ANSWER ALL QUESTIONS QUESTION 1: (50 MARKS) PART A: (44 MARKS) You are the Group Financial Reporter at Port Lous Ltd, an investment holding company, which has investments in shares in St. Croix Ltd, and St. Martin Ltd. You are given the folowing draft statements of financial position as at 31 July 2019 to consolidate: ASSETS Port St. Croix Louis MUR Notes million MUR million MUR million Non-current assets Property, plant and equipment Investment-St. Croix Investment-St. Martin Current assets TOTAL ASSETS 505 640 160 100 630 2901 2,660 EQUITY AND LIABILITIES EQUITY Share capital at MURT each 1,500 500 200 Share premium 300 100 50 Revaluation surplus 70 Retained eamings 200 60 TOTAL EQUITY 2,425 380 LIABILITIES Liabilities 235 70 Total liabilities TOTAL EQUITY AND LIABILITIES 235 2,660 895 Page 2 of 10 Note 1-Port Louis Ltd's investments On 1 April 2012. Port Louis Ltd acquired 400 million ordinary shares of St. Croix Ltd when the retained eamings were MUR 100 milion and fair value of net assets were MUR 710 milion The difference between the fair value of the net assets and their carrying amount was due to tems of non-depreciable property, plant and equipment On 1 April 2013. Port Louis Ltd bought 40% shares in St. Martin Ltd. The retained eamings of St. Martin on that date were MURSO million and those of St. Croix were MUR 150 milion There was no revaluation surplus in the books of St. Martin on 1 April 2013 and the fair values of the net assets of Line at April 2013 were not materially different from their carrying values Late during the current financial year, some key customers cancelled their contracts with the St. Croix Ltd. The directors of Port Louis Ltd expect that these events wil continue to have an adverse impact on St. Croix Ltd operations and the goodwill acquired. The directors estimate that it would be appropriate to impair a third of goodwill acquired. Note 2-St. Croix Ltd's investments Port Louis Ltd and St. Croix Ltd had acquired their holdings in St. Martin on the same date as part of an attempt to mask the true ownership of Line. St Croix Ltd acquired 25% of the ordinary shares of St. Martin Ltd. The information on the net assets of St. Manin Ltd given under note 1 above is relevant. Note 3-Non-controlling interest It is the group's policy to value the non-controlling interest at its proportionate share of the far value of the subsidiary's identifiable net assets Page 3 of 10 Note 4-Inter-company sales and purchases Following the acquisition of the shares St. Martin Ltd bought MUR 10 million worth of goods from Port Louis Ltd, half of which remained unsold at 31 July 2019. Port Louis Ltd prices is goods with a margin of 10% Note 5-Inter-company accounts As at 31 July 2019, Port Louis Lid had a trade receivable of MUR 2 million from St. Croix Ltd. St. Croix Lid's accounts showed a payable of MUR 1 million as it paid MUR 1 million on 31 July 2019 in favour of Port Louis Ltd which reached the latter's account only on 4 August 2019. Note 6-Development expenditure The group operates in the pharmaceutical industry and incurs a significant amount of expenditure on the development of products. These costs were formerly written off to the income statement as incurred but then reinstated when the related products were brought into commercial use. The reinstated costs amounting to MUR 20 million are shown as 'development inventories The costs do not meet the criteria in IAS 38 Intangible assets for classification as intangibles and the accountant now wishes to ensure that the financial statements comply strictly with IASAFRS as regards this matter. None of the four companies declared or paid dividends during the year and any effect of taxation must be ignored. REQUIRED Prepare the consolidated statement of teancial position for Port Louis Group at 31 July 2019. N.B. Figures are to be reported to 1 decimal places in MUR million.