The following are the statements of financial position of two companies at 31 October 2018, the end of their most recent financial years:

The following additional information is available:

1). On 1 November 2016 Multa plc purchased 90,000,000 ordinary shares in Tuli plc paying a total of £120,000,000. The reserves of Tuli plc on 1 November 2016 were £30,000,000. It was agreed that all the assets and liabilities of Tuli plc were reported in its financial statements at fair values as at 1 November 2016. Since then the directors of Multa plc feel that the amount paid for as goodwill upon the acquisition has been impaired by £3,000,000.

2). During the year ended 31 October 2018 Multa plc sold inventory to Tuli plc for £25,000,000. Multa plc earned a uniform margin of 40% on these sales. During the year ended 31 October 2018 Tuli plc resold 80% of this inventory. On 31 October 2018 Tuli plc had unpaid invoices totalling £18,000,000 payable to Multa plc in respect of these purchases.

3). Each ordinary share in Tuli plc carries one vote and there are no other voting rights in the company.

Required:

(a) Calculate the amount paid as goodwill on the acquisition of Tuli plc on 1 November 2016.

(b) Prepare with full supportive workings the consolidated statement of financial position of Multa plc as at 31 October 2018.

(CIPFA)

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Tuli plc Multa ple fm £m Assets Non-current assets Property, plant and equipment Investments, at cost 425 288 147 13 572 301 Current assets Inventories 88 73 Trade receivables 147 106 Other current assets Cash and cash equivalents 37 22 36 15 308 216 Total assets 880 517 £m £m Equity Ordinary share capital (£1 shares) 10% Preference share capital (£1 shares) Retained earnings 300 150 45 157 90 457 285 Liabilities Non-current liabilities 150 82 Current liabilities Trade payables Current tax payable Bank overdraft 184 56 89 69 25 273 150 Total liabilities 423 232 Total equity and liabilities 880 517