On 1 April 2020 Albion plc (Albion) acquired 80% of Wanderer pic's (Wanderer) ordinary shares. The...

 

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On 1 April 2020 Albion plc ("Albion") acquired 80% of Wanderer pic's ("Wanderer") ordinary shares. The terms of the acquisition were: - a share exchange whereby Albion issued 2 ordinary shares in exchange for every 3 ordin shares of Wanderer, and - a cash payment of £1.54 per acquired share deferred until 1 April 2021. Albion has not recorded any of the consideration for Wanderer in its financial statements for the yea ended 31 March 2021. At 1 April 2020 the fair value of Albion's and Wanderer's ordinary shares wa £3.25 and £1.75 respectively. Albion's cost of capital is 12% per annum. The summarised statements of financial position of the two companies at 31 March 2021 are as set out below: Assets Non-current assets Property, plant and equipment Intangible assets Current assets Inventory Trade receivables Bank Total assets Equity and liabilities Albion £000 221,000 56,000 277,000 149,000 94,000 28,000 271,000 548,000 Wanderer £000 165,000 165,000 114,000 65,000 6,000 185,000 350,000 Equity and liabilities Share capital (ordinary shares of £1 per share) Share premium account Retained earnings Non-current liabilities Deferred tax Current liabilities Trade payables Total equity and liabilities 148,800 36,000 252,200 437,000 40,000 71,000 548,000 96,000 180,000 276,000 14,000 60,000 350,000 On 1 April 2020 Albion plc ("Albion") acquired 80% of Wanderer pic's ("Wanderer") ordinary shares. The terms of the acquisition were: - a share exchange whereby Albion issued 2 ordinary shares in exchange for every 3 ordin shares of Wanderer, and - a cash payment of £1.54 per acquired share deferred until 1 April 2021. Albion has not recorded any of the consideration for Wanderer in its financial statements for the yea ended 31 March 2021. At 1 April 2020 the fair value of Albion's and Wanderer's ordinary shares wa £3.25 and £1.75 respectively. Albion's cost of capital is 12% per annum. The summarised statements of financial position of the two companies at 31 March 2021 are as set out below: Assets Non-current assets Property, plant and equipment Intangible assets Current assets Inventory Trade receivables Bank Total assets Equity and liabilities Albion £000 221,000 56,000 277,000 149,000 94,000 28,000 271,000 548,000 Wanderer £000 165,000 165,000 114,000 65,000 6,000 185,000 350,000 Equity and liabilities Share capital (ordinary shares of £1 per share) Share premium account Retained earnings Non-current liabilities Deferred tax Current liabilities Trade payables Total equity and liabilities 148,800 36,000 252,200 437,000 40,000 71,000 548,000 96,000 180,000 276,000 14,000 60,000 350,000

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