Alfa, the parent2ALL FOUR questions are compulsory and MUST be attempted1Alpha, a parent with a subsidiary Beta, is preparing the consolidated statement of financial position at 30 September20X7. The draft statements of financial position for both entities as at 30 September 20X7 are given below:AlphaBeta$000$000AssetsNon-current assets:Property, plant and equipment (note 1)966,500546,000Development project (note 1)020,000Investment in Beta (note 1)450,00001,416,500566,000Current assets:Inventories (note 2)165,00092,000Trade receivables99,00076,000Cash and cash equivalents18,00016,000282,000184,000Total assets1,698,500750,000Equity and liabilitiesEquityShare capital ($1 shares)360,000160,000Retained earnings570,000360,000Other components of equity102,0000Total equity1,032,000520,000Non-current liabilities:Long-term borrowings (note 3)300,00085,000Pension liability (note 4)187,5000Deferred tax (note 1 and 2)69,00054,000Total non-current liabilities556,500139,000Current liabilities:Trade and other payables70,00059,000Short-term borrowings40,00032,000Total current liabilities110,00091,000Total equity and liabilities1,698,500750,000Note 1 Alphas investment in BetaOn 1 April 20X7, Alpha acquired 120 million shares in Beta. Alpha made a payment of $450 million in exchangefor these shares. The individual interim financial statements of Beta showed a balance of $340 million on its retainedearnings on 1 April 20X7.The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 April20X7. The following matters emerged:Plant and equipment having a carrying amount of $440 million had an estimated fair value of $480 million. Theestimated remaining useful life of this plant and equipment at 1 April 20X7 was four years.An in-process development project of Betas had a carrying amount of $8 million and a fair value of $18 million.During the six-month period from 1 April 20X7 to 30 September 20X7, Beta incurred further development costsof $12 million relating to this project. These costs were correctly capitalised in accordance with the requirementsof IAS38 Intangible Assets. No amortisation of the capitalised costs of this project was required prior to30 September 20X7.

company of Beta, bought 120 million shares