Prospectus Ltd acquired 70% of the shares in Ried Ltd on 1 March 2022. Both companies...

  

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Prospectus Ltd acquired 70% of the shares in Ried Ltd on 1 March 2022. Both companies manufacture spare parts for motor vehicles. Below is an extract from the financial statements of these companies for the year ended 28 February 2023. Share capital - ordinary shares (300 000 / 200 000 shares respectively)... 1. Retained earnings - 1 March 2022 Other components of equity. Long-term loan Trade and other payables. Loan payable - Prospectus Ltd.. Overdraft XPY Bank Revenue.... Other income... Property, plant, and equipment. Other investments... Investment in Ried Ltd (cost equals fair value). Loan receivable -Ried Ltd.... Inventory ............ Trade and other receivables.. Bank Luno Bank Cordano Finance charges.. Cost of sales Other expenses. Dividends paid...... Income tax expense Prospectus Ltd R (600 000) (3 500 000) (450 000) (1 600 000) (750 000) (20 000) (7 508 000) (380 000) 135 456 200 000 3 000 000 400 000 1 080 000 865 000 345 000 50 000 3 003 200 480 000 30 000 1 219 344 Ried Ltd R (800 000) (3 000 000) (100 000) (1 250 000) (730 000) (400 000) (7 930 000) (185 000) 7 483 912 990 000 848 888 180 000 30 000 3 140 000 375 000 90 000 1 257 200 Additional information On acquisition date, Ried Ltd's other components of equity amounted to R100 000. The carrying amount of Ried Ltd's assets and liabilities were deemed equal to the fair value thereof on this date. Each share of Ried Ltd carries one vote and voting rights alone determine control. It is group policy to show goodwill at cost less impairment in the consolidated financial statements. Goodwill was not impaired during the current year. The issued share capital of both companies remained unchanged since acquisition. 2. Dividends received is included in other income. 3. You may assume that current year profit in Ried Ltd amounts to R3 312 800. ASSESSMENT 01 (First semester) (continued) REQUIRED: REQUIRED: Prepare the following statements for the Prospectus Ltd Group for the year ended 28 February 2023: (a) The consolidated statement of profit or loss and other comprehensive income. (b) The consolidated statement of changes in equity. (c) The total assets section of the consolidated statement of financial position. Please note: Your answer must comply with the requirements of International Financial Reporting Standards (IFRS). Notes to the consolidated statements and comparative figures are not required. Round off all amounts to the nearest Rand. Ignore the taxation effect on unrealised profits and/or losses, capital gains tax and dividends tax. Marks 12.5 5.5 7 [25] Prospectus Ltd acquired 70% of the shares in Ried Ltd on 1 March 2022. Both companies manufacture spare parts for motor vehicles. Below is an extract from the financial statements of these companies for the year ended 28 February 2023. Share capital - ordinary shares (300 000 / 200 000 shares respectively)... 1. Retained earnings - 1 March 2022 Other components of equity. Long-term loan Trade and other payables. Loan payable - Prospectus Ltd.. Overdraft XPY Bank Revenue.... Other income... Property, plant, and equipment. Other investments... Investment in Ried Ltd (cost equals fair value). Loan receivable -Ried Ltd.... Inventory ............ Trade and other receivables.. Bank Luno Bank Cordano Finance charges.. Cost of sales Other expenses. Dividends paid...... Income tax expense Prospectus Ltd R (600 000) (3 500 000) (450 000) (1 600 000) (750 000) (20 000) (7 508 000) (380 000) 135 456 200 000 3 000 000 400 000 1 080 000 865 000 345 000 50 000 3 003 200 480 000 30 000 1 219 344 Ried Ltd R (800 000) (3 000 000) (100 000) (1 250 000) (730 000) (400 000) (7 930 000) (185 000) 7 483 912 990 000 848 888 180 000 30 000 3 140 000 375 000 90 000 1 257 200 Additional information On acquisition date, Ried Ltd's other components of equity amounted to R100 000. The carrying amount of Ried Ltd's assets and liabilities were deemed equal to the fair value thereof on this date. Each share of Ried Ltd carries one vote and voting rights alone determine control. It is group policy to show goodwill at cost less impairment in the consolidated financial statements. Goodwill was not impaired during the current year. The issued share capital of both companies remained unchanged since acquisition. 2. Dividends received is included in other income. 3. You may assume that current year profit in Ried Ltd amounts to R3 312 800. ASSESSMENT 01 (First semester) (continued) REQUIRED: REQUIRED: Prepare the following statements for the Prospectus Ltd Group for the year ended 28 February 2023: (a) The consolidated statement of profit or loss and other comprehensive income. (b) The consolidated statement of changes in equity. (c) The total assets section of the consolidated statement of financial position. Please note: Your answer must comply with the requirements of International Financial Reporting Standards (IFRS). Notes to the consolidated statements and comparative figures are not required. Round off all amounts to the nearest Rand. Ignore the taxation effect on unrealised profits and/or losses, capital gains tax and dividends tax. Marks 12.5 5.5 7 [25]

Answer rating: 100% (QA)

a Consolidated Statement of Profit or Loss and Other Comprehensive Income Prospectus Ltd Group Conso... View the full answer