The statements of financial position of three companies are as follows: Unicycle Bicycle Tricycle GHS,000 GHS000 GHS000

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Question:

The statements of financial position of three companies are as follows:

Unicycle Bicycle Tricycle

GHS,000 GHS’000 GHS’000

Investment in Bicycle 400

Investment in Tricycle 50 300

Assets 220 340 460

670 640 460

Share capital (GHS1) 300 200 200

Retained earnings 130 250 120

Equity 430 450 320

Liabilities 240 190 140

670 640 460

Additional information

Three years ago Unicycle acquired 150,000 shares in Bicycle for consideration GHS400,000.
Two years ago Bicycle acquired 160,000 shares in Tricycle for consideration of GHS300,000.
One year ago Unicycle acquired 10,000 shares in Tricycle for consideration of GHS50,000.
At the date of acquisition the carrying values of the assets and liabilities were the same as the fair values, with the exception of Bicycle’s inventory that had a fair value in excess of its carrying value of GHS10,000. This inventory was sold shortly after acquisition.
Details of the fair values of the net assets and the fair value of the effective NCI are as follows:
Bicycle Net assets NCI
GHS’000 GHS’000
One year ago 400 75
Two years ago 330 60
Three years ago 300 50
Tricycle Net assets NCI
GHS’000 GHS’000
One year ago 275 160
Two years ago 250 110
Three years ago 240 90
Unicycle has a policy of always calculating goodwill in full. The impairment reviews reveal no impairment losses are to be recorded. No shares have been issued since the date of acquisition.
At the year-end Bicycle has a financial asset of GHS20,000 that is a receivable from Unicycle. This is recorded by Unicycle as a financial liability at GHS20,000.