GROUP STATEMENTS

COMPLEX GROUPS
1

GROUP STATEMENTS
VOLUME 1 LATEST EDITION :CHAPTER 7

COMPLEX GROUPS
 STUDY UNIT OUTCOMES
2

On completion of this study unit you should

be able to:

 Identify the composition of a complex group of companies;

 consolidate horizontal, vertical and mixed groups of
companies in accordance with generally accepted
accounting practice;
 correctly eliminate intra-group profits in complex groups;
 prepare the pro forma consolidation journal entries
needed to account for complex groups in the financial
statements of the group.
Complex group type 1: HORISONTAL GROUP
3

r o ls
H Ltd nt
c o a nd
L td L td
H S1
ot h L td
b S2
60% 70%

S1 Ltd S2 Ltd S1 and S2 are called

“fellow subsidiaries”
Complex group type 2: VERTICAL GROUP
4

H Ltd

60% H Ltd controls S Ltd

H Ltd INDIRECTLY
controls SS Ltd
S Ltd
(“subsidiary”) H Ltd’s effective
interest in SS Ltd is
70% S Ltd controls SS Ltd 70% x 60% = 42%

SS Ltd (“sub-
subsidiary”)
 Complex group type 3: MIXED GROUP

H Ltd

60% H Ltd controls S Ltd

However, H Ltd
INDIRECTLY
S Ltd controls SS Ltd
through its control
over S Ltd (30% +
30% 40% Neither H Ltd nor S Ltd 40% = 70%)
directly controls SS Ltd

SS Ltd

5
 Consolidation of a HORISONTAL group
6 Example
GS 7.1
 This is fairly easy. Always draw a diagram to determine whether it is a
horisonal or vertical group
 Do 2 Analyses: (1) H Ltd in S1 Ltd and (2) H Ltd in S2 Ltd
 Prepare PFJEs for both subsidiaries, then consolidate as follows:
TB TB TB
Pro-forma adjustments
H Ltd S1 Ltd S2 Ltd
 Consolidation of a VERTICAL group
12

 Do 2 Analyses in this order: (1) S Ltd in SS Ltd and (2) H Ltd in S Ltd
 To analyse H Ltd’s effective interest in SS Ltd, do the following:
 Carry over S Ltd’s interest in SS Ltd’s goodwill/bargain purchase gain (in
Analysis no. 1) to the total column in the period affected part of Analysis no. 2
 Carry over S Ltd’s interest in SS Ltd’s since acquisition reserves (BOY) and
profit in CY (in Analysis no. 1) to the total column of the period affected of
Analysis no. 2
 Except for dividends because these are transactions directly with the
owners (NCI not involved)
 Prepare PFJEs for both subsidiaries, then consolidate as follows:

TB TB TB
H Ltd S Ltd SS Ltd Pro-forma adjustments
 Consolidation of a VERTICAL group (continued…)
13

In most instances in practice, the acquisition dates of

(a) H Ltd in S Ltd and (b) S Ltd in SS Ltd will differ.
These dates are of primary importance.
 When (a) happened before (b), the goodwill arising
from Analysis no. 1 affects Analysis no. 2 in the
SINCE acquisition period
 When (b) happened before (a), the goodwill arising
from Analysis no. 1 affects Analysis no. 2 in the AT
acquisition period. There are 2 methods to treat this:
 Prepare Analysis 1 as if SS Ltd was acquired on date (a)- we need the amounts
of SS Ltd's equity on this date
 Prepare the analysis 1 as normal – transfer amounts from this analysis to
Analysis 2 at the correct places in the timeline
 Vertical groups: Examples
14

Group Statements Text book – Self study

 Ex 7.2 and 7.3 – H acquired interest in S on SAME date S
acquired interest in SS
 Ex 7.4 – H acquired interest in S on BEFORE S acquired
interest in SS
 Ex 7.5 - H acquired interest in S on AFTER S acquired
interest in SS
 Ex 7.6 – Intragroup Transactions

Refer to Handout - Example 8 (before) and 9

(after)
 Example 8 – Vertical Group (SS acquired after S)
15
The following trial balances of H Ltd, S Ltd and SS Ltd for the year ended 31 December 2010 are
given to you:

