and Equity side of the Balance Sheet.