In June 2014, Osprey Ltd made an offer to the shareholders of Kite Ltd to acquire...

    

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In June 2014, Osprey Ltd made an offer to the shareholders of Kite Ltd to acquire a controlling interest in the company. Osprey Ltd was prepared to pay $1.50 cash per share, provided that 70% of the shares could be acquired (enough shares to gain control). The directors of Kite Ltd recommended that the offer be accepted. By 1 July 2014, when the offer expired, 75% of the shares had changed hands and were now in the possession of Osprey Ltd. The statement of financial position of Kite Ltd on that date is shown below. KITE LTD Statement of financial position as at 1 July 2014 Current assets Non-current assets Share capital - 400 000 shares General reserve Asset revaluation surplus Other components of equity Retained earnings Current liabilities $368 000 244 000 $612 000 $400 000 50 000 40 000 30 000 40 000 52 000 $612 000 At 1 July 2014, all the identifiable assets and liabilities of Kite Ltd were recorded at amounts equal to fair value. Osprey Ltd uses partial goodwill method. Additional information Osprey Ltd had made an advance of $80 000 to Kite Ltd. This advance was repayable in June 2016. The directors of Osprey Ltd and Kite Ltd had declared final dividends of $50 000 and $10 000 respectively, from current period's profits. ● ● ● ● Kite Ltd holds at the end of the reporting period inventory purchased from Osprey Ltd during the year for $55 000. Osprey Ltd invoices goods to its subsidiary at cost plus 10%. On 1 July 2014, Kite Ltd sold to Osprey Ltd some display equipment for $60 000. At that date, the carrying amount of the equipment was $54 000 and the equipment was estimated to have a useful life of 10 years if used constantly over that period. Assume a tax rate of 30%. The draft financial statements of the two companies on 30 June 2015 revealed the following details: Osprey Ltd Kite Ltd $ 878 900 $ 388 900 Sales revenue Cost of sales Gross profit Other income Other expenses Profit from trading Gain on sale of non-current assets Profit before tax Income tax expense Profit Retained earnings (1/7/14) Dividend paid Dividend declared Retained earnings (30/6/15) Share capital General reserve Asset revaluation surplus Other components of equity Current liabilities Financial assets Receivables Inventory Investments - Shares in Kite Ltd Other investments Equipment Accumulated depreciation Land 374 400 504 500 282 100 786 600 216 200 570 400 20 000 590 400 112 400 478 000 112 000 590 000 40 000 50 000 90 000 500 000 1 200 000 24 000 70 000 30 000 177 000 $2 001 000 $ 280 000 320 000 287 500 450 000 47 000 650 000 (250 000) 216 500 $2 001 000 112 400 276 500 102 500 379 000 115 800 263 200 10 000 273 200 50 000 223 200 40 000 263 200 30 000 10 000 40 000 223 200 400 000 50 000 40 000 30 000 154 400 $ 897 600 $ 204 000 175 000 210 600 360 000 (160 000) 108 000 $ 897 600 Required Prepare the consolidated financial statements (Statement of profit or loss and other comprehensive income and Statement of financial position) for Osprey Ltd and its subsidiary as at 30 June 2015. In June 2014, Osprey Ltd made an offer to the shareholders of Kite Ltd to acquire a controlling interest in the company. Osprey Ltd was prepared to pay $1.50 cash per share, provided that 70% of the shares could be acquired (enough shares to gain control). The directors of Kite Ltd recommended that the offer be accepted. By 1 July 2014, when the offer expired, 75% of the shares had changed hands and were now in the possession of Osprey Ltd. The statement of financial position of Kite Ltd on that date is shown below. KITE LTD Statement of financial position as at 1 July 2014 Current assets Non-current assets Share capital - 400 000 shares General reserve Asset revaluation surplus Other components of equity Retained earnings Current liabilities $368 000 244 000 $612 000 $400 000 50 000 40 000 30 000 40 000 52 000 $612 000 At 1 July 2014, all the identifiable assets and liabilities of Kite Ltd were recorded at amounts equal to fair value. Osprey Ltd uses partial goodwill method. Additional information Osprey Ltd had made an advance of $80 000 to Kite Ltd. This advance was repayable in June 2016. The directors of Osprey Ltd and Kite Ltd had declared final dividends of $50 000 and $10 000 respectively, from current period's profits. ● ● ● ● Kite Ltd holds at the end of the reporting period inventory purchased from Osprey Ltd during the year for $55 000. Osprey Ltd invoices goods to its subsidiary at cost plus 10%. On 1 July 2014, Kite Ltd sold to Osprey Ltd some display equipment for $60 000. At that date, the carrying amount of the equipment was $54 000 and the equipment was estimated to have a useful life of 10 years if used constantly over that period. Assume a tax rate of 30%. The draft financial statements of the two companies on 30 June 2015 revealed the following details: Osprey Ltd Kite Ltd $ 878 900 $ 388 900 Sales revenue Cost of sales Gross profit Other income Other expenses Profit from trading Gain on sale of non-current assets Profit before tax Income tax expense Profit Retained earnings (1/7/14) Dividend paid Dividend declared Retained earnings (30/6/15) Share capital General reserve Asset revaluation surplus Other components of equity Current liabilities Financial assets Receivables Inventory Investments - Shares in Kite Ltd Other investments Equipment Accumulated depreciation Land 374 400 504 500 282 100 786 600 216 200 570 400 20 000 590 400 112 400 478 000 112 000 590 000 40 000 50 000 90 000 500 000 1 200 000 24 000 70 000 30 000 177 000 $2 001 000 $ 280 000 320 000 287 500 450 000 47 000 650 000 (250 000) 216 500 $2 001 000 112 400 276 500 102 500 379 000 115 800 263 200 10 000 273 200 50 000 223 200 40 000 263 200 30 000 10 000 40 000 223 200 400 000 50 000 40 000 30 000 154 400 $ 897 600 $ 204 000 175 000 210 600 360 000 (160 000) 108 000 $ 897 600 Required Prepare the consolidated financial statements (Statement of profit or loss and other comprehensive income and Statement of financial position) for Osprey Ltd and its subsidiary as at 30 June 2015.

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