Pot acquired 75% of Siv’s equity shares on 1st January 2019. The consideration for this purchase was £300,000 cash. On the 1st January 2019, Siv shares had a market price of £4.20. On the same date, Pot purchased 15,000 shares in Ale, paying £11 cash for every share bought.
Siv had suffered retained losses during 2019 of £48,000. Ale had made retained earnings of £35,000 during the same period.
Below are the summarised statements of financial position of the companies at 31st December 2019:
Pot Siv Ale
£’000 £’000 £’000
Non-current assets
Property, plant and Equipment 260 230 180
Investments 610 150 nil
Loan receivable 100 nil nil
970 380 180
Current assets
Inventory 70 64 55
Cash and Bank 120 110 115
Total Assets 1,160 554 350
Equity and Liabilities
Equity shares of £1 each 420 100 50
Retained Earnings 280 154 160
700 254 210
Non–current liabilities
8% Loan notes 340 100 nil
Current Liabilities
Trade payables 74 70 60
Current tax 46 130 80
Total equity and liabilities 1,160 554 350
The following information is relevant:
The fair value of an item of Plant in Siv was £50,000 greater than its book value on 1st January 2019. This Plant is being depreciated at 10% per annum on a straight line basis.
During 2019, Siv charged Pot £84,000 for goods supplied during the year at a mark up of 20%. Pot had paid in full for these goods before 31st December 2019 but had only sold half of these goods to its own customers.
Siv obtained a £100,000 loan from Pot on 30th December 2019.
Pot’s policy is to value non-controlling interests at their fair value at acquisition. An impairment test on 31st December 2019 showed that the value of the investment in Ale had been impaired by £3,000 and for Siv, an impairment of £8,000 had occurred to the consolidated goodwill.
Required:
Prepare the consolidated statement of financial position of Pot as at 31st December 2019.
