Prop and Flap have produced the following statements of financial position as at 31 October 2008:




The following information is relevant to the preparation of the Financial Statements of the Prop Group:
1 Prop acquired 80% of the issued ordinary share capital of Flap many years ago when the Retained Earnings of Flap were $72 million. Consideration transferred was $800 million. Flap has performed well since acquisition and so far there has been no impairment to goodwill.
2 At the date of acquisition the plant and equipment of Flap was revalued upwards by $40 million, although this revaluation was not recorded in the accounts of Flap. Depreciation would have been $32 million greater had it been based on the revalued figure.
3 Flap buys goods from Prop upon which Prop earns a margin of 20%. At 31 October 2008 Flap’s inventories include $180 million goods purchased from Prop.
4 At 31 October 2008 Prop has receivables of $140 million owed by Flap and payables of $60 million owed to Flap.
5 The Market Price of the non-controlling interest shares just before Flap’s acquisition by Prop was $1.30. It is the group’s policy to value the non-controlling interest at fair value.

Required:
Prepare the Prop Group consolidated Statement of Financial Position as at 31 October 2008.

Transcribed Image Text:

Prop $m Flap $m $m $m ASSETS Non-current assets Plant and equipment 2,100 480 Investments 800 Current assets Inventories 880 280 Receivables 580 420 Cash and cash equivalents 400 1,860 708 Total assets 4,760 1,188 EQUITY and LIABILITIES 2,400 680 Equity share capital Retained earnings 860 3,260 200 880 Non-current liabilities Long-term borrowing 400 Current liabilities Payables 1,100 228 Bank overdraft 80 1,100 308 Total equity and liabilities 4,760 1,188 Prop $m Flap $m $m $m ASSETS Non-current assets Plant and equipment 2,100 480 Investments 800 Current assets Inventories 880 280 Receivables 580 420 Cash and cash equivalents 400 1,860 708 Total assets 4,760 1,188 EQUITY and LIABILITIES 2,400 680 Equity share capital Retained earnings 860 3,260 200 880 Non-current liabilities Long-term borrowing 400 Current liabilities Payables 1,100 228 Bank overdraft 80 1,100 308 Total equity and liabilities 4,760 1,188

Answer rating: 100% (QA)

Required solution Prop Group Consolidated Statement of Financial Position as at 31October 2008 M Ass... View the full answer