SECTION A: COMPULSORY QUESTION Question 1 On 1 October 2020, Vanguard Ltd acquired 75% of Jupiter Ltd's equity shares by means of share exchange of two new shares in Vanguard Ltd for every five acquired shares in Jupiter. In addition, Vanguard issued to the shareholders of Jupiter a 100 10% loan note for every 1,000 shares it acquired in Jupiter. Vanguard has not recorded any of the purchase consideration, although it does have other 10% loan notes already in issue. The market value of Vanguard's shares at 1 October 2020 was 2 each. The summarised statements of financial position of the two companies as at 31 March 2021 are: Vanguard Jupiter m m Property, Plant& Equipment 47.4 25.5 Financial asset: equity 7.5 3.2 investment Stock 20.4 8.4 Trade receivables 14.8 9.0 Bank 2.1 nil 37.3 17.4 Current liabilities Bank overdraft nil 9.1 Trade payables 17.6 19.7 13.0 (4.7) 74.6 24 Non-current liabilities 10% loan notes 8.0 nil 66.6 24 Share Capital (1) 40 20 Reserves (P&L) 26.6 4 66.6 24 See Next Page