The following are the summarised statements of financial position of North Ltd and South Ltd as...

 

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The following are the summarised statements of financial position of North Ltd and South Ltd as at 31 December 2020 : Statements of Financial Position as at 31 December 2020 North South Ltd Ltd ASSETS $m $m Non-current assets Property, plant and equipment 425 288 Investments 147 13 572 301 Current assets Inventories 88 73 Accounts receivable 147 106 Other current assets 37 22 Cash and cash equivalents 36 15 308 216 880 517 EQUITY AND LIABILITIES Equity Ordinary shares 300 150 45 $0.2 Preference shares Retained profits 157 90 457 285 Non-current liabilities 150 82 Current liabilities 154 46 30 24 Accounts payable Dividends payable Tax payable Bank overdraft 89 55 = 25 273 150 423 232 880 517 The following additional information is available: 1. South Ltd has 150 million ordinary shares and 45 million preference shares in issue. There has been no change in the number of issued shares for the company. 2. On 1 January 2018 North Ltd purchased 90 million ordinary shares in South Ltd paying a total of $120 million. The retained profits of South Ltd on 1 January 2018 were $30 million. 3. All the assets and liabilities of South Ltd were reported on its balance sheet at fair values as at 1 January 2018 except for a machine, with a remaining useful life of 5 years, whose fair value exceeded its carrying amount by $20 million. 4. Since 1 January 2018 the directors of North Ltd consider that the amount paid for as goodwill upon the acquisition has been impaired by $3 million. 5. South Ltd declared dividend on 1 December 2020 at the following rate: Ordinary dividend - $0.1 per Preference dividend - $0.2 per shares. North Ltd has not accounted for the dividend receivable from South Ltd. 6. During the year ended 31 December 2020 North Ltd sold inventory to South Ltd for $25 million. North Ltd earned a uniform margin of 40% on these sales. During the year ended 31 December 2020 South Ltd resold 80% of this inventory. On 31 December 2020 South Ltd had unpaid invoices totalling $18 million payable to North Ltd in respect of these purchases. 7. Each ordinary share in South Ltd carries one vote and there are no other voting rights in the company. 8. Non-controlling interest is valued at proportionate share of the subsidiary's identifiable net assets. Instructions: You are required to prepare the consolidated balance sheet of North Ltd as at 31 December 2020. The following are the summarised statements of financial position of North Ltd and South Ltd as at 31 December 2020 : Statements of Financial Position as at 31 December 2020 North South Ltd Ltd ASSETS $m $m Non-current assets Property, plant and equipment 425 288 Investments 147 13 572 301 Current assets Inventories 88 73 Accounts receivable 147 106 Other current assets 37 22 Cash and cash equivalents 36 15 308 216 880 517 EQUITY AND LIABILITIES Equity Ordinary shares 300 150 45 $0.2 Preference shares Retained profits 157 90 457 285 Non-current liabilities 150 82 Current liabilities 154 46 30 24 Accounts payable Dividends payable Tax payable Bank overdraft 89 55 = 25 273 150 423 232 880 517 The following additional information is available: 1. South Ltd has 150 million ordinary shares and 45 million preference shares in issue. There has been no change in the number of issued shares for the company. 2. On 1 January 2018 North Ltd purchased 90 million ordinary shares in South Ltd paying a total of $120 million. The retained profits of South Ltd on 1 January 2018 were $30 million. 3. All the assets and liabilities of South Ltd were reported on its balance sheet at fair values as at 1 January 2018 except for a machine, with a remaining useful life of 5 years, whose fair value exceeded its carrying amount by $20 million. 4. Since 1 January 2018 the directors of North Ltd consider that the amount paid for as goodwill upon the acquisition has been impaired by $3 million. 5. South Ltd declared dividend on 1 December 2020 at the following rate: Ordinary dividend - $0.1 per Preference dividend - $0.2 per shares. North Ltd has not accounted for the dividend receivable from South Ltd. 6. During the year ended 31 December 2020 North Ltd sold inventory to South Ltd for $25 million. North Ltd earned a uniform margin of 40% on these sales. During the year ended 31 December 2020 South Ltd resold 80% of this inventory. On 31 December 2020 South Ltd had unpaid invoices totalling $18 million payable to North Ltd in respect of these purchases. 7. Each ordinary share in South Ltd carries one vote and there are no other voting rights in the company. 8. Non-controlling interest is valued at proportionate share of the subsidiary's identifiable net assets. Instructions: You are required to prepare the consolidated balance sheet of North Ltd as at 31 December 2020.

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