DipIFR Syllabus D. Preparation of external financial reports - Past Papers - Group SFP - Past Papers ^{12 / 14}

Note 1 – Alpha’s investment in Beta
On 1 October 2011, Alpha acquired 120 million shares in Beta and gained control of Beta on that date. The acquisition was financed by a cash payment by Alpha of $144 million to the former shareholders of Beta on 1 October 2011 and a further cash payment of $145·2 million to the former shareholders of Beta paid on 1 October 2013. The annual rate to use in any discounting calculations is 10% and the relevant discount factor is 0·826. Alpha correctly accounted for the payments made to the former shareholders of Beta in its own financial statements. The cost of investment figure in the financial statements of Alpha was rounded to the nearest $ million.

Alpha incurred due diligence costs of $1 million relating to the acquisition of Beta and included these costs in the carrying amount of its investment in Beta. On 1 October 2011, the individual financial statements of Beta showed retained earnings of $80 million.

The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 October 2011. The following matters emerged:

– Property which had a carrying amount of $120 million (land component $40 million) had an estimated fair value of $160 million (land component $60 million). The buildings component of the property had an estimated remaining useful life of 40 years at 1 October 2011.

– Plant and equipment having a carrying amount of $120 million had an estimated fair value of $130 million. The estimated remaining useful life of this plant at 1 October 2011 was two years.

– The fair value adjustments have not been reflected in the individual financial statements of Beta. In the consolidated financial statements, the fair value adjustments will be regarded as temporary differences for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%.

On 1 October 2011, the directors of Alpha initially measured the non-controlling interest in Beta at its fair value on that date. On 1 October 2011, the fair value of an equity share in Beta (which can be used to measure the fair value of the non-controlling interest) was $1·70. No impairments of the goodwill on acquisition of Beta have been evident up to and including 30 September 2018.

Note 2 – Alpha’s investment in Gamma
On 1 October 2015, Alpha acquired 36 million shares in Gamma by means of a cash payment of $145 million. Gamma’s issued share capital at that date was 120 million shares. On 1 October 2015 and 30 September 2018, the individual financial statements of Gamma showed retained earnings of $45 million and $65 million respectively. Since 1 October 2015, no other investor has owned more than 2% of the shares of Gamma.

Note 3 – Alpha’s investment in Delta
On 1 October 2012, Alpha issued 80 million of its own shares in exchange for an 80% shareholding in Delta. Delta has an issued share capital of 100 million shares. The fair value of an equity share in Alpha on that date was $1·40.

The fair values of the net assets of Delta at 1 October 2012 were the same as their carrying amounts.

On 1 October 2012, the directors of Alpha initially measured the non-controlling interest in Delta at its fair value on that date. On 1 October 2012, the fair value of an equity share in Delta (which can be used to measure the fair value of the non-controlling interest) was $1·10.

The individual financial statements of Delta showed net assets at the following amounts:
– $110 million on 1 October 2012.
– $170 million on 30 September 2017.

In the year ended 30 September 2018, the individual financial statements of Delta showed a profit of $24 million. On 31 March 2018, Delta paid a dividend of $9 million.

On 30 June 2018, Alpha disposed of its shareholding in Delta for cash proceeds of $180 million. The individual financial statements of Alpha recognised the correct profit on disposal of its shareholding in Delta. No impairment of the goodwill on acquisition of Delta had been necessary between 1 October 2012 and 30 June 2018.

Note 4 – Intra-group trading
Alpha supplies a component to Beta at a mark-up of 25% on its production cost. The trade receivables of Alpha at 30 September 2018 include $10 million receivable from Beta in respect of sales of the component. Beta paid Alpha $10 million to clear the outstanding balance on 29 September 2018. Alpha received and recorded this amount on 3 October 2018.

On 30 September 2018, the inventories of Beta included $15 million in respect of components purchased from Alpha. All such inventory is measured at original cost to Beta.

Note 5 – Property lease
On 1 October 2017, Alpha began to lease a property under a 10-year lease. The annual rate of interest implicit in the lease was 5%. The lease rentals payable by Alpha were $10 million, payable annually in arrears. The lease does not transfer ownership of the property to Alpha at the end of the lease term. The lease contains no option for Alpha to purchase the property at the end of the lease term. On 1 October 2017, Alpha incurred direct costs of $4 million in arranging this lease. The only accounting entries made by Alpha in respect of this lease were to charge $14 million to the statement of profit or loss. Using a discount rate of 5%, the cumulative present value of $1 payable annually in arrears for ten years is $7·72.