H Ltd S Ltd SS Ltd

Debits R R R
Property, plant and equipment 340 000 300 000 319 000
Investment in S Ltd at cost price 160 000 - -
Investment in SS Ltd at cost price - 100 000 -
Inventories 150 000 120 000 96 000
Debtors 80 000 64 000 51 200
Bank 20 000 16 000 12 800
Cost of sales 300 000 240 000 192 000
Operating expenses 50 000 40 000 32 000
Income tax expense 56 000 44 800 35 840
Dividends paid 40 000 80 000 65 000
1 196 000 1 004 800 803 840
Credits R R R
Share capital (R1 par value) 100 000 80 000 64 000
Retained earnings (balanace as at 01/01/2010) 420 000 339 000 271 200
Long-term loans 30 000 81 250 93 600
Creditors 36 000 28 800 23 040
Revenue 550 000 440 000 352 000
Dividends received 60 000 35 750 -
1 196 000 1 004 800 803 840
 Example 8 – Vertical Group (SS acquired after S)
16 Goodwill
Additional information treatment?
 H Ltd acquired 60 000 shares in S Ltd on 1 January 2001. At that stage the net assets of S
Ltd consisted of the following:
 Share capital 80 000, Retained earnings 110 000
 S Ltd acquired 35 200 shares in SS Ltd on 1 January 2003. At that stage the net assets of
SS Ltd consisted of the following:
 Share capital 64 000, Retained earnings 99 000
 Non-controlling interest is measured in accordance with the proportional method.
 REQUIRED
 Prepare both the analysis of owner’s interest in the equity of S Ltd and SS Ltd.
 Prepare all pro-forma journal entries needed to consolidate the group for the year
ended 31 December 2010.
 Calculate at which amounts the following line items will appear in the consolidated
financial statements for the year ended 31 December 2010:
 Goodwill
 Non-controlling interest in p/l
 Non-controlling interest in the SoFP
 Retained earnings opening balance in the SoCE
 Example 8 - Timeline
17

01/01/2001 01/01/2003 01/01/2010 31/12/2010

At acquisition for SS Ltd =

Since acquisition for S Ltd

75%

55%

S At acquisition Since acquisition to Since acquisition:

beginning of current year current year

Since acquisition to Since acquisition:

SS At acquisition
current year
beginning of current year
 Ex 8: Analysis in SS Ltd
18
ANALYSIS IN SS LTD SS (55%) (45%)
AT ACQUISITION (2003) TOTAL AT SINCE NCI
SCAP 64 000 35 200 28 800
RE 99 000 54 450 44 550
163 000 89 650 73 350
Consideration 100 000
Goodwill -10 350

SINCE ACQUISITION
BOY
RE (271 200-99 000) 172 200 94 710 77 490
CY
(352 000-192 000-
Profit 32 000-35 840) 92 160 50 688 41 472
Dividends Paid -65 000 -35 750 -29 250
362 360 109 648 163 062
 Ex 8: Analysis in S Ltd
19
ANALYSIS IN S LTD SS (75%) (25%)
AT ACQUISITION (2001) Carried TOTAL AT SINCE NCI
SCAP over 80 000 60 000 20 000
RE from 110 000 82 500 27 500
analysis 190 000 142 500 47 500
Consideration
SS 160 000
Goodwill -17 500
SINCE ACQUISITION
BOY
Retained Earnings - S Ltd (339000-110000) 229 000 171 750 57 250
Retained Earnings - SS Ltd 94 710 71 033 23 678
Goodwill - SS -10 350 -7 763 -2 588
CY
(440000-240000-
Profit - S Ltd 40000-44800) 115 200 86 400 28 800
Profit - SS Ltd 50 688 38 016 12 672
Dividends Paid (S Ltd Only!) -80 000 -60 000 -20 000
589 248 299 436 147 312
PFJEs in respect of S Ltd
20
Ex 8 : PFJEs in respect of SS Ltd
21

This amount is just

coincidentally the same as
J4. We get this amount
from the Analysis in SS
Ltd
 Ex 8: Disclosure of Line items in the consolidated F/S
22

NCI (p/l)
GOODWILL
41 472 (J4) + 41 472 (J8)
17 500 (J1) – 2 587 (J3) + 10 350 (J6)
= 82 944
= 25 263
OR:
OR:
41 472 + 28 800 + 12 672 per the 2
17 500 + 7 763 (Analysis in S Ltd)
analyses

Retained earnings (opening)

