QUESTION TWO $[50]$

Pop Ltd acquired $112000$ ordinary shares in Corn Ltd on $31$ December $2020.$ The following

represent the abridged statements of financial position of the two companies on that date:

Pop Ltd Corn Ltd

R R

ASSETS

Non$-$ current assets $17000077000$

Property, plant and equipment $6785077000$

Investment in Corn Ltd at fair value $90000-$

Loan $$ Corn Ltd $11250-$

Current assets $97500126000$

Inventories $4125094500$

Trade and other receivables $56250-$

Cash and cash equivalents $-31500$

Total assets $267500203000$

EQUITY AND LIABILITIES

Total equity $215625105000$

Ordinary shares at $50$c each $12500070000$

Retained earnings $7500028000$

Other components of equity $156257000$

TOTAL LIABILITIES $5187598000$

Non$-$current liabilities

Loan $$ Pop Ltd $-11250$

Debentures $1250049000$

Current liabilities

Trade and other payables $2500037750$

Bank overdraft $14375-$

Total equity and liabilities $267500203300$

Additional information

Pop Ltd acquired $112000$ shares at the date of acquisition in Corn Ltd$.$

Required:

$1.$ Prepare the pro$-$forma consolidation journal entries for the year ended $31$ December

$2020.(20)$

$2.$ Prepare the consolidated statement of financial position of the Pop Ltd group as at $31$

December $2020.(15)$

$3.$ Calculate the amount of goodwill$/$ gain from bargain purchase if the consideration paid

for the acquisition of Corn Ltd was R$78000.(7)$

$4.$ Calculate the amount of goodwill$/$ gain from bargain purchase to be disclosed in the

consolidated statement of financial position of the Pop Ltd group as at $31$ December

$2020.$ On $31$ December $2020,$ Corn Ltd$.$s shares were trading at a market value of $85$c

per share. $(7)$

$+1$ Communication mark