Required:
(b) Prepare the consolidated statement of financial position of Alpha at 30 September 2018. You need only consider the deferred tax implications of any adjustments you make where the question specifically refers to deferred tax. (33 marks)

Note: You should show all workings to the nearest $’000.

Note 1 – Alpha’s investment in Beta
On 1 April 2001, Alpha acquired 80 million of the 100 million $1 equity shares of Beta and gained control of Beta. Alpha paid $150 million in cash for these shares.

On 1 April 2001, the net assets of Beta had a fair value of $147 million, all of which had been disposed of or settled by 31 March 2016.

Alpha used the fair value method for measuring the non-controlling interest when recognising the goodwill on acquisition of Beta. The fair value of an equity share in Beta on 1 April 2001, which was $1·50, was used for this purpose. No impairments of goodwill on acquisition of Beta have been necessary in the consolidated financial statements of Alpha up to and including 31 March 2016.

Beta has three cash generating units. On 31 March 2017, the annual impairment review indicated that the recoverable amounts of the net assets, including goodwill, of the three cash generating units of Beta at that date were as follows:

– Unit 1 – $87 million.
– Unit 2 – $84 million.
– Unit 3 – $80 million.

Net assets and goodwill are allocated equally to the three units and any impairments of goodwill should be charged to cost of sales.

Note 2 – Alpha’s investment in Gamma
On 1 August 2016, Alpha acquired 60 million of the 80 million $1 equity shares in Gamma and gained control of Gamma. The acquisition was financed as follows:

– Alpha issued two new shares to the former shareholders of Gamma for every three shares Alpha acquired in Gamma. On 1 August 2016, the fair value of an equity share in Alpha was $4·50.

– Alpha agreed to pay a total of $16·2 million in cash to the former shareholders of Gamma on 31 July 2017. Alpha’s incremental borrowing rate at 1 August 2016 was 8% per annum.

– Alpha agreed to issue additional shares in Alpha to the former shareholders of Gamma on 30 September 2019 if the cumulative profits of Gamma for the three-year period from 1 August 2016 to 31 July 2019 exceed a target amount. On 1 August 2016, the fair value of this contingent equity consideration was $26 million.

Alpha has not yet accounted for this acquisition in its individual financial statements. However, you can assume that no impairment of the goodwill on acquisition of Gamma is necessary in the consolidated financial statements of Alpha for the year ended 31 March 2017. Alpha has resolved to use the proportion of net assets method for measuring the non-controlling interest when recognising the goodwill on the acquisition of Gamma.

On 1 August 2016, the fair values of the net assets of Gamma were the same as their carrying amounts in the financial statements of Gamma with the exception of:

– Land – whose fair value exceeded the carrying amount by $30 million.
– Plant and equipment – whose fair value exceeded the carrying amount by $12 million. The estimated remaining useful life of the plant and equipment of Gamma at 1 August 2016 was five years.

All depreciation of property, plant and equipment is charged to cost of sales. You can assume that the profit of Gamma for the year ended 31 March 2017 accrued evenly over the year.

Note 3 – Intra-group trading
Alpha supplies a component used by both Beta and Gamma. Alpha earns a profit margin of 20% on these supplies.
Details of the sales of the component, and the holdings of inventory of the component by group entities, are as follows:

Note 4 – Decommissioning provision
On 1 April 2016, Alpha completed the construction of an energy generating facility and brought the facility into use immediately. The cost of construction of the facility was included in property, plant and equipment and was also appropriately depreciated over the useful life of the facility, which was estimated at 16 years at 1 April 2016. At the end of the useful life of the facility, Alpha has an obligation to decommission the facility and restore its location to its former condition. The estimated cost of this decommissioning and restoration is $8 million, payable on 31 March 2032. The directors of Alpha made a provision of $8 million in respect of this liability, and charged $8 million to administrative expenses in the year ended 31 March 2017. An appropriate discount rate to use in any discounting calculations is 8% per annum. At 1 April 2016, the present value of $1 payable in 16 years’ time at 8% can be taken as 30 cents.

