Practice Question – Consolidations 1

Question
Matcha Ltd acquired a controlling interest in Chamomile (Pty) Ltd at 1 July 2017. At this date, the
retained earnings was R82 500 and the carrying amount of the assets and liabilities of Chamomile (Pty)
Ltd was considered to be equal to the fair value.

The following information relates to Matcha Ltd and Chamomile (Pty) Ltd at 30 June 2019:

STATEMENTS OF FINANCIAL POSITION

Matcha Ltd Chamomile

(Pty) Ltd
R R

ASSETS
Property, plant and equipment 150 000 165 000
Investment in Chamomile (Pty) Ltd – 22 500 114 375 0
ordinary shares
Trade and other receivables 37 875 60 000
Bank 20 250 33 750
322 500 258 750

EQUITY AND LIABILITIES

Share capital – ordinary shares (37 500/30 000) 75 000 60 000
Retained earnings 202 500 142 500
Trade and other payables 45 000 56 250
322 500 258 750
 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Matcha Ltd Chamomile

(Pty) Ltd
R R

Gross profit 80 250 78 750

Dividends received from Chamomile (Pty) Ltd 5 625 0
Profit before tax 85 875 78 750
Income tax expense (25 875) (26 250)
Profit for the year 60 000 52 500

STATEMENTS OF CHANGES IN EQUITY

Matcha Chamomile Matcha Chamomile Matcha Chamomile

Ltd (Pty) Ltd Ltd (Pty) Ltd Ltd (Pty) Ltd
R R R R R R
Share capital Retained earnings Total
Balance at 1 July 2018 75 000 60 000 157 500 97 500 232 500 157 500
Profit for the year 60 000 52 500 60 000 52 500
Dividends paid (15 000) (7 500) (15 000) (7 500)
Balance at 30 June 2019 75 000 60 000 202 500 142 500 277 500 202 500

Required:

1. The analysis of equity

2. Pro-forma consolidated journal entries
3. Consolidated statement of profit or loss and other comprehensive income of Matcha Ltd Group
for the year ended 30 June 2019
4. Consolidated statement of changes in equity of Matcha Ltd Group for the year ended
30 June 2019
5. Consolidated statement of financial position of Matcha Ltd Group as at 30 June 2019