Sab Theek Hai, a public listed company, acquired 75% of Ghabrana Nahi's ordinary shares on 1 April 20X4. Sab Theek Hai paid an immediate Rs.3.50 per share in cash and agreed to pay a further amount of Rs.108 million on 1 April 20X5. Sab Theek Hai's cost of capital is 8% per annum. Sab Theek Hai has only recorded the cash consideration of Rs.3.50 per share. The summarised statements of financial position of the two companies at 31 March 20X5 are shown below: Sab Theek Hai Ghabrana Nahi Rs.m Rs.m Rs.m Rs.m Property, plant and equipment (note (i)) 420 320 Development costs (note (iv)) Nil 40 Investments (note (ii)) 300 20 720 380 Current assets 133 91 Total assets 853 471 Equity and liabilities Ordinary shares of Rs.1 each 270 80 Reserves: Share premium 80 40 Revaluation surplus 45 Nil Retained earnings – 1 April 20X4 160 134 – year to 31 March 20X5 190 76 350 210 745 330 Non-current liabilities 10% intragroup loan (note (ii)) Nil 60 Current liabilities 108 81 Total equity and liabilities 853 471 The following information is relevant: (i) Sab Theek Hai has a policy of revaluing land and buildings to fair value. At the date of acquisition Ghabrana Nahi's land and buildings had a fair value Rs.20 million higher than their carrying amount and at 31 March 20X5 this had increased by a further Rs.4 million (ignore any additional depreciation). (ii) Included in Sab Theek Hai's investments is a loan of Rs.60 million made to Ghabrana Nahi at the date of acquisition. Interest is payable annually in arrears. Ghabrana Nahi paid the interest due for the year on 31 March 20X5, but Sab Theek Hai did not receive this until after the year end. Sab Theek Hai has not accounted for the accrued interest from Ghabrana Nahi. (iii) Ghabrana Nahi had established a line of products under the brand name of Titanware. Acting on behalf of Sab Theek Hai, a firm of specialists, had valued the brand name at a value of Rs.40 million with an estimated life of ten years as at 1 April 20X4. The brand is not included in Ghabrana Nahi's statement of financial position. (iv) Ghabrana Nahi's development project was completed on 30 September 20X4 at a cost of Rs.50 million. Rs.10 million of this had been amortised by 31 March 20X5. Development costs capitalised by Ghabrana Nahi at the date of acquisition were Rs.18 million. Sab Theek Hai's directors are of the opinion that Ghabrana Nahi's development costs do not meet the criteria in IAS 38 Intangible assets for recognition as an asset. (v) Ghabrana Nahi sold goods to Sab Theek Hai during the year at a profit of Rs.6 million, one-third of these goods were still in the inventory of Sab Theek Hai at 31 March 20X5. (vi) An impairment test at 31 March 20X5 on the consolidated goodwill concluded that it should be written down by Rs.20 million. No other assets were impaired. (vii) It is the group policy to measure non-controlling interest fair value. The fair value of the non-controlling interest in Ghabrana Nahi at the acquisition date was Rs.83 million. Required Calculate the following figures as they would appear in the consolidated statement of financial position of Sab Theek Hai at 31 March 20X5: (i) Goodwill

