Problem 4 (Consolidation difference at acquisition date) Piotr Corp. (or holding

Question

Problem 4 (Consolidation difference at acquisition date)

       Piotr Corp. (or holding company) has an investment of $50 million in Pomian Corp (a subsidiary located in Zurich.

       The investment is represented by $75 million of assets, and $25 million of liabilities.

       Piotr Corp. balance sheet is made of the following accounts:

         Current assets: $20 million

         Investment in Pomian Corp.: $60 million

         PPE:   $ 120,000 million

         Share capital: $100 million

         Retained earnings: $50 million

         L.T. liabilities: $ 35 million

         Current liabilities: $15 million

       Pomian Corp accounts are as follow:

         PPE: $40 million

         Current assets: $15 million

         Share capital: $40 million

         Retained Earnings: $ 10 million

         L.T liabilities: $5 million

Task: Prepare the consolidated Statement of Financial Position for the Group composed of Piotr and its sole subsidiary (Pomian corp.)

Explanation / Answer

Consolidated Financial Statement of                     Piotr Corp Standalone Financial Statement of                     Piomian Corp Non Current Assets Piotr Pomian Total ($ in million) Non Current Assets Total ($ in million) PPE 120 40 160 PPE 40 Goodwill (60-50) 10 10 Total 130 40 170 Total 40 Current Assets 20 15 35 Current Assets 15 Total 20 15 35 Total 15 Total Assets 150 55 205 Total Assets 55 Share Capital 100 100 Share Capital 40 Retained Earnings 50 50 Retained Earnings 10 Total 150 0 150 Total 50 Non Current Liabilities 35 5 40 Non Current Liabilities 5 Total 35 5 40 Total 5 Current Liabilities 15 0 15 Current Liabilities Total 15 0 15 Total 0 Total Liabilities 200 5 205 Total Liabilities 55

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