Section B: Partly Owned Subsidiary $(25$ marks$)$

$2.$ XL Ltd owns $80\%$ of MN Ltd$.$ The statements of financial position for the two companies as of $31$ March $2019$ are provided below.

Statement of Financial Position as at $31$ March $2019$

XL Ltd $($R$000)$

MN Ltd $($R$000)$

Non$-$Current Assets

Tangible assets at net book value

$2,200$

$920$

Investment in MN Ltd $(800,000$ Ord Shares$)$

$3,200$

$-$

Current Assets

Inventory

$1,300$

$400$

Accounts Receivables

$3,400$

$300$

Cash and bank

$250$

$80$

Total Assets

$10,350$

$1,700$

Current Liabilities

Accounts Payables

$4,100$

$280$

Capital and Reserves

Share capital of R$1$ each

$5,000$

$1,000$

Retained Income

$1,250$

$420$

Total Equity and Liabilities

$10,350$

$1,700$

$$

Additional Information:

At $31$ March $2019,$ XL Ltd had inventory purchased from MN Ltd for R$60,000.$ The goods had been invoiced by MN Ltd at cost plus $20\%.$

Inter$-$company debts at $31$ March $2019$: XL Ltd owed MN Ltd R$70,000.$

A remittance of R$40,000$ from XL Ltd to MN Ltd in March $2019$ was not received by MN Ltd until April $2019.$

a$.$ Prepare the consolidated statement of financial position for XL Ltd and its partly owned subsidiary MN Ltd as of $31$ March $2019.(15$ marks$)$

b$.$ Discuss the impact of the additional information provided $($inventory$,$ inter$-$company debts, and remittance$)$ on the consolidated financial statements. $(10$ marks