Reference no: EM132966755
Question - On 1 January 2020, Petre Ltd acquired a 60% interest in the issued share capital of Sanford Ltd, for a cash consideration of $6,000,000. On the acquisition date, the retained profits of Sandford Ltd were $3,000,000. The statement of financial position of the two companies for the year ended 31 December 2020 were as follow:-
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Petre Ltd
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Sanford Ltd
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ASSETS
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|
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Property, plant and equipment
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15,500
|
8,800
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Investment in Sanford Ltd
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6,000
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-
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Inventories
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5,000
|
3,000
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Receivable from Sanford Ltd
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500
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-
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Other current assets
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4,500
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2,000
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Total Assets
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31,500
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13,800
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EQUITY AND LIABILITIES
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|
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Ordinary share capital of $1 each
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16,000
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4,000
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Retained earnings
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7,500
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6,000
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Payable to Petre Ltd
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-
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500
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Liabilities
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8,000
|
3,300
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Total Equity and Liabilities
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31,500
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13,800
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Additional information:
a) Included in the property, plant and equipment of Sanford Ltd is a freehold land recorded at cost of $1,000,000. At the acquisition date, this land was assessed to have fair value of $3,000,000. No adjustment has been made in the accounts to reflect the fair value.
b) During the year 2020, Petre Ltd has provided inter-company advances of $500,000 to Sanford Ltd.
c) It is Petre Ltd's policy to measure non-controlling interest equal to its proportionate share of net assets of the subsidiary.
REQUIRED - Prepare the Consolidated Statement of Financial Position for Petre Ltd and its subsidiary as at 31 December 2020. (Show all workings).