Question 1. Draft Statement of Financial Position as at 31/05/2020 are given below: Paboni GHSGHS Sang...

 

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Question 1. Draft Statement of Financial Position as at 31/05/2020 are given below: Paboni GHSGHS Sang GHSGHS Jena GHSGHS Assets Non-Current Assets: Land & Buildings 80,000 60,000 57,000 Plant and Machinery 55,000 30,000 33,000 Investments 180,000 63,000 315,000 153,000 90,000 Current Assets: Inventory 35,000 25,000 7,500 Receivables 15,000 15,000 40,000 Cash 10,000 35,000 12,500 375,000 228,000 150,000 Equity and Liabilities Equity: Ord. Shares GHS1 150,000 75,000 75,000 Revaluation Surplus 77,000 30,000 Retained Earnings 73,000 48,000 37,500 300,000 153,000 112,500 Non-Current Liabilities 12% Loan naotes 15,000 300,000 168,000 112,500 Current Liabilities Payables 75,000 60,000 37,500 375,000 228,000 150,000 Additional information: (a) Paboni Ltd acquired 60% of the shares in Sang on 1 January 2018 when the balance on that company's retained earnings was GHS 12,000 (credit) and there was no share premium account. (b) Paboni acquired 20% of the shares of Jena and Sang acquired 60% of the shares of Jena on 1 January 2019 when that company's retained earnings stood at GHS22,500. (c) It is the group's policy to measure the non-controlling interest at acquisition at its proportionate share of the fair value of the subsidiary's net assets. (d) Paboni sold goods with original cost of GHS 15,000 to Jena for GHS 20,000. Jeikan managed to sell half of these goods to Zabzugu Ltd, a company not related to the group. The effects of the unsold goods have not been adjusted in the financial statements. (e) Among the current assets of Paboni Ltd is an item of receivable of GHS 1500 due to from Jena Ltd due to intercompany sales, but the latter has in its payable, GHS 1000 due to Paboni Ltd. It has been established that the difference is due to funds wired to Paboni which did not reflect in its bank at the year-end. (f) During the year, Paboni transferred an old machinery to Sang for 10,000 though its carrying amount in the latter's books was 8000. The machine has a remaining useful life of 5 years and is depreciated on straight line basis (g) The acquisitions were totally financed by cash payments based on the prevailing share prices of GHS 3.4 per share for Sang Ltd and GHS 1.4 for Jena Ltd. (h) There has no Goodwill impairment since the acquisitions were made (i) A legacy customer database of Jena Ltd which could not be previously capitalized (and not included in the accounts) because it did not meet the relevant standard has now been valued at GHS 10,000 with an infinite life. No impairment has been recorded since the acquisition of shares in Jena by both Paboni and Sang. Required: Prepare the consolidated statement of financial position of Paboni Group as at 31 May 2020. Question 1. Draft Statement of Financial Position as at 31/05/2020 are given below: Paboni GHSGHS Sang GHSGHS Jena GHSGHS Assets Non-Current Assets: Land & Buildings 80,000 60,000 57,000 Plant and Machinery 55,000 30,000 33,000 Investments 180,000 63,000 315,000 153,000 90,000 Current Assets: Inventory 35,000 25,000 7,500 Receivables 15,000 15,000 40,000 Cash 10,000 35,000 12,500 375,000 228,000 150,000 Equity and Liabilities Equity: Ord. Shares GHS1 150,000 75,000 75,000 Revaluation Surplus 77,000 30,000 Retained Earnings 73,000 48,000 37,500 300,000 153,000 112,500 Non-Current Liabilities 12% Loan naotes 15,000 300,000 168,000 112,500 Current Liabilities Payables 75,000 60,000 37,500 375,000 228,000 150,000 Additional information: (a) Paboni Ltd acquired 60% of the shares in Sang on 1 January 2018 when the balance on that company's retained earnings was GHS 12,000 (credit) and there was no share premium account. (b) Paboni acquired 20% of the shares of Jena and Sang acquired 60% of the shares of Jena on 1 January 2019 when that company's retained earnings stood at GHS22,500. (c) It is the group's policy to measure the non-controlling interest at acquisition at its proportionate share of the fair value of the subsidiary's net assets. (d) Paboni sold goods with original cost of GHS 15,000 to Jena for GHS 20,000. Jeikan managed to sell half of these goods to Zabzugu Ltd, a company not related to the group. The effects of the unsold goods have not been adjusted in the financial statements. (e) Among the current assets of Paboni Ltd is an item of receivable of GHS 1500 due to from Jena Ltd due to intercompany sales, but the latter has in its payable, GHS 1000 due to Paboni Ltd. It has been established that the difference is due to funds wired to Paboni which did not reflect in its bank at the year-end. (f) During the year, Paboni transferred an old machinery to Sang for 10,000 though its carrying amount in the latter's books was 8000. The machine has a remaining useful life of 5 years and is depreciated on straight line basis (g) The acquisitions were totally financed by cash payments based on the prevailing share prices of GHS 3.4 per share for Sang Ltd and GHS 1.4 for Jena Ltd. (h) There has no Goodwill impairment since the acquisitions were made (i) A legacy customer database of Jena Ltd which could not be previously capitalized (and not included in the accounts) because it did not meet the relevant standard has now been valued at GHS 10,000 with an infinite life. No impairment has been recorded since the acquisition of shares in Jena by both Paboni and Sang. Required: Prepare the consolidated statement of financial position of Paboni Group as at 31 May 2020.

Answer rating: 100% (QA)

Answer To prepare the consolidated statement of financial position for Paboni Group as at 31 May 202... View the full answer