Question

QUESTION 1
On 1 June 2019, Manchester United Ltd bought 48 million ordinary shares in Chelsea FC Ltd paying GHS 280 million cash. The summarised statement of financial position for the two entities as at 31 December 2019 were as follows:
                                               Man Utd. Ltd Chelsea Ltd
                                                       GHS’m                       GHS’m
Non- current assets:
Property, plant and equipment        276                            230
Investment                                      324                      -     
                                                         600                            230
Current assets:
Inventory                                    30                               34
Trade receivables                           38                               40
Cash and cash equivalents                4                          -
                                                          72                            74       
Total assets                                       672                            304
EQUITY AND LIABILITIES
Equity:
Share capital                                    228               80
Retained earnings                            378                            138
                                                         606                            218
Non- current liabilities
8% loan stocks                                      -                              40
Current liabilities
Trade payables                              66                             46
Equity and Liabilities                    672                            304

Additional Information:
a)On the date of acquisition, an item of equipment of Man United. Ltd with a carrying amount of GHS60 million had a fair value of GHS96 million and had remaining useful life of ten years from that date. This fair valuation has not been reflected in the financial statement of Man United Ltd.
b) The inventory of Chelsea Ltd at 31 December 2019 included GHS 16 million worth of goods purchased from Man United at cost plus 25%

c) Chelsea Ltd earned a profit after tax of GHS 18 million in 2019. No dividend was paid in the year.
d)The loan stock in the books of Chelsea Ltd was acquired by Man United Ltd on 1 June 2019.
e)Included in the Man United Ltd receivables is GHS 8 million relating to inventory sold to Chelsea Ltd since acquisition. Chelsea raised a cheque for GHS 5 million and sent it to Man United Ltd on 30 December 2019. Man United Ltd got value for the cheque 2 January 2020.

f)It is the policy of the group to value NCI at acquisition using the proportion of net assets method. Goodwill is impaired by GHS 10 million at the reporting date.
REQUIRED:
Prepare the Consolidated Statement of Financial Position of Man United Ltd Group as at 31 December 2019.

KINDLY ANSWER ASAP
VERY URGENT PLEASE
IMMEDIATE RESPONSE NEEDED.

Answer 1

Consoldated statement of financial position 31st dec 2019

Man Ltd Chelsea Ltd Adjustments Consolidated statement

Property 276 230 + 36 542

Investment 324 - 324

Inventory 30 34 -3.2 60.8

Receivable 38 40 -5 - 3 70

Cash 4 - 4

goodwill 73.2     -10 63.2

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Total Assets 1064

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Share capital 228 80 308

REtained earnings 378 138 +36-3.2-8+73.2-10    604  

8% loan stock - 40 40

trade payables 66 46 112

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Total equity & liabilities 1064

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Notes :

1. Goodwill   

fair value of consideration transferred 280

plus fair value of NCI

minus fair value of net asset acquired   

fair value of assets ( 230 + 34 + 40 -3.2 -8) = 292.8

minus fair value of liabilities (40+46)   = 86   206.8

___________

goodwill    73.2

2.Inventory mark up 25 % of 16 m is 3.2 m Its removed from Inventory as well as retained earnings

3. Intra group receivalbes of 8 m removed from receivables & retained earnings

4. No treatment is given for cheque payment as the receivables are removed .

5. Property & plant is marked at fair value to reflect the increase in plant of 36 m ; Retianed earning are also increased to reflect the same