ABSTRACT
Whale Limited acquired all the equity shares in Minnow Limited for £200 000 in cash on 1 January 2005. At 31 December 2004 (before the purchase price had been paid), the two companies’ balance sheets were summarized as follows:
Consolidation Whale Whale Minnow adjustments Group £’000 £’000 £’000 £’000
Tangible fixed assets 790 150
Net current assets 230 40 1 020 190
Less: Long-term debt (70) (60) 950 130
Called up share capital 500 80
Reserves 450 50 Shareholders’ funds 950 130
Please draw up Whale Limited’s consolidated balance sheet immediately after the acquisition, on the assumptions (1) that Minnow Limited is its only subsidiary, and (2) that goodwill is carried forward in the balance sheet as an intangible fixed asset, to be amortized against profit over its useful life.