Note 5 – Investment income
The investment income which is shown in Alpha’s statement of profit or loss represents dividends received from Beta and Gamma and also dividends received from a portfolio of other equity investments. This portfolio is classified by Alpha as fair value through profit or loss. The gain on remeasurement of the portfolio to fair value at 31 March 2017 was $6·5 million. This gain has not yet been recognised in the financial statements of Alpha.

Note 6 – Cash flow hedge
On 1 January 2017, Alpha agreed to purchase goods from a foreign supplier. This purchase is due to be made and paid for on 30 June 2017. The directors of Alpha decided to hedge the cash-flow risk attaching to this future purchase by entering into a derivative contract and to formally designate the derivative as a hedging instrument. The hedge met all of the effectiveness requirements for the use of hedge accounting. On 31 March 2017, the derivative had a positive fair value resulting in a gain to Alpha of $5 million. Between 1 January 2017 and 31 March 2017 the expected cash flows in respect of the purchase of goods on 30 June 2017 had increased by $4·2 million. Alpha has not made any accounting entries in respect of this arrangement.

Required:
(a) Using the information in notes 1 and 2, compute the goodwill arising on the acquisitions of Beta and Gamma in the consolidated financial statements of Alpha. (7 marks)

Note: You should show all workings to the nearest $’000.

Note 1 – Alpha’s investment in Beta
On 1 October 2013, Alpha acquired 80 million shares in Beta by means of a share exchange of one share in Alpha for every two shares acquired in Beta. On 1 October 2013, the market value of an Alpha share was $7·00.

Alpha incurred directly attributable due diligence costs of $3 million on acquisition of Beta. The directors of Alpha included these acquisition costs in the carrying amount of the investment in Beta in the draft statement of financial position of Alpha. There has been no change to the carrying amount of this investment in Alpha’s own statement of financial position since 1 October 2013.

On 1 October 2013, the individual financial statements of Beta showed the following balances:
– Retained earnings $150 million.
– Other components of equity $5 million.

The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 October 2013. The following matters emerged:
– Property having a carrying amount of $160 million (land component $70 million, buildings component $90 million) had an estimated fair value of $200 million (land component $80 million, buildings component $120 million). The buildings component of the property had an estimated useful life of 30 years at 1 October 2013.

– Plant and equipment having a carrying amount of $120 million had an estimated fair value of $140 million. The estimated remaining useful life of this plant at 1 October 2013 was four years. None of this plant and equipment had been disposed of between 1 October 2013 and 30 September 2016.

– On 1 October 2013, the notes to the financial statements of Beta disclosed a contingent liability. On 1 October 2013, the fair value of this contingent liability was reliably measured at $6 million. The contingency was resolved in the year ended 30 September 2014 and no payments were required to be made by Beta in respect of this contingent liability.

– The fair value adjustments have not been reflected in the individual financial statements of Beta. In the consolidated financial statements the fair value adjustments will be regarded as temporary differences for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%.

The directors of Alpha used the proportion of net assets method when measuring the non-controlling interest in Beta in the consolidated statement of financial position.

Note 2 – Impairment review of goodwill on acquisition of Beta
No impairment of the goodwill on acquisition of Beta was evident when the reviews were carried out on 30 September 2014 and 2015. On 30 September 2016, the directors of Alpha carried out a further review and concluded that the recoverable amount of the net assets of Beta at that date was $400 million. Beta is regarded as a single cash generating unit for the purpose of measuring goodwill impairment.

Note 3 – Alpha’s investment in Gamma
On 1 October 2015, Alpha acquired 60 million shares in Gamma by means of a cash payment of $140 million. The purchase agreement provided for an additional payment on 31 October 2017 to the former holders of the 60 million acquired shares. The amount of this additional payment is dependent on the financial performance of Gamma in the two-year period from 1 October 2015 to 30 September 2017. On 1 October 2015, the fair value of this additional payment was estimated to be $20 million. This estimate was revised to $24 million on 30 September 2016. Alpha has not made any entries in its draft financial statements to record this potential additional payment.

On 1 October 2015, the individual financial statements of Gamma showed a balance on retained earnings of $75 million.

On 1 October 2015, the fair values of the net assets of Gamma were the same as their carrying amounts with the exception of some land which had a carrying amount of $50 million and a fair value of $70 million. This land continued to be an asset of Gamma at 30 September 2016. The fair value adjustment has not been reflected in the individual financial statements of Gamma. In the consolidated financial statements the fair value adjustment will be regarded as a temporary difference for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%.

