Please ensure that the answer is correct and write clear explanations.It should be in accounting format.

updated.

Equity QUESTION 1 [40 MARKS On October 2019 Prime acquired 80% equity shares of Strike's total equity shares on the following terms: a share exchange of four shares in Prime for every eight shares acquired in Strike, and a cash payment due on 30 June 2025 of MUR 2 per share acquired Ignore cost of capital). At the date of acquisition shares in Prime and Strike had a stock market value of MUR 2 50 and MUR 1.50 each respectively Equity in the separate financial statements of Strike as at 1 July 2018: MUR Equity shares of MUR 1 1.800.000 Retained earnings 840 000 Statements of profit or loss for the year ended 30 June 2020: Prime Strike MRU MUR Revenue 8.450.000 1.840.000 Cost Of Sales 3280.000 440.000 Gross Profit 5,170,000 1.400,000 Distribution Expenses 80.000 32 000 Administrative Costs 170.000 86.000 Finance Costs 42.000 16.000 Profit before tax 4,878,000 1,266 000 Income tax expense 78 000 24 000 Profit for the year 4,800,000 1,242,000 At the date of acquisition, the fair values of Strikes assets were equal to their carrying amounts with the exception of some items of equipment which had a fair value of MUR 200,000 above its carrying amount. The remaining life of the equipment at the date of acquisition was 4 years. Depreciation is charged to cost of sales 1) Sales from Strike to Prime in the post-acquisition period were MUR 800,000 at a mark- up on cost of 10%. Strike had MUR 330,000 of these goods in Inventory as at 30 June 2020 On 30 June 2020, Prime carried out an impairment review which identified that the goodwill on the acquisition of Strike was impaired by MUR 25.000. Impaired goodwill is charged to cost of sales (iv) Prime's policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose. Strike's has decided to value share price at that date to be MUR 1.80 to be representative of the fair value of the shares held by the non- controlling interest REQUIRED (a) Calculate the consolidated goodwill at the date of acquisition and as 30 June 2020 of Strike [12 marks] (b) Prepare Prime's consolidated statement of profit or loss for the year ended 30 June 2020 20 marks! (c) Prime is deciding to invest 25% in equity share capital of another company. In accordance with IAS 28 explain how Prime should account for its investment when preparing its financial statement for the year ending 30 June 2021 18 marks QUESTION 1 [40 MARKS] On 1 October 2019 Prime acquired 80% equity shares of Strike's total equity shares on the following terms: a share exchange of four shares in Prime for every eight shares acquired in Strike; and a cash payment due on 30 June 2025 of MUR 2 per share acquired (Ignore cost of capital). At the date of acquisition, shares in Prime and Strike had a stock market value of MUR 2-50 and MUR 1.50 each respectively. Equity in the separate financial statements of Strike as at 1 July 2019: Equity MUR Equity shares of MUR 1 1,800,000 Retained earnings 840.000 Statements of profit or loss for the year ended 30 June 2020: Prime Strike MRU MUR Revenue 8,450,000 1.840.000 Cost Of Sales 3.280.000 440,000 Gross Profit 5,170,000 1,400,000 Distribution Expenses 80.000 32.000 Administrative Costs 170,000 86,000 Finance Costs 42,000 16,000 Profit before tax 4,878,000 1,266,000 Income tax expense 78,000 24,000 Profit for the year 4,800,000 1,242,000 (1) At the date of acquisition, the fair values of Strike's assets were equal to their carrying amounts with the exception of some items of equipment which had a fair value of MUR 200,000 above its carrying amount. The remaining life of the equipment at the date of acquisition was 4 years. Depreciation is charged to cost of sales. (1) Sales from Strike to Prime in the post-acquisition period were MUR 800,000 at a mark- up on cost of 10%. Strike had MUR 330,000 of these goods in inventory as at 30 June 2020. () On 30 June 2020, Prime carried out an impairment review which identified that the goodwill on the acquisition of Strike was impaired by MUR 25,000. Impaired goodwill is charged to cost of sales. (iv) Prime's policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose, Strike's has decided to value share price at that date to be MUR 1.80 to be representative of the fair value of the shares held by the non- controlling interest REQUIRED (a) Calculate the consolidated goodwill at the date of acquisition and as at 30 June 2020 of Strike. [12 marks] (b) Prepare Prime's consolidated statement of profit or loss for the year ended 30 June 2020 (20 marks) (c) Prime is deciding to invest 25% in equity share capital of another company. In accordance with IAS 28 explain how Prime should account for its investment when preparing its financial statement for the year ending 30 June 2021. [8 marks)