Group Account: Fair Value Adjustment

Where the assets of the subsidiary are revalued during consolidation and there is revaluation difference, the difference is treated as a pre-acquisition reserve.

The accounting treatment of revaluation difference is shown as follows:

For revaluation surplus,

Dr: Assets Revalued

Cr: Pre-acquisition reserves

For revaluation deficit,

Dr: Pre-acquisition reserves

Cr: Assets revalued

Sam Plc acquired 300 million of the ordinary share capital of Ruth Ltd on 1^st January, 20x5 when the retained earnings of the latter was N80million. The statements of financial position of the two companies as at 31^st December, 20x8 are as follows

Additional information

1. A non-current asset which was not depreciated with a book value of N65million was estimated to have a fair value of N88million as at 31^st December, 20x8

2. The fair value of the non-controlling interest was estimated to be N105million at 31^st December, 20x8

Required

Prepare the statement of financial position for Sam Plc group as at 31^st December, 20x8.

Suggested solution