No impairment issues arose concerning the measurement of Gamma in the consolidated statement of financial position of Alpha at 30 September 2016.

The directors of Alpha used the full goodwill (fair value) method when measuring the non-controlling interest in Gamma in the consolidated statement of financial position. On 1 October 2015, the fair value of a share in Gammawas $2·30.

Note 4 – Trade receivables and payables
Group policy is to clear intra-group balances on a given date prior to each year end. Beta complied with this policy at 30 September 2016 but Gamma was late in making the required payment of $10 million to Alpha. The payment was made by Gamma on 29 September 2016 and received and recorded by Alpha on 2 October 2016.

Note 5 – Provision
On 1 October 2015, Alpha completed the construction of a non-current asset with an estimated useful life of 20 years. The costs of construction were recognised in property, plant and equipment and depreciated appropriately. Alpha has a legal obligation to restore the site on which the non-current asset is located on 30 September 2035. The estimated cost of this restoration work, at 30 September 2035 prices, is $25 million. The directors of Alpha have made a provision of $1·25 million (1/20 x $25 million) in the draft statement of financial position at 30 September 2016. An appropriate annual discount rate to use in any relevant calculations is 6% and at this rate the present value of $1 payable in 20 years is 31·2 cents.

Required:
Prepare the consolidated statement of financial position of Alpha at 30 September 2016. You need only consider the deferred tax implications of any adjustments you make where the question specifically refers to deferred tax.

Note 1 – Alpha’s investment in Beta 
On 1 October 2012, Alpha acquired 300 million shares in Beta by means of a share exchange of one share in Alpha for every two shares acquired in Beta. On 1 October 2012, the market value of an Alpha share was $2·40. Alpha incurred directly attributable costs of $2 million on acquisition of Beta. These costs comprised:

– $0·8 million – cost of issuing own shares, debited to Alpha’s share premium account within other components of equity; 
– $1·2 million due diligence costs – included in the carrying amount of the investment in Beta in Alpha’s own statement of financial position.

There has been no change to the carrying amount of this investment in Alpha’s own statement of financial position since 1 October 2012.

On 1 October 2012, the individual financial statements of Beta showed the following reserves balances:

– Retained earnings $125 million. 
– Other components of equity $10 million.

The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 October 2012. The following matters emerged:

– Plant and equipment having a carrying amount of $295 million had an estimated market value of $340 million. The estimated remaining useful economic life of this plant at 1 October 2012 was five years. None of this plant and equipment had been disposed of between 1 October 2012 and 30 September 2015.

– An in-process research and development project existed at 1 October 2012 but did not meet the recognition criteria of IAS 38 – Intangible Assets. The fair value of the research and development project at 1 October 2012 was $20 million. The project started to generate economic benefits on 1 October 2013 over an estimated period of four years.

The above two fair value adjustments have not been reflected in the individual financial statements of Beta. In the consolidated financial statements, these fair value adjustments will be regarded as temporary differences for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%.

Alpha uses the proportion of net assets method to calculate non-controlling interests in Beta.

Note 2 – Impairment review of goodwill on acquisition of Beta
No impairment of the goodwill on acquisition of Beta was evident when reviews were carried out on 30 September 2013 and 2014. On 30 September 2015, the directors of Alpha concluded that the recoverable amount of the net assets (including the goodwill) of Beta at that date was $450 million. Beta is regarded as a single cash generating unit for the purpose of measuring goodwill impairment.

Note 3 – Alpha’s investment in Gamma
On 1 October 2014, Alpha acquired 144 million shares in Gamma by means of a cash payment of $125 million. Alpha incurred costs of $1 million associated with this purchase and debited these costs to administrative expenses in its draft statement of profit or loss for the year ended 30 September 2015. There has been no change in the carrying amount of this investment in the financial statements of Alpha since 1 October 2014.

On 1 October 2014, the individual financial statements of Gamma showed the following reserves balances:

– Retained earnings $45 million. 
– Other components of equity $2 million.

On 1 October 2014, the fair values of the net assets of Gamma were the same as their carrying amounts with the exception of some land which had a carrying amount of $100 million and a fair value of $130 million. This land continued to be an asset of Gamma at 30 September 2015. The fair value adjustment has not been reflected in the individual financial statements of Gamma. In the consolidated financial statements, the fair value adjustment will be regarded as a temporary difference for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%.

