Parent | Subsidiary | |
N$ 000 | N$ 000 | |
ASSETS | ||
Non-current assets: | ||
Intangible assets | 50 | 140 |
Tangible assets | 3 900 | 1 110 |
Investment in Subsidiary | 281 | – |
4 231 | 1 250 | |
Current assets: | ||
Inventory | 752 | 379 |
Trade receivables | 456 | 273 |
Bank | 101 | 10 |
1 309 | 662 | |
TOTAL ASSETS | 5 540 | 1 912 |
EQUITY AND LIABILITIES Equity: | ||
Ordinary shares 25c | 3 200 | – |
Ordinary shares 50c | – | 960 |
Share premium account | 1 200 | 350 |
Retained earnings | 300 | 200 |
4 700 | 1 510 | |
Liabilities | ||
Non-current liabilities: | ||
8% debentures | 60 | – |
5% debentures | – | 100 |
Current liabilities | 780 | 302 |
TOTAL EQUITY AND LIABILITIES | 5 540 | 1 912 |
(Note that figures in the above table are in 000’s – thousands)
The following information is also available:
- On 1st January 2021, the acquisition date, the fair value of the tangible non-current assets of Subsidiary was $100 000 more than their book value and which had a remaining useful life of 10 years. This revaluation has not been included in Subsidiary’s financial statements.
- The fair value of all other assets and liabilities at the acquisition date was equal to book value. The retained earnings of Subsidiary at that date were $60 000.
- The group policy is to depreciate tangible assets to Nil using straight line method.
- The consideration for the acquisition was agreed and paid as follows: N$ 280 843 payables on 01 January 2021 and another N$ 200 000 payable for the next five years starting 01 January 2022. Only the initial payment has been recorded in the books of Parent.
- No further share or debenture issues have been made by Subsidiary since the acquisition date.
- The share prices of Subsidiary were trading at 80c and 85c as of 01 January 2021 and 31 December 2021 respectively.
- Goodwill has not been impaired during the year ended 31 December 2021.
- The pretax rate (cost of capital) is 10%.
- Ignore the effects of deferred tax
Required
- Calculate the amount of goodwill arising on the acquisition of Subsidiary. It is the Parent group policy to use the fair value method in calculating goodwill (10 marks)
- Prepare the Consolidated statement of financial position as at 31st December 2021 for Parent and its subsidiaries as per IFRS 10. (16 marks)
IFRS 10 outlines circumstances that a holding company (parent) may be exempted to prepare consolidated financial statements. Describe in sufficient detail the exceptions to the requirement to present consolidated financial statements. (4 marks
1 Answer