Below are the separate statements of financial position of Ghana Ltd and its two investee companies...

  

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Below are the separate statements of financial position of Ghana Ltd and its two investee companies as at 31 December 2017 Non-current assets Property, plant and equipment Investment in Nigeria Investment in Togo Current assets Inventories Trade receivables Cash Total Assets Equity Ordinary share capital @GHcleach Share premium Retained earnings Current liabilities Trade payables Ghana Ltd GHe'm 2,458 500 27 2,985 450 610 240 1,300 4.285 500 250 2,405 3,155 1,130 Page 1 of 6 4.285 Nigeria Ltd GHe'm 1,410 240 1,650 200 365 95 660 2.310 200 120 1,572 1,892 418 2.310 Togo Ltd GHç'm 870 870 260 139 116 515 1.385 100 50 850 1,000 385 1.385 The following information is relevant: 1) On 1 January 2016, Ghana Ltd acquired 60% of the equity share capital Nigeria Ltd. The consideration consisted of the following elements: cash of GH¢500 million, a share exchange of two shares in Chana Ltd for every five acquired shares in Nigeria Ltd, GHe200 million to be paid after 2 years of acquisition and GHe 400 million to be paid at the end of the fifth year of acquisition if Nigeria earns a return of 25% on Its equity. No entries have been made in the financial statements except the cash offer. At the date of acquisition, shares in Ghana Ltd had a market value of GHC4 each and the shares of Nigeria Ltd had a stock market price of GH¢3 each. The cost of capital of Ghana is 10%. 11) On 30 July 2015 Ghana acquired 10% of Togo Ltd and on the same day Nigeria acquired 80% of Togo. III) During the year, Nigeria sold goods to Togo of GHe260 million including a mark-up of 25%. All of these goods remain in Inventories at the year end. Iv) Nigerta Ltd sold goods to Ghana for GH 300 million at a margin of 20% and only quarter of these goods were left in Inventories at the year end. v) The retained earnings of the three companies at the acquisition dates was: 30 July 2015 1 January 2016 GHe'm GHe'm 1,610 Ghana Nigeria Togo 700 40 1,860 950 100 VI) At the date of acquisition, the fair values of Nigeria Ltd.'s assets were equal to their carrying amounts with the exception of its property. This had a fair value of GH¢ 10 million below its carrying amount and a remaining useful life 5years. Nigeria Ltd has not incorporated this value change into its separate financial statements. vil) The fair value of Ghana's 10% holding in Togo on 1 January 2016 was GH₂50 million. Chana and Nigeria hold their investments in subsidiaries at cost in their separate financial statements. VIII) It is group policy to value the non-controlling interests at fair value at acquisition. For this purpose, Nigeria's share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling Interest. However, the directors valued the non-controlling interests in Togo at GHe210million on 1 January 2016. Ix) It was determined at the year-end that 20% of the goodwill relating to the acquisition of Nigeria and Togo were impaired. Page 2 of 6 Required Prepare the consolidated statement of financial position of Chana group Ltd as at 31 December 2017. [22marks] Below are the separate statements of financial position of Ghana Ltd and its two investee companies as at 31 December 2017 Non-current assets Property, plant and equipment Investment in Nigeria Investment in Togo Current assets Inventories Trade receivables Cash Total Assets Equity Ordinary share capital @GHcleach Share premium Retained earnings Current liabilities Trade payables Ghana Ltd GHe'm 2,458 500 27 2,985 450 610 240 1,300 4.285 500 250 2,405 3,155 1,130 Page 1 of 6 4.285 Nigeria Ltd GHe'm 1,410 240 1,650 200 365 95 660 2.310 200 120 1,572 1,892 418 2.310 Togo Ltd GHç'm 870 870 260 139 116 515 1.385 100 50 850 1,000 385 1.385 The following information is relevant: 1) On 1 January 2016, Ghana Ltd acquired 60% of the equity share capital Nigeria Ltd. The consideration consisted of the following elements: cash of GH¢500 million, a share exchange of two shares in Chana Ltd for every five acquired shares in Nigeria Ltd, GHe200 million to be paid after 2 years of acquisition and GHe 400 million to be paid at the end of the fifth year of acquisition if Nigeria earns a return of 25% on Its equity. No entries have been made in the financial statements except the cash offer. At the date of acquisition, shares in Ghana Ltd had a market value of GHC4 each and the shares of Nigeria Ltd had a stock market price of GH¢3 each. The cost of capital of Ghana is 10%. 11) On 30 July 2015 Ghana acquired 10% of Togo Ltd and on the same day Nigeria acquired 80% of Togo. III) During the year, Nigeria sold goods to Togo of GHe260 million including a mark-up of 25%. All of these goods remain in Inventories at the year end. Iv) Nigerta Ltd sold goods to Ghana for GH 300 million at a margin of 20% and only quarter of these goods were left in Inventories at the year end. v) The retained earnings of the three companies at the acquisition dates was: 30 July 2015 1 January 2016 GHe'm GHe'm 1,610 Ghana Nigeria Togo 700 40 1,860 950 100 VI) At the date of acquisition, the fair values of Nigeria Ltd.'s assets were equal to their carrying amounts with the exception of its property. This had a fair value of GH¢ 10 million below its carrying amount and a remaining useful life 5years. Nigeria Ltd has not incorporated this value change into its separate financial statements. vil) The fair value of Ghana's 10% holding in Togo on 1 January 2016 was GH₂50 million. Chana and Nigeria hold their investments in subsidiaries at cost in their separate financial statements. VIII) It is group policy to value the non-controlling interests at fair value at acquisition. For this purpose, Nigeria's share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling Interest. However, the directors valued the non-controlling interests in Togo at GHe210million on 1 January 2016. Ix) It was determined at the year-end that 20% of the goodwill relating to the acquisition of Nigeria and Togo were impaired. Page 2 of 6 Required Prepare the consolidated statement of financial position of Chana group Ltd as at 31 December 2017. [22marks]

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