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[Total 20 marks] Question B3 Bestfit plc has interests in a number of professional sports teams. The company is planning to launch a brand-new basketball team ('The Liverpool Lions') in the recently-formed British Basketball Premier League. The league is currently enjoying a huge surge in popularity. The company is planning to build a new 40,000 seat stadium in which the Lions can play their home matches. The stadium is to be located in a residential area of Liverpool. The company has already engaged a team of business consultants, at a cost of 37,000, that has produced the following estimates: Initial investment required: Land acquisition 20,000,000 Stadium development 25,000,000 Annual costs of running the team and stadium: Annual staff costs 15,000,000 Other annual fixed costs 2,650,000 The project is to be assessed over five years. After this time, the company plans to sell the stadium to a commercial property developer for 28,000,000 at year 5 prices. Revenues Average ticket price per seat 35 in year 1 Additional information: 1. The issued share capital of neither Texcado Ltd nor Defar Ltd has changed in the last ten years. It is the policy of Texcado Ltd to calculate goodwill and non-controlling interests using the proportionate ('proportion of net assets) method. On the date of acquisition, the fair values of the net assets of Defar Ltd did not differ materially from their carrying amounts, Texcado Ltd has undertaken annual impairment reviews of goodwill since the acquisition took place. As a result of these reviews, there has been an impairment in the value of goodwill in respect of Defar Ltd to date totalling 16.000. Required: a) Prepare the consolidated Statement of Financial Position of Texcado Ltd as at 31 July 2017 (15 marks) b) Explain what is meant by the term associate and outline how the results of an associate are incorporated in the consolidated income statement (5 marks) Total 20 markel [Total 20 marks] Question B3 Bestfit plc has interests in a number of professional sports teams. The company is planning to launch a brand-new basketball team ('The Liverpool Lions') in the recently-formed British Basketball Premier League. The league is currently enjoying a huge surge in popularity. The company is planning to build a new 40,000 seat stadium in which the Lions can play their home matches. The stadium is to be located in a residential area of Liverpool. The company has already engaged a team of business consultants, at a cost of 37,000, that has produced the following estimates: Initial investment required: Land acquisition 20,000,000 Stadium development 25,000,000 Annual costs of running the team and stadium: Annual staff costs 15,000,000 Other annual fixed costs 2,650,000 The project is to be assessed over five years. After this time, the company plans to sell the stadium to a commercial property developer for 28,000,000 at year 5 prices. Revenues Average ticket price per seat 35 in year 1 Additional information: 1. The issued share capital of neither Texcado Ltd nor Defar Ltd has changed in the last ten years. It is the policy of Texcado Ltd to calculate goodwill and non-controlling interests using the proportionate ('proportion of net assets) method. On the date of acquisition, the fair values of the net assets of Defar Ltd did not differ materially from their carrying amounts, Texcado Ltd has undertaken annual impairment reviews of goodwill since the acquisition took place. As a result of these reviews, there has been an impairment in the value of goodwill in respect of Defar Ltd to date totalling 16.000. Required: a) Prepare the consolidated Statement of Financial Position of Texcado Ltd as at 31 July 2017 (15 marks) b) Explain what is meant by the term associate and outline how the results of an associate are incorporated in the consolidated income statement (5 marks) Total 20 markel