Sab Theek Hai, a public listed company, acquired 75% of Ghabrana Nahi's ordinary shares on 1 April 20X4. Sab Theek Hai paid an immediate Rs.3.50 per share in cash and agreed to pay a further amount of Rs.108 million on 1 April 20X5. Sab Theek Hai's cost of capital is 8% per annum. Sab Theek Hai has only recorded the cash consideration of Rs.3.50 per share. The summarised statements of financial position of the two companies at 31 March 20X5 are shown below: Sab Theek Hai Ghabrana Nahi Rs.m Rs.m Rs.m Rs.m Property, plant and equipment (note (i)) 420 320 Development costs (note (iv)) Nil 40 Investments (note (ii)) 300 20 720 380 Current assets 133 91 Total assets 853 471 Equity and liabilities Ordinary shares of Rs.1 each 270 80 Reserves: Share premium 80 40 Revaluation surplus 45 Nil Retained earnings – 1 April 20X4 160 134 – year to 31 March 20X5 190 76 350 210 745 330 Non-current liabilities 10% intragroup loan (note (ii)) Nil 60 Current liabilities 108 81 Total equity and liabilities 853 471 The following information is relevant: (i) Sab Theek Hai has a policy of revaluing land and buildings to fair value. At the date of acquisition Ghabrana Nahi's land and buildings had a fair value Rs.20 million higher than their carrying amount and at 31 March 20X5 this had increased by a further Rs.4 million (ignore any additional depreciation). (ii) Included in Sab Theek Hai's investments is a loan of Rs.60 million made to Ghabrana Nahi at the date of acquisition. Interest is payable annually in arrears. Ghabrana Nahi paid the interest due for the year on 31 March 20X5, but Sab Theek Hai did not receive this until after the year end. Sab Theek Hai has not accounted for the accrued interest from Ghabrana Nahi. (iii) Ghabrana Nahi had established a line of products under the brand name of Titanware. Acting on behalf of Sab Theek Hai, a firm of specialists, had valued the brand name at a value of Rs.40 million with an estimated life of ten years as at 1 April 20X4. The brand is not included in Ghabrana Nahi's statement of financial position. (iv) Ghabrana Nahi's development project was completed on 30 September 20X4 at a cost of Rs.50 million. Rs.10 million of this had been amortised by 31 March 20X5. Development costs capitalised by Ghabrana Nahi at the date of acquisition were Rs.18 million. Sab Theek Hai's directors are of the opinion that Ghabrana Nahi's development costs do not meet the criteria in IAS 38 Intangible assets for recognition as an asset. (v) Ghabrana Nahi sold goods to Sab Theek Hai during the year at a profit of Rs.6 million, one-third of these goods were still in the inventory of Sab Theek Hai at 31 March 20X5. (vi) An impairment test at 31 March 20X5 on the consolidated goodwill concluded that it should be written down by Rs.20 million. No other assets were impaired. (vii) It is the group policy to measure non-controlling interest fair value. The fair value of the non-controlling interest in Ghabrana Nahi at the acquisition date was Rs.83 million. Required Calculate the following figures as they would appear in the consolidated statement of financial position of Sab Theek Hai at 31 March 20X5: (i) Goodwill

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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	Sab Theek Hai	Ghabrana Nahi
	Rs.m	Rs.m	Rs.m	Rs.m
Property, plant and equipment (note (i))		420		320
Development costs (note (iv))		Nil		40
Investments (note (ii))		300		20
		720		380
Current assets		133		91
Total assets		853		471

Equity and liabilities
Ordinary shares of Rs.1 each		270		80
Reserves:
Share premium		80		40
Revaluation surplus		45		Nil
Retained earnings – 1 April 20X4	160		134
– year to 31 March 20X5	190		76

		350		210
		745		330

Non-current liabilities
10% intragroup loan (note (ii))		Nil		60
Current liabilities		108		81
Total equity and liabilities		853		471

The following information is relevant:

(i) Sab Theek Hai has a policy of revaluing land and buildings to fair value. At the date of acquisition Ghabrana Nahi's land and buildings had a fair value Rs.20 million higher than their carrying amount and at 31 March 20X5 this had increased by a further Rs.4 million (ignore any additional depreciation).

(ii) Included in Sab Theek Hai's investments is a loan of Rs.60 million made to Ghabrana Nahi at the date of acquisition. Interest is payable annually in arrears. Ghabrana Nahi paid the interest due for the year on 31 March 20X5, but Sab Theek Hai did not receive this until after the year end. Sab Theek Hai has not accounted for the accrued interest from Ghabrana Nahi.

(iii) Ghabrana Nahi had established a line of products under the brand name of Titanware. Acting on behalf of Sab Theek Hai, a firm of specialists, had valued the brand name at a value of Rs.40 million with an estimated life of ten years as at 1 April 20X4. The brand is not included in Ghabrana Nahi's statement of financial position.

(iv) Ghabrana Nahi's development project was completed on 30 September 20X4 at a cost of Rs.50 million. Rs.10 million of this had been amortised by 31 March 20X5. Development costs capitalised by Ghabrana Nahi at the date of acquisition were Rs.18 million. Sab Theek Hai's directors are of the opinion that Ghabrana Nahi's development costs do not meet the criteria in IAS 38 Intangible assets for recognition as an asset.

(v) Ghabrana Nahi sold goods to Sab Theek Hai during the year at a profit of Rs.6 million, one-third of these goods were still in the inventory of Sab Theek Hai at 31 March 20X5.

(vi) An impairment test at 31 March 20X5 on the consolidated goodwill concluded that it should be written down by Rs.20 million. No other assets were impaired.

(vii) It is the group policy to measure non-controlling interest fair value. The fair value of the non-controlling interest in Ghabrana Nahi at the acquisition date was Rs.83 million.

Required

Calculate the following figures as they would appear in the consolidated statement of financial position of Sab Theek Hai at 31 March 20X5:

(i) Goodwill

(ii) Non-controlling interest

(iii) The following consolidated reserves:share premium, revaluation surplus and retained earnings.

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