Alpha plc paid £820,000 to acquire all of the equity shares in Beta plc on 1 January 2010 when:

(i) Beta had retained earnings amounting to £80,000.

(ii) Investments held by Beta had a market value of £120,000.

The Statements of financial position of both companies as at 31 December 2012 have been prepared as shown.

You are informed as follows:

(a) As at 31 December 2012 Alpha’s trade receivables include £114,000 receivable from Beta. However, goods invoiced at £42,000 and £30,000 cash are in transit.

(b) Inventory held by Beta on 31.12.2012 includes goods invoiced to it by Alpha at £118,000. Alpha invoices Beta at cost plus a third.

(c) £10,000 needs to be written off as impairment of goodwill.

Required: 

The Consolidated Statement of financial position of the Alpha group as at 31 December 2012.

Transcribed Image Text:

Statements as at 31 December 2012 of financial position Non-current assets: Property, plant and equipment at cost Accumulated depreciation Investments Current assets: Inventories Trade receivables O Cash and bank Alpha £'000 740 (210) 530 920 428 516 24 2,418 Beta £'000 520 (180) 340 80 312 475 13 1,220