QUESTION 1 30 MARKS The following information represents the abridged financial
ID: 2431069 • Letter: Q
Question
QUESTION 1 30 MARKS
The following information represents the abridged financial statements of Mega Ltd and its subsidiary Ultra Ltd:
Statement of financial position as at 31 December 2018
Mega Ltd
Ultra Ltd
ASSETS
Property, plant and equipment
270 000
340 000
Investment in Ultra Ltd: 48 000 shares at fair value
350 000
-
(cost: N$ 330 000)
Trade receivables
80 000
23 500
Inventories
350 000
218 000
Bank
65 000
-
Total assets
1 115 000
581 500
EQUITY AND LIABILITIES
Share capital
400 000
240 000
Mark-to-market reserve
20 000
10 000
Retained earnings
375 000
240 000
Long-term borrowings
43 000
21 000
Trade and other payables
277 000
23 500
Bank overdraft
-
47 000
Total equity and liabilities
1 115 000
581 500
Statement of profit or loss and other comprehensive income for the year ended
31 December 2018
Mega Ltd
Ultra Ltd
Revenue
927 000
1 628 000
Cost of sales
-472 000
-725 000
Gross profit
455 000
903 000
Other expenses
-287 100
-472 000
Dividend received from Ultra Ltd
94 000
-
Profit before tax
261 900
431 000
Income tax expense
-198 000
-128 000
Profit for the year
63 900
303 000
Other comprehensive income
Items that will not be reclassified to profit or loss
Mark-to-market reserve
4 000
1 000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
67 900
304 000
Extract from the Statement of changes in equity for the year ended 31 December 2018
Mark-to-market reserve
Retained earnings
Mega Ltd
Ultra Ltd
Mega Ltd
Ultra Ltd
Balance at 1 Jan 2018
15 000
8 000
215 000
170 000
Changes in equity for 2018
Total comprehensive income for the year:
Profit for the year
63 900
303 000
Other comprehensive income for the year
4 000
1 000
Dividends
-108 000
-120 000
Balance at 31 December 2018
19 000
9 000
170 900
353 000
Additional information:
On 1 January 2018, the date on which Ultra Ltd acquired the interest in Mega Ltd, the equity of Mega Ltd consisted of:
Share capital N$ 260 000
Mark-to-market reserve N$ 3 000
Revaluation reserve N$ 7 000
Retained earnings N$ 135 000
Ultra Ltd elected to measure non-controlling interests at fair value at the acquisition date. On 1 January 2018, the fair value of each non-controlling interest’s share was N$8,50 per share, based on market prices.
Ultra Ltd classified the investment in Ultra Ltd under IFRS 9 in its separate financial statements and recognised fair value adjustments in a mark-to-market reserve (other comprehensive income). Ignore tax implications.
REQUIRED
Prepare consolidated financial statements for the Mega Ltd Group for the reporting period ended 31 December 2018. (30 marks
Statement of financial position as at 31 December 2018
Mega Ltd
Ultra Ltd
ASSETS
Property, plant and equipment
270 000
340 000
Investment in Ultra Ltd: 48 000 shares at fair value
350 000
-
(cost: N$ 330 000)
Trade receivables
80 000
23 500
Inventories
350 000
218 000
Bank
65 000
-
Total assets
1 115 000
581 500
EQUITY AND LIABILITIES
Share capital
400 000
240 000
Mark-to-market reserve
20 000
10 000
Retained earnings
375 000
240 000
Long-term borrowings
43 000
21 000
Trade and other payables
277 000
23 500
Bank overdraft
-
47 000
Total equity and liabilities
1 115 000
581 500
Explanation / Answer
Hey there !!
In Consolidation, A parent company which presents its consolidated financial statements must consolidate all of its subsidiaries, foreign as well as domestic. Where a company doesn’t have any subsidiary, however, has associates and/or joint ventures such company also needs to prepare consolidated financial statements.
Now, as required by the question, please find below the Consolidated Financial Statements which includes Consolidated balance sheet as well...
I hope the solution is clear to you now. Do let me know if you have any issues. Refer the attached image for details .
All the best :)
Mega Ltd Ultra Ltd Consolidated ASSETS Property, plant and equipment 2,70,000 3,40,000 6,10,000 Investment in Ultra Ltd: 48 000 shares at fair value 3,50,000 - 3,50,000 (cost: N$ 330 000) Trade receivables 80,000 23,500 1,03,500 Inventories 3,50,000 2,18,000 5,68,000 Bank 65,000 - 65,000 Total assets 11,15,000 5,81,500 EQUITY AND LIABILITIES Share capital 4,00,000 2,40,000 6,40,000 Mark-to-market reserve 20,000 10,000 30,000 Retained earnings 3,75,000 2,40,000 6,15,000 Long-term borrowings 43,000 21,000 64,000 Trade and other payables 2,77,000 23,500 3,00,500 Bank overdraft - 47,000 47,000 Total equity and liabilities 11,15,000 5,81,500Related Questions
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