At the start of business on 1 January 2018, the statements of financial position of A1 Ltd and A2 Ltd were as follows:
On 1 January 2018, A1 Ltd acquired 100% of the share capital of A2 Ltd for £225,000. The fair value of A2 Ltd’s non-current assets on that date was £150,000. All other assets and liabilities were shown at fair value in the company’s statement of financial position. There were no other transactions on 1 January 2018.
Required:
(a) Prepare a consolidated statement of financial position as at the close of business on 1 January 2018, assuming that the purchase consideration of £225,000 was paid in cash.
(b) Prepare a consolidated statement of financial position as at the close of business on 1 January 2018, now assuming that the purchase consideration of £225,000 was settled by means of an issue of 150,000 £1 ordinary shares in A1 Ltd at a premium of 50p per share.
