A (40 marks) Please start each new question on a new page Question 1 - You must answer this question 1.1) The Income Statements of VenusX plc, Mars Ltd and Jupiter Ltd for the year ended 30 June 20X9, and their Statements of Financial Position at that date are as follows: Statements of Financial Position as at 30 June 20X9 VenusX '000 Mars Jupiter '000 '000 Non-current assets Property, plant & equipment 2,215 594 666 Investment in Mars Ltd 1,134 Investment in Jupiter Ltd 125 3,474 594 666 Current assets Inventories 1,305 360 504 Trade receivables 1,809 468 549 Cash & cash equivalents 498 288 3,612 1,116 1,053 Total assets 7,086 1,710 1,719 Equity and liabilities Equity shares of 1 each 1,350 270 450 Share premium 585 180 Retained earnings 1,416 616 (150) 3,351 1,066 300 Non-current liabilities Borrowings 1,350 0 450 1,350 0 450 Current liabilities Bank overdraft 0 0 303 Payables 2,385 644 666 2,385 644 969 Total equity and liabilities 7,086 1,710 1,719 Income Statements for the year ended 30 June 20X9 VenusX Mars Jupiter '000 '000 '000 Revenue 15,804 5,850 4,347 Cost of sales (10,593) (4,374) (3,519) Gross profit 5,211 1,476 828 Administrative expenses (3,789) (999) (720) Profit from operations 1,422 477 108 Dividends received 126 Finance costs (135) (36) Profit before tax 1,413 477 72 Taxation (288) (109) (12) Profit for the year 1,125 368 60 Additional information: VenusX acquired 189,000 shares in Mars Ltd on 1 July 20X7 when Mars's retained earnings were 380,000 and the balance on its share premium was 180,000. At 1 July 20X7 the fair values of Mars's property, plant & equipment were 720,000 whereas the net book values were 540,000. The assets had an estimated remaining useful life of 10 years at this date. The fair values of all other net assets were equivalent to their book values. VenusX acquired 180,000 shares in Jupiter Ltd on 1 January 20X9. Jupiter's profits for the year ended 30 June 20X9 may be assumed to have arisen evenly over the year. At 1 January 20X9 the fair values of Jupiter's net assets can be assumed to be equal to their book values. During the year ended 30 June 20X9 VenusX sold goods to Mars for 225,000, earning a 40% gross profit on this transaction. One-third of these goods were still in Mars's inventories at the year end. At 30 June 20X9 VenusX's trade receivables include an amount owing from Mars of 120,000. During the year ended 30 June 20X9 VenusX and Mars paid dividends of 240,000 and 180,000 respectively. Jupiter did not pay any dividends during the year. Jupiter and Mars have not issued shares for many years. The review for impairment of goodwill at 30 June 20X9 indicated that goodwill on acquisition of Mars should be written down to 300,000. VenusX uses the proportion of net assets method/partial goodwill method to value non-controlling interests. Required: Prepare the VenusX plc group's consolidated Income Statement for the year ended 30 June 20X9 and a Consolidated Statement of Financial Position as at 30 June 20X9. You need to present your workings on goodwill, inter-company trading, group retained earnings, non-controlling interests and investment in associates. Answers should be rounded to the nearest thousand. (30 marks) 1.2) IAS 36 currently requires that goodwill acquired in a business combination should not be amortised, but tested each year for impairment. However, in the IASB's post implementation review on IFRS 3 Business Combinations in 2015, some financial statement preparers and users have criticized the current accounting requirement for goodwill impairment. Required: Explain and give your opinion on whether goodwill acquired in a business combination should be amortised or tested annually for impairment. (10 marks) (maximum 300 words) Total 40 marks