Assignment 2

Consolidated Statement of Financial Position

Fair value adjustments

Given below are the statements of financial position of Shine and John as at 31 December 20X1:

	Shine	John
	$000	$000
Non- Current assets
Property , Plant & Equipment	155,000	54,000
Investments	25,000
	180,000	54,000
Current assets
Inventory	10,250	20,000
Receivables	6,500	16,000
Cash	2,500	6,400
	19,250	42,400
Total Assets	199,250	96,400
Equity
Share capital $1	70,000	44,000
Share premium	11,000
Retained earnings	37,000	34,200
	118,000	78,200
Non-current liabilities	60,000	10,400
Current liabilities	21,250	7,800
Total Equity & Liabilities	199250	96,400

Additional Information

1. Shine acquired 35,200 shares of John 3 years ago, when the retained Earnings of John stood at $ 20m. Shine paid initial cash consideration of $ 20m. In addition, Shine issued three shares for every five shares received in John and promised to pay a further $7.5m in three years time. The market value of Shines shares was $1.75. Current interest rates are 12% pa.
2. At acquisition, the fair values of Johns plant exceeded its book value b$ 6m. The plant had a remaining useful life of five years at this date.
3. The consolidated good will has been impaired by $ 3m
4. John has an internally generated brand, which has never been recognized in its statement of financial position. Management of Shine with the help of some experts decided to value this brand at $ 12m with a remaining useful life of 6 years.
5. The Shine Group values the non-controlling interest using the fair value method. At the date of acquisition, the fair value of the 30% non-controlling interest was $ 7.2m.

Required:

Prepare the consolidated statement of financial position for Shine Groupas at 30 November 20X1