Q.8 Following are the summarized statements of financial position of Aluminium Limited (AL) and Silver Limited...

   

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Q.8 Following are the summarized statements of financial position of Aluminium Limited (AL) and Silver Limited (SL) as at 31 December 2022: AL SL Rs. in million Property, plant and equipment 1,160 960 Investment property 440 290 Investments at cost 1,000 Inventories 365 190 Other current assets 295 270 3,260 1,710 Share capital (Rs. 10 per share) 1,400 800 Share premium 550 Revaluation surplus 150 Retained earnings 618 445 Liabilities 692 315 3,260 1,710 111 On 1 January 2022, AL acquired a 70% shareholding in SL for the following consideration: Issuance of 20 million shares of AL after one month of acquisition. The market price of AL's shares at the date of acquisition was Rs. 25 each. However, market price increased to Rs. 27 each when shares were issued. The issuance of shares has been recorded in AL's books at Rs. 27 per share. Cash payment of Rs. 304 million after three years. The amount payable has been recorded in full i.e. at Rs. 304 million in AL's books. At acquisition date, SL's retained earnings and revaluation surplus were Rs. 515 million and Rs. 105 million respectively. Further, carrying values of SL's net assets were equal to their fair values except an investment property whose fair value exceeded the carrying value by Rs. 160 million. The property had a remaining useful life of eight years. Both AL and SL subsequently measure investment properties using the cost model. AL follows the cost model whereas SL follows the revaluation model for subsequent measurement of property, plant and equipment. If SL had adopted the cost model, SL would not have recorded revaluation surplus of Rs. 45 million on 31 December 2022. (iv) During the year, SL made sales of Rs. 150 million to AL at 20% mark-up. 40% of these goods are included in AL's closing inventories. (v) On 1 July 2022, AL acquired 5 million shares representing 25% shareholdings in Platinum Limited (PL) for Rs. 91 million. On acquisition date, the fair value of PL's share was Rs. 17 each. AL has nominated 1 director out of 5 directors on the board of PL. (vi) During the six months ended 31 December 2022, PL reported net profit of Rs. 52 million. AL has recorded its share of dividend from PL amounting to Rs. 5 million as other income. (vii) On 1 September 2022, AL sold a machine having carrying value of Rs. 60 million to PL for Rs. 108 million. The remaining useful life of the machine at the time of disposal was four years. (viii) A fair value loss of Rs. 22 million needs to be recorded in respect of AL's remaining investments. (ix) Discount rate of 15% per annum may be used wherever required. (x) AL measures non-controlling interest at the proportionate share of SL's identifiable net assets. Required: In accordance with IFRSS, prepare AL's consolidated statement of financial position as at 31 December 2022. (18) Q.8 Following are the summarized statements of financial position of Aluminium Limited (AL) and Silver Limited (SL) as at 31 December 2022: AL SL Rs. in million Property, plant and equipment 1,160 960 Investment property 440 290 Investments at cost 1,000 Inventories 365 190 Other current assets 295 270 3,260 1,710 Share capital (Rs. 10 per share) 1,400 800 Share premium 550 Revaluation surplus 150 Retained earnings 618 445 Liabilities 692 315 3,260 1,710 111 On 1 January 2022, AL acquired a 70% shareholding in SL for the following consideration: Issuance of 20 million shares of AL after one month of acquisition. The market price of AL's shares at the date of acquisition was Rs. 25 each. However, market price increased to Rs. 27 each when shares were issued. The issuance of shares has been recorded in AL's books at Rs. 27 per share. Cash payment of Rs. 304 million after three years. The amount payable has been recorded in full i.e. at Rs. 304 million in AL's books. At acquisition date, SL's retained earnings and revaluation surplus were Rs. 515 million and Rs. 105 million respectively. Further, carrying values of SL's net assets were equal to their fair values except an investment property whose fair value exceeded the carrying value by Rs. 160 million. The property had a remaining useful life of eight years. Both AL and SL subsequently measure investment properties using the cost model. AL follows the cost model whereas SL follows the revaluation model for subsequent measurement of property, plant and equipment. If SL had adopted the cost model, SL would not have recorded revaluation surplus of Rs. 45 million on 31 December 2022. (iv) During the year, SL made sales of Rs. 150 million to AL at 20% mark-up. 40% of these goods are included in AL's closing inventories. (v) On 1 July 2022, AL acquired 5 million shares representing 25% shareholdings in Platinum Limited (PL) for Rs. 91 million. On acquisition date, the fair value of PL's share was Rs. 17 each. AL has nominated 1 director out of 5 directors on the board of PL. (vi) During the six months ended 31 December 2022, PL reported net profit of Rs. 52 million. AL has recorded its share of dividend from PL amounting to Rs. 5 million as other income. (vii) On 1 September 2022, AL sold a machine having carrying value of Rs. 60 million to PL for Rs. 108 million. The remaining useful life of the machine at the time of disposal was four years. (viii) A fair value loss of Rs. 22 million needs to be recorded in respect of AL's remaining investments. (ix) Discount rate of 15% per annum may be used wherever required. (x) AL measures non-controlling interest at the proportionate share of SL's identifiable net assets. Required: In accordance with IFRSS, prepare AL's consolidated statement of financial position as at 31 December 2022. (18)

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