NCI (SoFP)
420 000 (H) + 339 000 (S) + 271 200
= 310 374 (net of all NCI (SoFP)
(SS) – 110 000 (J1) – 80 927 (J2) –
amounts in J1 to J9)
99 000 (J6) – 77 490 (J7) = 662 782
OR:
OR:
163 062 (analysis SS Ltd) + 147 312
420 000 (H) + 171 750 + 71 033
(analysis S Ltd)
(analysis S Ltd)
 Example – Vertical Group (SS acquired before S)
23
The following trial balances of H Ltd, S Ltd and SS Ltd for the year ended 31 December 2010 are
given to you:

H Ltd S Ltd SS Ltd

Debits R R R
Property, plant and equipment 340 000 300 000 319 000
Investment in S Ltd at cost price 160 000 - -
Investment in SS Ltd at cost price - 100 000 -
Inventories 150 000 120 000 96 000
Debtors 80 000 64 000 51 200
Bank 20 000 16 000 12 800
Cost of sales 300 000 240 000 192 000
Operating expenses 50 000 40 000 32 000
Income tax expense 56 000 44 800 35 840
Dividends paid 40 000 80 000 65 000
1 196 000 1 004 800 803 840
Credits R R R
Share capital (R1 par value) 100 000 80 000 64 000
Retained earnings (balanace as at 01/01/2010) 420 000 339 000 271 200
Long-term loans 30 000 81 250 93 600
Creditors 36 000 28 800 23 040
Revenue 550 000 440 000 352 000
Dividends received 60 000 35 750 -
1 196 000 1 004 800 803 840
 Example 9 – Vertical Group (S acquired after SS)
24 Goodwill
Additional information treatment?
 S Ltd acquired 35 200 shares in SS Ltd on 1 January 2001. At that stage the net assets of
SS Ltd consisted of the following:
 Share capital 64 000, Retained earnings 99 000
 H Ltd acquired 60 000 shares in S Ltd on 1 January 2003. At that stage the net assets of S
Ltd consisted of the following:
 Share capital 80 000, Retained earnings 110 000
 At this date the Retained Earnings of SS Ltd amounted to 111 000
 Non-controlling interest is measured in accordance with the proportional method.
 Prepare both the analysis of owner’s interest in the equity of S Ltd and SS Ltd.
 Prepare all pro-forma journal entries needed to consolidate the group for the year
ended 31 December 2010.
 Calculate at which amounts the following line items will appear in the consolidated
financial statements for the year ended 31 December 2010:
 Goodwill
 Non-controlling interest in p/l
 Non-controlling interest in the SoFP
 Retained earnings opening balance in the SoCE
 Example 9 - Timeline
25

01/01/2001 01/01/2003 01/01/2010 31/12/2010

At acquisition for S Ltd =

Since acquisition for SS Ltd

SS At acquisition Since acquisition to Since acquisition:

beginning of current year current year

Since acquisition to Since acquisition:

S At acquisition
current year
beginning of current year
 Ex 9: METHOD 1 - Analysis in SS Ltd
26
ANALYSIS IN SS LTD SS (55%) (45%)
AT ACQUISITION (AS IF 2003) TOTAL AT SINCE NCI
SCAP 64 000 35 200 28 800
RE 111 000 61 050 49 950
175 000 96 250 78 750
Consi deration 100 000
Goodwi l l -3 750

SINCE ACQUISITION
BOY
RE (271 200-99 000) 160 200 88 110 72 090
CY

(352 000-192 000-

Profi t 32 000-35 840) 92 160 50 688 41 472
Di vi dends Pai d -65 000 -35 750 -29 250
362 360 103 048 163 062

* in terms of method 1 we prepare the Analysis AS IF SS Ltd was acquired 1 Jan 2003
 Ex 9: METHOD 1 - Analysis in S Ltd
27
ANALYSIS IN S LTD SS (75%) (25%)
AT ACQUISITION (2003) TOTAL AT SINCE NCI
SCAP 80 000 60 000 20 000
RE 110 000 82 500 27 500
Goodwi l l - SS Ltd -3 750 -2 813 -938
186 250 139 688 46 563
Consi deration 160 000
Goodwi l l - S Ltd -20 313
SINCE ACQUISITION
BOY

Retai ned Earni ngs - S Ltd (339000-110000) 229 000 171 750 57 250
Retained Earnings - SS Ltd 88 110 66 083 22 028
CY

