Question

ASSIGNMENT TWO The balance sheet of Imperial Ple and its two subsidiaries Metric plc and Quantum ple as at 31 December 2019 were as follows: Balance sheets at 31 December 2020 Imperial Metric Quantum KOOO K000 кооо Non-current assets Tangible assets 525 60 Investments 100.000 shares Metric plc 40,000 shares Quantum 697 Current assets Inventory 210 140 32 210 60 63 83 28 60 36 15 24 16 9 10 7 2 (120) Debtors Trade debtors Metric plc Quantum Cash at bank Creditors: amounts falling within one year Trade credits Imperial Metric Net current assets Total assets less current liabilities Capital and reserves Called-up share capital (K1 shares) Reserves brought forward Income statement for 2019 (68) (22) (46) (16) (8) 53 45 (25) 750 255 35 ==== 400 150 50 45 200 150 750 60 255 (15) 35 The following additional information is available: 1. At 31 December 2019. goods transferred at cost K2.000 were in transit between Imperial plc and Metric plc. A cheque for 1.000 was in transit between Quantum plc and Metric. 2. The closing inventory of Imperial plc included goods supplied by Metric plc at an invoiced value of K3,600. Metric plc had priced these goods at cost plus 20 per cent, the standard group markup. 3. Imperial plc purchased all its investments in its subsidiaries on 1 January 2019. Required: Prepare a consolidated balance sheet for Imperial Group as at 31 December 2019.

Answer 1

PART I — BALANCE SHEET
Name of the CompanyImperial Plc
Balance Sheet as at 31st December 2019
Particulars	K'000
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(a) Share capital	400
(b) Reserves and surplus	377.6
Gain on burgen purchase	8
(c) Money received against share warrants
(2) Non Controlling Interest
From Metric (WN- 3)	84.8
From Quantum (WN- 6)	7
(3) Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
(4) Current liabilities
(a) Short-term borrowings
(b) Trade payables	182
(c) Other current liabilities
(d) Short-term provisions
TOTAL	1059.4
II. ASSETS
Non-current assets
(1)        (a) Fixed assets
(i) Tangible assets	795
(ii) Intangible assets (Goodwill)	10
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long-term loans and advances
(e) Other non-current assets
(2) Current assets
(a) Current investments
(b) Inventories (Including goods in transit K2000)	175.4
(c) Trade receivables	59
(d) Cash and cash equivalents (Including Cheque in transit K1000)	20
(e) Short-term loans and advances
(f) Other current assets
TOTAL	1059.4

Calculation of controlling interest
In Metric	67%
In Quantum	80%
WN- 1 Statement of Identifiable Net Assets of Metric			K'000
Particulars	Date of Acquisition of control	Changes	Date of Consolidation
Share Capital	150	0	150
Other Reserves	45	60	105
	195	60	255
Less: Unrealized profit on stock/asset (downstream i.e. sold by subsidiary)		-0.6
	195	59.4
Share of Parent Company @ holding %		39.6
Share of Non-Controlling Interest @ holding %		19.8
WN-2 Statement showing Calculation of Goodwill/Gain on bargain Purchase of Metric
Particulars	K'000
Cost of Investment in Shares of Subsidiary Company	140
Add: Non-Controlling Interest at the date of acquisition (at FV or INA x NCI%)	65
Less: Identifiable Net Assets on the date of acquisition (at Fair Value) (Refer WN-1)	-195
Goodwill/(gain on bargain Purchase)	10
WN- 3       Statement of Non-Controlling Interest of Metric
Particulars	K'000
Non-Controlling Interest at the date of acquisition (WN- 2)	65
Add: Share of profit from post-acquisition period (WN- 1)	19.8
Total (NCI can be negative)	84.8
WN- 4 Statement of Identifiable Net Assets of Quantum			K'000
Particulars	Date of Acquisition of control	Changes	Date of Consolidation
Share Capital	50	0	50
Other Reserves	0	-15	-15
	50	-15	35
Share of Parent Company @ holding %		-12
Share of Non-Controlling Interest @ holding %		-3
WN-5 Statement showing Calculation of Goodwill/Gain on bargain Purchase of Quantum
Particulars	K'000
Cost of Investment in Shares of Subsidiary Company	32
Add: Non-Controlling Interest at the date of acquisition (at FV or INA x NCI%)	10
Less: Identifiable Net Assets on the date of acquisition (at Fair Value) (Refer WN-4)	-50
Goodwill/(gain on bargain Purchase)	-8
WN- 6       Statement of Non-Controlling Interest of Quantum
Particulars	K'000
Non-Controlling Interest at the date of acquisition (WN- 5)	10
Less: Share of loss from post-acquisition period (WN- 4)	-3
Total (NCI can be negative)	7
WN- 7       Statement of Consolidated Changes in Equity	K'000
Particulars	Retained Earnings
Balance from Separate Balance Sheet of Parent Company (K200 + K150)	350
Add: Share of profit from post-acquisition period from Subsidiary Company
From Metric (WN- 1)	39.6
From Quantum (WN- 4)	-12
Total	377.6