The statements of profit and loss and other comprehensive income for Pluto Ltd and Gold Ltd for the year ended 31 December 2020 are shown below:
| Pluto | Gold | |
| N$ | N$ | |
| Revenue | 520 000 | 450 000 |
| Cost of sales | (320 000) | (300 000) |
| Gross Profit | 200 000 | 150 000 |
| Distribution costs | (30 000) | (42 000) |
| Administrative Expenses | (45 000) | (45 000) |
| Profit before tax | 125 000 | 63 000 |
| Income tax expenses | (20 000) | (18 000) |
| Profit for the year | 105 000 | 45 000 |
On 1 January 2020 the companies had the following equity balances:
| Pluto | Gold | |
| Share Capital | N$ 5 000 000 | N$ 1 000 000 |
| Retained Earnings | N$ 1 200 000 | N$ 800 000 |
| Other reserves | N$ 600 000 | N$ 200 000 |
Additional information:
• Pluto acquired 70% of the ordinary share capital of Gold Ltd on 1 January 2018 for N$1,500,000.
• At the date of acquisition Gold had a share capital balance of N$1,000,000 and retained earnings of N$500,000. The group policy is to value non-controlling interest at the proportion of the net assets at the date of acquisition.
Required:
a) Calculate goodwill to be recognized in the records of the Pluto Group on 1 January 2018 at acquisition of Gold Ltd. (6)
b) Prepare the pro-forma consolidation journals for the year ended 31 December 2020. Journal narrations are not required. (15)
c) Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2020. (9)
d) Calculate the total retained earnings balance to be included in the statement of financial position of the Pluto Group as at 31 December 2020. (5)
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com