(440000-240000-
Profi t - S Ltd 40000-44800) 115 200 86 400 28 800
Profit - SS Ltd 50 688 38 016 12 672
Di vi dends Pai d (S Ltd Only!) -80 000 -60 000 -20 000
589 248 302 249 147 312
Ex 9: METHOD 1 - PFJEs in respect of S Ltd
28

SS Ltd’s goodwill is
integrated in the goodwill
of S Ltd.
Ex 9: METHOD 1 - PFJEs in respect of SS Ltd
29

This amount is just

coincidentally the same as
J3. We get this amount
from the Analysis in SS
Ltd
Ex 9: METHOD 1 - Certain line items in the consolidated F/S
30
NCI (p/l)
*20 313 (J1) – 3 750 (J1) + 3 750 (J5)
GOODWILL #
41 472 (J3) + 41 472 (J7)
= 82 944
= 20 313
OR:
OR:
41 472 + 28 800 + 12 672 per the 2
20 313 from Analysis in S Ltd
analyses

# NCI (SoFP) *420 000 (H) + 339 000 (S) + 271 200
Retained earnings (opening)

= 310 374 (net of all NCI (SoFP)

(SS) – 110 000 (J1) – 79 277 (J2) –
amounts in J1 to J8)
111 000 (J5) – 72 090 (J6) = 657 833
OR:
OR:
163 062 (analysis SS Ltd) + 147 312
420 000 (H) + 171 750 + 66 083
(analysis S Ltd)
(analysis S Ltd)

* Different than Example 8 # Same as Example 8

 Ex 9: METHOD 2* - Analysis in SS Ltd
31
ANALYSIS IN SS LTD SS (55%) (45%)
AT ACQUISITION (2001) TOTAL AT SINCE NCI
SCAP 64 000 35 200 28 800
RE 99 000 54 450 44 550
163 000 89 650 73 350
Consi deration 100 000
Goodwi l l - SS Ltd -10 350
AT
SINCE ACQUISITION
BOY
RE (Up to 1 Jan 2003) (111000-99000) 12 000 6 600 5 400
RE (Up to 31 Dec 2009) (271200-111000) 160 200 88 110 72 090
CY

SINCE
CY
(352 000-192 000-
Profi t 32 000-35 840) 92 160 50 688 41 472
Di vi dends Pai d -65 000 -35 750 -29 250
362 360 109 648 163 062

* In terms of Method 2 we prepare the Analysis on the actual acquisition date

of SS Ltd, i.e. on 01/01/2001
 Ex 9: METHOD 2 - Analysis in S Ltd
32
ANALYSIS IN S LTD SS (75%) (25%)
AT ACQUISITION (2003) TOTAL AT SINCE NCI
SCAP 80 000 60 000 20 000
RE 110 000 82 500 27 500
Goodwi l l - SS Ltd -10 350 -7 763 -2 588
Retai ned Earni ngs: SS Ltd 6 600 4 950 1 650
186 250 139 688 46 563
Consi deration 160 000
Goodwi l l - S Ltd -20 313
SINCE ACQUISITION
BOY

Retai ned Earni ngs - S Ltd (339000-110000) 229 000 171 750 57 250
Retained Earnings - SS Ltd 88 110 66 083 22 028
CY

(440000-240000-
Profi t - S Ltd 40000-44800) 115 200 86 400 28 800
Profit - SS Ltd 50 688 38 016 12 672
Di vi dends Pai d (S Ltd Only!) -80 000 -60 000 -20 000
589 248 302 249 147 312
METHOD 2: PFJEs in respect of S Ltd
33

SS Ltd’s goodwill and retained

earnings are integrated in the
goodwill of S Ltd.
METHOD 2: PFJEs in respect of SS Ltd
34

Same as in Example 8

This amount is just

coincidentally the same as
J3. We get this amount
from the Analysis in SS
Ltd
Ex: 9 METHOD 2 - Certain line items in the consolidated F/S
GOODWILL NCI (p/l)
35
20 313 (J1) – 10 350(J1) + 41 472 (J3) + 41 472 (J7)
10 350(J5) = 82 944
= 20 313
OR:
OR: 41 472 + 28 800 + 12 672 per the 2
20 313 from Analysis in S Ltd analyses

Retained earnings (opening)