There was no impairment of the goodwill arising on acquisition of Gamma in the consolidated financial statements at 30 September 2015.

Alpha uses the proportion of net assets method to calculate non-controlling interests in Gamma

Note 4 – Other investments
Apart from its investments in Beta and Gamma, the investments of Alpha included in the statement of financial position at 30 September 2015 are all financial assets which Alpha measures at fair value though other comprehensive income. These other investments are correctly measured in accordance with IFRS 9 – Financial Instruments.

Note 5 – Intra-group sale of inventories 
The inventories of Alpha and Gamma at 30 September 2015 included components purchased from Beta in the last three months of the financial year at a cost of $20 million to Alpha and $16 million to Gamma. Beta supplied these goods to both Alpha and Gamma at a mark-up of 25% on the cost to Beta.

Note 6 – Trade receivables and payables
Group policy is to clear intra-group balances on a given date prior to each year end. All group companies had complied with this policy at 30 September 2015, so at that date there were no outstanding intra-group balances.

Note 7 – Provision 
On 30 September 2015, Alpha finalised the construction of an energy generating facility. The facility has an expected useful economic life of 25 years and Alpha has a legal requirement to decommission the facility at the end of its estimated useful life. The directors of Alpha estimated the costs of this decommissioning to be $34 million – based on prices prevailing at 30 September 2040. At an appropriate discount rate the present value of the cost of decommissioning the facility is $10 million. The directors of Alpha made a provision of $34 million and charged this amount as an operating cost in the financial statements of Alpha for the year ended 30 September 2015.

Note 8 – Long-term borrowings  
On 1 October 2014, Alpha issued 40 million $1 bonds at par. The cost of issuing the bonds was $1 million and this cost was charged as a finance cost for the year ended 30 September 2015. No interest is payable on the bonds but they are redeemable at a large premium which makes their effective finance cost 8% per annum. The bonds are included at a carrying amount of $40 million in the statement of financial position of Alpha at 30 September 2015.

Required: 
(a) Prepare the consolidated statement of financial position of Alpha at 30 September 2015. You need only consider the deferred tax implications of any adjustments you make where the question specifically refers to deferred tax. (36 marks)

Note 1 – Alpha’s investment in Beta
On 1 April 2010, Alpha acquired 120 million shares in Beta by means of a cash payment of $234·5 million. Alpha also incurred directly attributable costs of $2·5 million associated with the acquisition of Beta and recognised the investment in its individual statement of financial position at $237 million. There has been no change to the carrying value of this investment in Alpha’s own statement of financial position since 1 April 2010.

It is the group policy to value the non-controlling interest in subsidiaries at the date of acquisition at fair value. The market value of an equity share in Beta at 1 April 2010 can be used for this purpose.

On 1 April 2010, the market value of a Beta share was $1·80. On 1 April 2010, the individual financial statements of Beta showed the following reserves balances:

– Retained earnings $75 million. 
– Other components of equity $1 million.

The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 April 2010. The following matters emerged:

– Property having a carrying value of $150 million at 1 April 2010 (depreciable component $80 million) had an estimated market value of $180 million at that date (depreciable component $90 million). The estimated future economic life of the depreciable component at 1 April 2010 was 20 years. This property is included in Beta’s statement of financial position at 31 March 2015. 
– Plant and equipment having a carrying value of $110 million at 1 April 2010 had an estimated market value of $123 million at that date. Beta has disposed of all of this plant and equipment since 1 April 2010.

The fair value adjustments have not been reflected in the individual financial statements of Beta. In the consolidated financial statements, the fair value adjustments will be regarded as temporary differences for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%. No impairment of the goodwill on acquisition of Beta has occurred since 1 April 2010.

Note 2 – Alpha’s investment in Gamma
On 1 July 2014, Alpha acquired 90 million shares in Gamma by means of a share exchange. Alpha issued two shares for every three shares acquired in Gamma. On 1 July 2014, the market value of an Alpha share was $2·90 and the market value of a Gamma share was $1·50. The share exchange has not been recorded in the draft financial statements of Alpha presented above. Alpha also incurred directly attributable costs of $1·5 million associated with this acquisition and debited these costs to administrative expenses in its draft statement of profit or loss for the year ended 31 March 2015.

