ACF318-Financial Accounting CRNs 80072/87385 SECTION A- Answer question 1 Question 1 On 1st October 2020, Bridge plc acquired 60% of the shares in Waterloo Ltd. At that date Bridge also purchased 40% of Southbank Ltd. Statement of Financial Position as at 31 December 2020 Bridge plc Non-current assets '000 Waterloo Ltd 000 000 000 Southbank Ltd '000 '000 Property plant and 6,300 4,000 4,500 equipment Investment in Waterloo Ltd. 7,000 Investment in Southbank Ltd 2,400 Current assets Inventories 16,250 6,950 Receivables 18,350 6,850 2,450 1,400 Bank 7,750 42,350 0 13,800 250 4,100 58,050 17,800 8,600 Equity and liabilities Share capital (1 shares) 30,000 1,500 1.200 Share Premium Retained Earnings Current liabilities Trade payables Taxation Bank Overdraft 6,500 500 600 8,700 7,600 3,200 45,200 9,600 5,000 11,450 800 4,150 2,950 600 350 600 12.850 3,450 8.200 300 3,600 58.050 17,800 8.600 Extracts for the Statement of Changes in Equity for the year ended 31 December 2020 Balance 1.1.2020 Profit for the year Balance 21.12.2020 Bridge plc Waterloo Ltd Southbank Ltd '000 '000 2000 6,000 4,500 1,460 2,700 3,100 1,740 8,700 7,600 3,200 a) During the three months ended 31 December 2020, Bridge pic sold goods to Waterloo Ltd for 525,000. Bridge plc sets its prices at cost plus 25%. One third of these goods were included in the inventories of Waterloo Ltd at 31 December 2020. b) None of the companies paid dividends during the year ended 31 December 2020. c) Bridge plc uses IFRS3 Method 2 to value Non-Controlling Interest (NCI). The fair value of NCI at the date of acquisition was 4 m. Page 3 of 9 continued/ ACF318-Financial Accounting SECTION A Question 1 continued/ CRNS 80072/87385 d) Included in Bridge plc's Receivables is a balance due from Waterloo Ltd of 80,000. Waterloo Ltd.'s Payables include a balance due to Bridge plc of 60,000. On 28th December 2020, a cheque for 20,000 had been sent by Waterloo Ltd to Bridge plc but was not received until 4th January 2021. e) All profits accrued evenly throughout the year. f) The fair value of Waterloo Ltd.'s property was 600,000 higher than book value at the date of acquisition. This has not been reflected in Waterloo Ltd.'s financial statements. If the fair value had been shown in Waterloo's financial statements an additional depreciation charge of 20,000 would have been charged. g) At 31st December 2020 an impairment review determined that the investment in Southbank Ltd had been impaired by 54,000. Required: (i) Calculate the amount to be included in the consolidated Statement of Financial Position as at 31st December 2020 for: a. Goodwill; b. NCI; and c. Consolidated Reserves d. Investment in Associate (17 Marks) (ii) Prepare the consolidated Statement of Financial Position as at 31st December 2020. (8 Marks) [Total: 25 Marks]