NCI (SoFP)
= 310 374 (net of all NCI (SoFP)
amounts in J1 to J8)
OR:
163 062 (analysis SS Ltd) + 147
312 (analysis S Ltd)
420 000 (H) + 339 000 (S) + 271 200
(SS) – 110 000 (J1) – 6 600 (J1) – 79 277
(J2) – 99 000 (J5) – 77 490 (J6) = 657
833
OR:
420 000 (H) + 171 750 + 66 083 (analysis
S Ltd)

All final answers are the same as Method 1

 Consolidation of a MIXED group
36
 Do 2 Analyses in this order: (1) H Ltd and S Ltd in SS Ltd and (2) H Ltd in S
Ltd
 To analyse H Ltd’s effective interest in SS Ltd, do the following:
 Carry over S Ltd’s interest in SS Ltd’s goodwill/bargain purchase gain (in Analysis
no. 1) to the total column of Analysis no. 2
 Carry over S Ltd’s interest in SS Ltd’s since acquisition reserves (in Analysis no. 1)
to the total column of Analysis no. 2 (except for dividends as already explained)
 Prepare PFJEs for both subsidiaries, then consolidate as follows:

TB TB TB
H Ltd S Ltd SS Ltd Pro-forma adjustments
 Mixed groups: Examples
37

Group Statements Text book – Self study

 Ex 7.7 – Consolidation of a Mixed Group
 Self Assessment Question 7.1 and 7.2 (Page 471)

Refer to Handout - Example 10

 Example 10 – Mixed Group
38
The following trial balances of H Ltd, S Ltd and SS Ltd for the year ended 31 December 2010 are
given to you:

H Ltd S Ltd SS Ltd

Debits R R R
Property, plant and equipment 300 000 340 000 319 000
Investment in S Ltd at cost price 160 000 - -
Investment in SS Ltd at cost price 40 000 60 000 -
Inventories 150 000 120 000 96 000
Debtors 80 000 64 000 51 200
Bank 20 000 16 000 12 800
Cost of sales 300 000 240 000 192 000
Operating expenses 50 000 40 000 32 000
Income tax expense 56 000 44 800 35 840
Dividends paid 40 000 80 000 65 000
1 196 000 1 004 800 803 840

Credits R R R
Share capital (R1 par value) 100 000 80 000 64 000
Retained earnings (balanace as at 01/01/2010) 420 000 339 000 271 200
Long-term loans 17 000 95 550 93 600
Creditors 36 000 28 800 23 040
Revenue 550 000 440 000 352 000
Dividends received 73 000 21 450 -
1 196 000 1 004 800 803 840
 Example 10 – Mixed Group
39
Additional information
 H Ltd acquired 60 000 shares in S Ltd on 1 January 2001. At that stage the net assets of S Ltd
consisted of the following:
 Share capital 80 000 Retained earnings 110 000
 H Ltd acquired 12 800 shares in SS Ltd on 1 January 2001. At that stage the net assets of SS Ltd
consisted of the following:
 Share capital 64 000 Retained earnings 99 000
 S Ltd acquired 21 120 shares in SS Ltd on 1 January 2001. At that stage the net assets of SS Ltd
consisted of the following:
 Share capital 64 000 Retained earnings 99 000
 Non-controlling interest is measured in accordance with the proportional method.
REQUIRED
 Prepare both the analysis of owner’s interest in the equity of S Ltd and SS Ltd.
 Prepare all pro-forma journal entries needed to consolidate the group for the year ended 31 December
2010.
 Calculate at which amounts the following line items will appear in the consolidated financial
statements for the year ended 31 December 2010:
 Goodwill
 Non-controlling interest in p/l
 Non-controlling interest in the SoFP
 Retained earnings opening balance in the SoCE
 How do we know this is a mixed group?
40

H Ltd

75% 60 000 ÷ 80 000 shares

H Ltd INDIRECTLY
controls SS Ltd
S Ltd through its control
over S Ltd (20% +
12 800 ÷ 64 000 shares 33% = 53%)
20% 33% &
21 120 ÷ 64 000 shares

SS Ltd
MIXED GROUP ALSO D SHAPED GROUP
 Example 10: Analysis in SS Ltd
42
ANALYSIS IN SS LTD H Ltd (20%) S Ltd (33%) NCI (47%)
AT ACQUISITION (2001) TOTAL AT SINCE AT SINCE
SCAP 64 000 12 800 21 120 30 080
RE 99 000 19 800 32 670 46 530
163 000 32 600 53 790 76 610
Consideration 40 000 60 000
Goodwill - SS Ltd -7 400 -6 210

