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Simona Catuogno » 15.Preparation of a consolidated financial statement


Information on Alpha – Beta group

Administrators at Alpha Plc have to submit a consolidated financial statement for the group Alpha + Beta at 31/12/2009 on the basis of the following information:

  1. There are reciprocal profits and losses, as well as costs and revenue relating to intra-group transactions;

  2. The investment is recorded at cost. Alpha acquired 80% of shares in Beta at beginning of period, at a price equaling 800 thousand Euros.

At the moment of purchase, book value of shareholders’ equity in Beta company comprised:

Share capital…………………500

Legal reserve………………… 120

Statutory reserve……………. 80

Total…………………………… 700

Information on Alpha – Beta (cont.)

3) The value of Beta company’s inventory includes internal profits of 60 thousand Euros.

4) Beta sold Alpha land for 400 thousand Euros, making a surplus value of 50 thousand Euros.

5) Alpha sold Beta one of its machines, which represented a remaining book value of 100 thousand Euros for Alpha, and Beta paid 200 thousand Euros for it.

6) Alpha sold Beta shares, initially registered at a value of 220 thousand Euros, for 200 thousand Euros, thus making a loss of 20 thousand Euros. On 31/12 market value of those same shares was equal to 200 thousand Euros.

Aggregated financial position


Aggregated income statement


Elimination of intra-group credits and losses


Elimination of intra-group costs and revenue


Elimination of shares from net equity

Price paid 800 thousand > 80 % PNC 560 thousand

240 = Positive consolidation difference

When adjusting for PCD, higher current values compared to fair value are identified for Buildings, Commercial Equipment and Stock. A consolidation start-up of 50 is also estimated.


Elimination of shares from net equity


Elimination of shares from net equity (cont.)


Profits included in inventory


Profits included in inventories (cont.)


Sale of land from controlling company to subsidiary


Sale of land from controlling company to subsidiary (cont.)


Controlling company sells vehicle to subsidiary


Controlling company sells vehicle to subsidiary (cont.)


Intragroup losses through alienation of shares


Intragroup losses through alienation of shares (cont.)


Consolidated Financial Situation


Consolidated financial statement


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Progetto "Campus Virtuale" dell'Università degli Studi di Napoli Federico II, realizzato con il cofinanziamento dell'Unione europea. Asse V - Società dell'informazione - Obiettivo Operativo 5.1 e-Government ed e-Inclusion