On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 The following information is relevant: 1)The fair value of Danute’s net assets differed from its carrying values at 1 July 2015. Plant was $8 million in excess of its net book value. Plant had 4 years remaining at the date of acquisition. The group depreciation policy is to charge depreciation on a proportionate basis and should be included in cost of sales. No adjustment was made for this in Danute’s financial statements. 2)Ausrahas a policy of revaluing land and buildings to fair value (as allowed per IAS 16) at each reporting date. Danute accounts for its non-current assets at historical cost. At the acquisition date, Danute’s land and buildings had a fair value of $2 million greater than their book value and at 31 December 2015 this had increased by a further $400,000 (ignore any additional depreciation). 3)On 1 July 2015, Ausratransferred an item of machinery to Danute. The machine had originally cost $1.2 million on 1 July 2010, and it was transferred to Danute for $1 million. Machines have a useful life of ten years. The Useful Economic Life has not changed as a result of the transfer. 4)During the year Ausrasold goods to Danute at a transfer price of $250,000. All of the goods were sold on outside the group by the year-end. The current accounts of Ausra and Danute were reconciled at the year end with Danute owing $50,000. 5)Ausra’s policy is to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interests at the date of acquisition is $7.3 million. 6)An impairment test carried out on 31 December 2015 concluded that consolidated goodwill was impaired by $780,000. Required: Prepare a consolidated Statement of Comprehensive Income for Ausra for the year to 31 December 2015.
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows:
Statement of Comprehensive Income for the year ended 31 December 2015
|
|
Ausra |
Danute |
|
|
$ 000 |
$ 000 |
|
Revenue |
120,000 |
48,000 |
|
Cost of sales |
(84,000) |
(40,000) |
|
Gross profit |
36,000 |
8,000 |
|
Operating expenses |
(11,900) |
(400) |
|
Profit from operations |
24,100 |
7,600 |
|
Other income |
300 |
- |
|
Finance costs |
- |
(1,200) |
|
Profit before tax |
24,400 |
6,400 |
|
Income tax expense |
(6,000) |
(1,200) |
|
Profit for the year |
18,400 |
5,200 |
|
|
|
|
The following information is relevant:
1)The fair value of Danute’s net assets differed from its carrying values at 1 July 2015. Plant was $8 million in excess of its net book value. Plant had 4 years remaining at the date of acquisition. The group
2)Ausrahas a policy of revaluing land and buildings to fair value (as allowed per IAS 16) at each reporting date. Danute accounts for its non-current assets at historical cost. At the acquisition date, Danute’s land and buildings had a fair value of $2 million greater than their book value and at 31 December 2015 this had increased by a further $400,000 (ignore any additional depreciation).
3)On 1 July 2015, Ausratransferred an item of machinery to Danute. The machine had originally cost $1.2 million on 1 July 2010, and it was transferred to Danute for $1 million. Machines have a useful life of ten years. The Useful Economic Life has not changed as a result of the transfer.
4)During the year Ausrasold goods to Danute at a transfer price of $250,000. All of the goods were sold on outside the group by the year-end. The current accounts of Ausra and Danute were reconciled at the year end with Danute owing $50,000.
5)Ausra’s policy is to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interests at the date of acquisition is $7.3 million.
6)An impairment test carried out on 31 December 2015 concluded that consolidated
Required:
Prepare a consolidated Statement of Comprehensive Income for Ausra for the year to 31 December 2015.
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