SINCE ACQUISITION
BOY
RE (271 200-99 000) 172 200 34 440 56 826 80 934
CY

(352 000-192 000-

Profit 32 000-35 840) 92 160 18 432 30 413 43 315
Dividends Paid -65 000 -13 000 -21 450 -30 550
362 360 39 872 65 789 170 309
 Example 10: Analysis in S Ltd
43
ANALYSIS IN S LTD H Ltd (75%) NCI (25%)
AT ACQUISITION (2001) TOTAL AT SINCE
SCAP 80 000 60 000 20 000
RE 110 000 82 500 27 500
Goodwill: SS Ltd -6 210 -4 658 -1 553
183 790 137 843 45 948
Consideration 160 000
Goodwill - S Ltd -22 158
SINCE ACQUISITION
BOY

Retained Earnings - S Ltd (339000-110000) 229 000 171 750 57 250

Retained Earnings - SS Ltd 56 826 42 620 14 207
CY
(440000-240000-
Profi t - S Ltd 40000-44800) 115 200 86 400 28 800
Profit - SS Ltd 30 413 22 810 7 603
Dividends Paid (S Ltd Only!) -80 000 -60 000 -20 000
535 229 263 579 133 807
Example 10: PFJEs in respect of SS Ltd
44

Note the accounting for both

investments in SS Ltd by
S Ltd and H Ltd (mixed
group)
Example 10: PFJEs in respect of S Ltd
45

SS Ltd’s goodwill is integrated

in the goodwill of S Ltd.
 Certain line items in the consolidated F/S
GOODWILL
GOODWILL NCI
NCI (p/l)
(p/l)
46
22
22 158
158 (J1)
(J1) –
–66 210
210 (J1)
(J1) +
+ 36
36 403
403 (J3)
(J3) +
+ 43
43 315
315 (J7)
(J7)
13
13 610
610 (J5)
(J5) =
= 29
29 558
558 =
= 79
79 718
718
OR:
OR: OR:
OR:
22
22 158
158 (analysis
(analysis in
in S
S Ltd)
Ltd) +
+7 400*
7 400 43
43 315
315 +
+ 28
28 800
800 +
+77 603
603 per
per the
the
(analysis
(analysis in in SS
SS Ltd)
Ltd) 2
2 analyses
analyses

Retained
Retained earnings
earnings (opening)
(opening)
NCI
NCI (SoFP)
(SoFP) 420
420 000
000 (H)
(H) +
+ 339
339 000
000 (S)
(S) +
+ 271
271 200
200
=
= 304
304 116
116 (net
(net of
of all
all NCI
NCI (SoFP)
(SoFP) (SS)
(SS) –
– 110
110 000
000 (J1)
(J1) –
– 71
71 456
456 (J2)
(J2) –
–
amounts
amounts inin J1
J1 to
to J8)
J8) 99
99 000
000 (J5)
(J5) –
– 80
80 934
934 (J6)
(J6) =
= 668
668 810
810
OR:
OR: OR:
OR:
170
170 309
309 (analysis
(analysis SS
SS Ltd)
Ltd) +
+ 420
420 000
000 (H)
(H) +
+ 34 440* (analysis
34 440 (analysis SSSS
133
133 807
807 (analysis
(analysis S
S Ltd)
Ltd) Ltd)
Ltd)
+
+ 171
171 750
750 +
+ 42
42 620
620 (analysis
(analysis S
S Ltd)
Ltd)

* This is unique to mixed groups: Remember these 2 items!

 HOMEWORK

Self study ALL group statement

examples
Errors in GS Volume 1 (15th edition)
 Note error memo 7.5 page 466 RE to BOY of s is 208 000 (270
000 – 62 000). Also journals are wrong – Agrees to PY Volume 1
solution
 Note error 7.6 question says cost of s is 107 00 but memo uses 227
100
 Note error 7.6 brackets of S analysis calc 2 should be
 36360-12600-1270+356=22846
 Note error in Q 7.2 Plant of S 2 undervalued by 40 220 yet memo
uses 40 000 in workings of analysis. Assume CGT rate used on
reval of plant because intention is sale.