On 1 April 2014, the individual financial statements of Gamma showed the following reserves balances:

– Retained earnings $45 million. The profits of Gamma for the year ended 31 March 2015 accrued evenly over the year. 
– Other components of equity $2 million. See also the information provided in note 3 regarding other components of equity.

Gamma leases all of its properties on operating leases and its plant and equipment comprises assets with relatively short useful economic lives. Therefore on 1 July 2014, there were no material differences between the carrying values of the net assets of Gamma in the individual financial statements and the fair values of those net assets.

No impairment of the goodwill on acquisition of Gamma has occurred since 1 July 2014.

Note 3 – Other investments 
Apart from its investment in Beta, the investments of Alpha included in the statement of financial position at 31 March 2015 are all financial assets which Alpha has elected to measure at fair value through other comprehensive income. All of the investments held by Beta and Gamma are also financial assets which Beta and Gamma have elected to measure at fair value through other comprehensive income. None of these investments have been bought or sold in the year ended 31 March 2015. The fair values which are included in the draft statements of financial position above are the fair values at 31 March 2014 for Beta and 1 July 2014 for Gamma. Relevant fair values as at 31 March 2015 were as follows:

– Alpha – $33 million. 
– Beta – $43 million. 
– Gamma – $11·6 million. The change in the fair value of Gamma’s investments during the year ended 31 March 2015 was caused by events occurring AFTER 1 July 2014.

You do NOT need to consider the deferred tax implications of any gains arising on the remeasurement of these investments.

Note 4 – Inter-company sale of inventories
The inventories of Beta and Gamma at 31 March 2015 included components purchased from Alpha in the last three months of the financial year at a cost of $15 million to Beta and $10 million to Gamma. Alpha normally earns a profit margin of 30% on the sale of these components but supplies of these components to group companies are routinely made at a reduced margin of 20%.

In the consolidated financial statements, any adjustments required as a result of this note will be regarded as temporary differences for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%. You can assume that sufficient taxable profits exist in each entity to allow the deferred tax implications of deductible temporary differences.

Note 5 – Trade receivables and payables
The trade receivables of Alpha included $9 million receivable from Beta and $6 million receivable from Gamma in respect of the purchase of components (see Note 4). On 30 March 2015, Beta and Gamma paid $9 million and $6 million respectively to Alpha and so eliminated their trade payables balance in respect of the purchase of components. Alpha recorded these receipts on 3 April 2015.

Note 6 – Provision 
On 1 March 2015, the board of directors of Alpha finalised a plan to re-organise and reconstruct the group. The plan was publicly announced on 15 March 2015. The plan involved closing down one of Alpha’s operating units – unit X (not a separate legal entity). The business of unit X will not be discontinued – the other operating units of Alpha will be able to supply the unit’s existing customers. However, all of the property, plant and equipment being used in unit X will be disposed of. Some of the employees working in unit X will be made redundant, and others will be transferred to other operating units of Alpha.

The provision made by Alpha in its draft financial statements comprised the best estimate of the following:

On 15 March 2015, the property, plant and equipment of unit X, which is included in the above statement of financial position, had a total carrying value of $15 million. $12 million of this amount relates to property, and $3 million to plant and equipment. On 15 March 2015, all of the property, plant and equipment was offered for sale. The property was offered for sale at a price of $16·5 million, and the plant and equipment at $1·05 million. Both of these amounts are considered to be reasonable prices which are achievable within six months of the year end. The estimated costs of disposal of the property are $500,000 and the costs of disposal of the plant $50,000. However, none of the property, plant and equipment of unit X which was being offered for sale had actually been sold by 31 March 2015. You can assume that any change in carrying value of this property, plant and equipment between 15 and 31 March 2015 is immaterial.

Note 7 – Long-term borrowings
On 31 March 2015, Alpha issued 30 million $1 convertible loan notes. The loan notes carry a coupon rate of 6% per annum payable annually in arrears and are redeemable at par on 31 March 2020. As an alternative to redemption, the loan note holders can elect to exchange their loan notes for equity shares in Alpha on 31 March 2020. If the option to exchange were not available, the investors in the loan notes would have required a return on their investment of 10% per annum.

Discount factors which may be relevant are as follows:

On 31 March 2015, Alpha debited cash and credited long-term borrowings with $30 million in respect of this loan.

Required:
Prepare the consolidated statement of financial position of Alpha at 31 March 2015.