Reference no: EM132782018
The following are the draft statements of financial position of Party Co and Streamer Co as at 30 September 20X5:
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ASSETS Non-current assets
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Party Co
$'000
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Streamer Co
$'000
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Property, plant and equipment
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392,000
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84,000
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Investments
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120,000
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Nil
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|
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512,000
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84,000
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Current assets
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94,700
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44,650
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Total assets
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606,700
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128,650
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EQUITY AND LIABILITIES
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|
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Equity
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|
|
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Equity shares
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190,000
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60,000
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Retained earnings
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210,000
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36,500
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Revaluation surplus
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41,400
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4,000
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|
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441,400
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100,500
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Non-current liabilities
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|
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Deferred consideration
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28,000
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Nil
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Current liabilities
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137,300
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28,150
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Total equity and liabilities
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606,700
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128,650
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The following information is relevant:
(i) On 1 October 20X4, Party Co acquired 80% of the share capital of Streamer Co. At this date the retained earnings of Streamer Co were $34m and the revaluation surplus stood at $4m. Party Co paid an initial cash amount of $92m and agreed to pay the owners of Streamer Co a further $28m on 1 October 206. The accountant has recorded the full amounts of both elements of the consideration in investments. Party Co has a cost of capital of 8%. The appropriate discount rate is 0.857.
(ii) On 1 October 20X4, the fair values of Streamer Co's net assets were equal to their carrying amounts with the exception of some inventory which had cost $3m but had a fair value of $3.6m. On 30 September 20X5, 10% of these goods remained in the inventories of Streamer Co.
(iii) During the year, Party Co sold goods totalling $8m to Streamer Co at a gross profit margin of 25%. At 30 September 20X5, Streamer Co still held $1m of these goods in inventory. Party Co's normal margin (to third party customers) is 45%.
(iv) Party group uses the FV method to value non-controlling interest. At acq it was valued at $15m.
Required:
Question 1: financial position as at 30 Sept 20X5
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