Syclop has recently lost some large contracts and the directors of Pacemaker are wondering if Pacemaker can be excluded from consolidation next year. Discuss on this decision and factors whether to do it or not?
On 1 April 2018 Pacemaker acquired 116 million of Syclop's 145 million ordinary shares for an immediate cash payment of Rs210 million and issued at par one 10% Rs100 loan note for every 200 shares acquired.
At the date of acquisition Syclop owned a recently built property that was carried at its
Syclop also had an internally-developed brand which was valued at the acquisition date at Rs25 million with a remaining life of 10 years.
The inventory of Syclop at 31 March 2020 includes goods supplied by Pacemaker for a sale price of Rs56 million. Pacemaker adds a mark-up of 40% on cost to all sales.
Syclop has recently lost some large contracts and the directors of Pacemaker are wondering if Pacemaker can be excluded from consolidation next year. Discuss on this decision and factors whether to do it or not?
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