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Explain the accounting concept of consistency

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Reference no: EM132499257

High Ltd acquired all of the share capital of Small Ltd 5 years ago when Small Ltd's reserves were N$15,000. Goodwill has suffered an impairment of N$4,500.

Balance Sheets as at 30th September 2006

                                                             High Ltd Small N$                 Ltd Fixed Assets N$

Property, Plant and Equipment                        37,000                                  25,000

Investment in Small Ltd                                    63,000                                      -

Current Assets

Stock                                                             40,000                                 23,000

Trade debtors                                                     25,000                             8,000

Bank                                                                 15,000                              4,000

                                                                         80,000                           35,000

Total Assets                                                          180,000                          60,000

Capital and Reserves

Ordinary Share Capital                                               100,000                        30,000

Retained earnings                                                     63,000                         20,000

                                                                           163,000                          50,000

Current Liabilities

Trade creditors                                                        17,000                          10,000

Total equity and liabilities                                            180,000                           60,000

Required:

Question (a) Calculate Goodwill.

Question (b) Calculate retained earnings.

Question (c) Prepare the Consolidated Balance Sheet of High Ltd as at 30th September 2006

Question (d) Explain the accounting concept of consistency

Reference no: EM132499257

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