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Prepare the consolidated statement of financial position of Pa Ltd as at 30 June 2019.

Prepare the consolidated statement of financial position of Pa Ltd as at 30 June 2019.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pa Ltd and Son Ltd have produced the following statements of financial position as at 30 June 2019: Statements of financial position as at 30 June 2019: Rs'000 Rs'000 ASSETS Non-current Assets PPE 600,000 100,000 250,000 50,000 Motor Van Investments 600,000 1,300,000 300,000 Current Assets Inventory Trade receivables 425,000 250.000 125,000 400,000 600,000 Cash and cash equivalent 800,000 1,000,000 Total Assets 2,100,000 1,300,000 EQUITY AND LIABILITIES Equity shares of Rs1 each Retained earnings Capital reserves 900,000 400,000 400,000 350,000 250,000 300,000 1,600,000 1,000,000 Non-current liabilities 125,000 Long term borrowings Current liabilities Trade payables Bank overdraft 300,000 200,000 100,000 75,000 300,000 500,000 Total equity and liabilities 2,100,000 1,300,000 The following additional information is relevant to the preparation of the financial statements of the Pa group: ) Pa Ltd acquired 80% of the ordinary share of Son Ltd many years ago, when the retained earnings of Son Ltd were Rs30 million and capital reserves were Rs20 million. Consideration transferred was Rs600 million.
Transcribed Image Text:Pa Ltd and Son Ltd have produced the following statements of financial position as at 30 June 2019: Statements of financial position as at 30 June 2019: Rs'000 Rs'000 ASSETS Non-current Assets PPE 600,000 100,000 250,000 50,000 Motor Van Investments 600,000 1,300,000 300,000 Current Assets Inventory Trade receivables 425,000 250.000 125,000 400,000 600,000 Cash and cash equivalent 800,000 1,000,000 Total Assets 2,100,000 1,300,000 EQUITY AND LIABILITIES Equity shares of Rs1 each Retained earnings Capital reserves 900,000 400,000 400,000 350,000 250,000 300,000 1,600,000 1,000,000 Non-current liabilities 125,000 Long term borrowings Current liabilities Trade payables Bank overdraft 300,000 200,000 100,000 75,000 300,000 500,000 Total equity and liabilities 2,100,000 1,300,000 The following additional information is relevant to the preparation of the financial statements of the Pa group: ) Pa Ltd acquired 80% of the ordinary share of Son Ltd many years ago, when the retained earnings of Son Ltd were Rs30 million and capital reserves were Rs20 million. Consideration transferred was Rs600 million.
(i) At the date of acquisition, the plant and equipment of Son Ltd was revalued upwards by Rs35 million, although this revaluation was not recorded in the accounts of Son Ltd. Depreciation would have been Rs5 milion greater had it been based on the revalued figure. (ii) Son Ltd sold goods costing Rs24 million to Pa Ltd at a margin of 20%. These goods were still unsold at the year end. (iv) At 30 June 2018, Son Ltd had invoiced Pa Ltd Rs4 million for goods which Pa had not been received and was due. (v) At 30 June 2018, Pa Ltd had receivables of Rs100 million owed by Son Ltd and payables of Rs75 million owed to Son Ltd. (vi) It is the company policy to value non-controlling interest at full fair value. At the acquisition date, non-controlling shares were valued at a market price of Rs2.00 per share. (vii) 10% of the goodwill on acquisition is to be amortized. REQUIRED: Prepare the consolidated statement of financial position of Pa Ltd as at 30 June 2019.
Transcribed Image Text:(i) At the date of acquisition, the plant and equipment of Son Ltd was revalued upwards by Rs35 million, although this revaluation was not recorded in the accounts of Son Ltd. Depreciation would have been Rs5 milion greater had it been based on the revalued figure. (ii) Son Ltd sold goods costing Rs24 million to Pa Ltd at a margin of 20%. These goods were still unsold at the year end. (iv) At 30 June 2018, Son Ltd had invoiced Pa Ltd Rs4 million for goods which Pa had not been received and was due. (v) At 30 June 2018, Pa Ltd had receivables of Rs100 million owed by Son Ltd and payables of Rs75 million owed to Son Ltd. (vi) It is the company policy to value non-controlling interest at full fair value. At the acquisition date, non-controlling shares were valued at a market price of Rs2.00 per share. (vii) 10% of the goodwill on acquisition is to be amortized. REQUIRED: Prepare the consolidated statement of financial position of Pa Ltd as at 30 June 2019.
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