Question 32a
The following are the draft statements of financial position of Party Co and Streamer Co as at 30 September 20X5:
Party Co | Streamer Co | |
---|---|---|
$´000 | $´000 | |
ASSETS | ||
Non-current assets | ||
Property, plant and equipment | 392,000 | 84,000 |
Investments | 120,000 |
Nil |
512,000 | 84,000 | |
Current assets | 94,700 |
44,650 |
Total assets | 606,700 | 128,650 |
EQUITY AND LIABILITIES | ||
Equity | ||
Equity shares | 190,000 | 60,000 |
Retained earnings | 210,000 | 36,500 |
Revaluation surplus | 41,400 |
4,000 |
441,400 | 100,500 | |
Non-current liabilities | ||
Deferred consideration | 28,000 | Nil |
Current liabilities | 137,300 | 28,150 |
Total equity and liabilities | 606,700 |
128,650 |
The following information is relevant:
(i) | On 1 October 20X4, Party Co acquired 80% of the share capital of Streamer Co. At this date the retained earnings of Streamer Co were $34m and the revaluation surplus stood at $4m. Party Co paid an initial cash amount of $92m and agreed to pay the owners of Streamer Co a further $28m on 1 October 20X6. The accountant has recorded the full amounts of both elements of the consideration in investments. Party Co has a cost of capital of 8%. The appropriate discount rate is 0·857. |
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(ii) | On 1 October 20X4, the fair values of Streamer Co’s net assets were equal to their carrying amounts with the exception of some inventory which had cost $3m but had a fair value of $3·6m. On 30 September 20X5, 10% of these goods remained in the inventories of Streamer Co. |
(iii) | During the year, Party Co sold goods totalling $8m to Streamer Co at a gross profit margin of 25%. At 30 September 20X5, Streamer Co still held $1m of these goods in inventory. Party Co’s normal margin (to third party customers) is 45%. |
(iv) | The Party group uses the fair value method to value the non-controlling interest. At acquisition the non-controlling interest was valued at $15m. |
Required:
(a) Prepare the consolidated statement of financial position of the Party group as at 30 September 20X5.
(15 marks)