On 1 January 2018, Chelsea Ltd acquired 75% of the shares in Orlando Ltd at N$126 000. At that date
On 1 January 2018, Chelsea Ltd acquired 75% of the shares in Orlando Ltd at N$126 000.
At that date, the balance on Orlando Ltd’s
The share capital amounted to N$120 000 and no shares have been issued since that date.
The following are the condensed financial statements of Chelsea Ltd and subsidiary Orlando
Ltd at 31 December 2020.
Chelsea Ltd
N$
Orlando Ltd
N$
ASSETS
Property, plant and equipment 168 000 105 000
Investment in Orlando Ltd at fair value 180 000 -
Trade receivables 87 000 156 000
Total assets 435 000 261 000
EQUITY AND LIABILITIES
Share capital 240 000 120 000
Mark-to-market reserve 54 000 -
Retained earnings 54 000 54 000
Long-term borrowings 30 000 6 000
Trade and other payables 57 000 81 000
Total equity and liabilities 435 000 261 000
EXTRACT FROM THE STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020
Chelsea LTD
N$
Orlando LTD
N$
Profit 55 500 30 000
Dividend received 9 000 -
Profit before tax 64 500 30 000
Income tax expense (16 500) (9 000)
PROFIT FOR THE YEAR 48 000 21 000
Other comprehensive income
Mark-to-market reserve 4 500 -
Other comprehensive income for the year 4 500 -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 52 500 21 000Page 7 of 7
Additional information
• Assume that the identifiable assets acquired, and the liabilities assumed at
acquisition date are shown at their acquisition-date fair values, as determined in
terms of IFRS 3.
• Chelsea Ltd elected to measure non-controlling interests in an acquiree at its
proportionate share of the acquiree’s identifiable net assets at acquisition date.
• Ignore tax implications
Required
Prepare the consolidated financial statements of the Chelsea Ltd Group for the reporting
period ended 31 December 2020. (30)
(Show your workings
Step by step
Solved in 3 steps
