SOLUTION ONE

Ryan

70% 40%

Subsidiary Associate

Emma Perth

Working 2- Net Assets of Subsidiary and Associate

Emma Perth

At Acq At Rpty At Acq At Rpty

Share Capital 900,000 900,000 700,000 700,000

Retained Ear 364,000 684,000 368,500 670,000

OCI 100,000 280,000 100,000 145,000

PURP-Plant (15,000)

Add Depn _______ 2,500 _______ _______

1,364,000 1,851,500 1,168,500 1,515,000

Post Acq 487,500 346,500

Working 3- Goodwill

Purchase Consideration 70% x 900,000 x 2/3 x K 2.5= K 1,050,000

NCI fair value 600,000

1,650,000

Less: Net Assets on day of Acquisition (1,364,000)

Goodwill 286,000

Less: Impairment (286,000)

Working 4- Non-Controlling Interest

NCI Fair value on acq date 600,000

Share of post-acquisition profits 146,250

Less: Impairment (85,800)

660,450

Working 5- Group Retained Earnings

Ryan’s Retained Earnings 1,895,000

Share of post Acq profits

Emma 215,250

Perth 120,600

Goodwill Impairment (200,200)

Impairment- Plant (8,000)

PURP-Inventory (Emma) (8,000)

PURP-Inventory (Perth) (1,200)

2,013,450

Working 6- OCI

Ryan’s OCI 150,000

Share of post-acquisition OCI

 Emma (280,000-100,000) x 75% 126,000

Perth (145,000-100,000) x 40% 18,000

294,000

Statement of Financial Position

PPE (1,980,000+1,450,000-15,000+2,500-8,000) 3,409,500

Investment in Associate (150,000+120,600+18,000-1,200) 287,400

Other Investments 1,000,000

Other Intangible Assets 70,000

4,766,900

Inventory (600,000+200,000-8,000) 792,000

Trade Receivables 399,000

Cash at bank and in hand 76,000 1,267,000

6,033,900

Share Capital (K1 each) 1,200,000

Share premium 630,000

Other Components of Equity 294,000

Retained earnings 2,013,450

Non-Controlling Interest 660,450

4,797,900

Non-current liabilities 426,000

Current Liabilities 810,000

6,033,900
 Statement of Comprehensive Income

Ryan Emma Perth

K’000 K’000 K’000

Revenue (1,200,000+708,333-200,000) 1,708,333

Cost of Sales (670,000+354,167-200,000+15,000

+8,000+8000+200,200+1,200-2,500) (1,139,867)

Gross Profit 568,466

Administrative Expenses (95,833)

Distribution Costs (72,250)

Operating Profit 400,383

Finance Costs (6,667)

Share of Perth’s profits 120,600

Profit before tax 514,316

Taxation (8,217)

Profit for the year 506,099

Attributable to:

NCI 6,450

Group 499,649