Question 1The Consolidated Statement of Financial PositionElectra is a small publicly listed company and on 1 April 20X8 it acquired 90% of the equityshares in Helios, a private limited company. On the same date Electra accepted a 10% loannote from Helios for $200,000 which was repayable at $40,000 per annum (on 31 Marcheach year) over the next 5 years. Helios' retained earnings at the date of acquisition were$2,200,000.STAMENTS OF FINANCIAL POSITION AS AT 31 MARCH 20X9ELECTRAHELIOS$'000$'000$'000$'000AssetsNon-current assetsplant&PropertyequipmentIntangible: SoftwareInvestments: Equity in2,1201,9901,8004,110Helios10% loan note Helios200Other652106,4954,000Current AssetsInventories719560Trade receivables524328Helios current account75Cash201,338888Total Assets7,8334,888Equity & LiabilitiesEquityEquity shares of $1 each2,0001,500Share Premium2,000500Retained Earnings2,9006,9001,9553,955Non -current liabilities10% loan from Electra160Government Grant23040200 Current LiabilitiesTrade payables475472Electra current account60Income taxes payable228174Operating overdraftTotal Equity & Liabilities703277337,8337,833Notes:а.Included in Helios property at the date of acquisition was a leasehold propertyrecorded at its depreciated historical cost of $400,000. On 1 April 20X8 the leaseholdproperty was sublet for its remaining life of four years at an annual rental of $80,000payable in advance on 1 April each year. The directors of Electra are of the opinionthat the fair value of this leasehold property is best reflected by the present value ofits future cash flows. An appropriate cost of capital for the group is 10% per annum.The present value of $1 annuity received at the end of each year where interestrates are 10% can be taken as:2$3 year annuity2,504 year annuity3,50b. The software of Helios represents the depreciation cost of the development of anintegrated business accounting package. It was completed at a capitalized cost of$2,400,000 and went on sale on April 1 20X7. Helios directors are depreciating thesoftware on a straight line basis over an eight-year life (i.e. $300,000 per annum).However the directors of Electra are of the opinion that a five year life would bemore appropriate as sales of business software rarely exceed this period.с.The inventory of Electra on 31 March 20X9 contains goods at a transfer price of$25,000 that were supplied by Helios who had marked them up with a profit of 25%on cost. Unrealized profits are adjusted for against the profit of the company thatmade them.d. On 31 March 20X9 Helios remitted to Electra a cash payment of $55,000. This wasnot received by Electra until early April. It was made up of an annual repayment ofthe 10% loan note of $40,000 (interest had been already paid) and $15,000 on thecurrent account balance.е.Goodwill is reviewed for impairment annually. At 31 March 20X9 there was animpairment loss of $120,000 in value of goodwill since acquisition.Required:Prepare the consolidated statement of financial position of Electra as at 31 March 20X9.

Name: Question 1The Consolidated Statement of Financial PositionElectra is
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Description: Question 1The Consolidated Statement of Financial PositionElectra is a small publicly listed company and on 1 April 20X8 it acquired 90% of the equityshares in Helios, a private limited company. On the same date Electra accepted a 10% loannote from

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Question 1 The Consolidated Statement of Financial Position Electra is a small publicly listed company and on 1 April 20X8 it acquired 90% of the equity shares in Helios, a private limited company. On the same date Electra accepted a 10% loan note from Helios for $200,000 which was repayable at $40,000 per annum (on 31 March each year) over the next 5 years. Helios' retained earnings at the date of acquisition were $2,200,000. STAMENTS OF FINANCIAL POSITION AS AT 31 MARCH 20X9 ELECTRA HELIOS $'000 $'000 $'000 $'000 Assets Non-current assets plant & Property equipment Intangible: Software Investments: Equity in Helios 2,120 1,990 1,800 4,110 10% loan note Helios 200 Other 65 210 6,495 4,000 Current Assets Inventories 719 560 Trade receivables 524 328 Helios current account 75 Cash 20 1,338 888 Total Assets 7,833 4,888 Equity & Liabilities Equity Equity shares of $1 each Share Premium 2,000 1,500 2,000 500 Retained Earnings Non -current liabilities 2,900 6,900 1,955 3,955 10% loan from Electra 160 Government Grant 230 40 200

Question 1 The Consolidated Statement of Financial Position Electra is a small publicly listed company and on 1 April 20X8 it acquired 90% of the equity shares in Helios, a private limited company. On the same date Electra accepted a 10% loan note from Helios for $200,000 which was repayable at $40,000 per annum (on 31 March each year) over the next 5 years. Helios' retained earnings at the date of acquisition were $2,200,000. STAMENTS OF FINANCIAL POSITION AS AT 31 MARCH 20X9 ELECTRA HELIOS $'000 $'000 $'000 $'000 Assets Non-current assets plant & Property equipment Intangible: Software Investments: Equity in Helios 2,120 1,990 1,800 4,110 10% loan note Helios 200 Other 65 210 6,495 4,000 Current Assets Inventories 719 560 Trade receivables 524 328 Helios current account 75 Cash 20 1,338 888 Total Assets 7,833 4,888 Equity & Liabilities Equity Equity shares of $1 each Share Premium 2,000 1,500 2,000 500 Retained Earnings Non -current liabilities 2,900 6,900 1,955 3,955 10% loan from Electra 160 Government Grant 230 40 200

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter14: Intercorporate Investments In Common Stock

Section: Chapter Questions

Problem 16E

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