Assignment Scenario 01 $ RedBerry Co and Zen Co The following are the draft statement of Financial Position of RedBerry Co and its subsidiary Zen Co as at 31st December 2019 are given below: RedBerry Co Zen Co Assets '$ Non-current assets Tangible assets 471,000 110,000 Investments: Zen PLC 250,000 Current assets Inventories 220,600 75,600 Trade receivables 290,400 140,700 Cash and cash equivalents 60,000 75,450 Total Assets 1,292,000 401,750 Equity and liabilities Share capital :Ordinary $1 shares 750,000 150,000 Share premium 18,750 Retained earnings 112,000 80,000 Non-current liabilities: 6% Loan 85,000 60,000 Current liabilities Trade and other payables 345,000 93,000 Total Equity & Liabilities 1,292,000 401,750 Additional information: 1. RedBerry Co acquired 120,000 shares in Zen Co on 1st Jan 2019 for a cost of $ 250,000when the retained earnings of Zen Co were $ 40,000. The fair value of the non-controlling interest in Zen Co at the date of acquisition was $44,000. 2. At the date of acquisition, the fair value of the net assets of Zen Co approximated their carrying amounts, except for a plot of land owned by Zen Co. This land was held in the financial statements of Zen Co at its cost of $40,000 but was estimated to have a fair value of $95,000. This land is still owned by Zen Co at 31st December 2019. 3. At 31st December 2019 RedBerry Co's inventory included $ 12,000 of goods purchased from Zen PLC. Zen Co earns a mark-up of 25% on sales. 4. At 31st December 2019 Zen Co's trade receivables include $ 75,000 due from RedBerry Co and RedBerry Co's trade payable include $ 75,000 due to Zen PLC. Question 1 You are required to: A. Prepare consolidate statement of financial position as at 31st December 2019 of RedBerry Co. (Provide Reference to IFRS wherever applicable and relevant workings) (Relevant workings 3 marks + consolidated statement of financial position 3marks) (Q.1 -A- 6 Marks) B. Briefly explain the concept of 'unrealised profit & Evaluate the adjustment of provision for unrealized profit if: At 31st December 2019, RedBerry Co sold goods to Zen Co for $ 30,000 at a Margin of 25%. 1/4th of these goods were still unsold by Zen Co at the end of the year. (Q.1-B: Total 4 Marks) (Total Marks Q.1= 10 Marks) Note: For solving question no. 1, you should use information given in Assignment Scenario 01. Assignment Scenario 01 $ RedBerry Co and Zen Co The following are the draft statement of Financial Position of RedBerry Co and its subsidiary Zen Co as at 31st December 2019 are given below: RedBerry Co Zen Co Assets '$ Non-current assets Tangible assets 471,000 110,000 Investments: Zen PLC 250,000 Current assets Inventories 220,600 75,600 Trade receivables 290,400 140,700 Cash and cash equivalents 60,000 75,450 Total Assets 1,292,000 401,750 Equity and liabilities Share capital :Ordinary $1 shares 750,000 150,000 Share premium 18,750 Retained earnings 112,000 80,000 Non-current liabilities: 6% Loan 85,000 60,000 Current liabilities Trade and other payables 345,000 93,000 Total Equity & Liabilities 1,292,000 401,750 Additional information: 1. RedBerry Co acquired 120,000 shares in Zen Co on 1st Jan 2019 for a cost of $ 250,000when the retained earnings of Zen Co were $ 40,000. The fair value of the non-controlling interest in Zen Co at the date of acquisition was $44,000. 2. At the date of acquisition, the fair value of the net assets of Zen Co approximated their carrying amounts, except for a plot of land owned by Zen Co. This land was held in the financial statements of Zen Co at its cost of $40,000 but was estimated to have a fair value of $95,000. This land is still owned by Zen Co at 31st December 2019. 3. At 31st December 2019 RedBerry Co's inventory included $ 12,000 of goods purchased from Zen PLC. Zen Co earns a mark-up of 25% on sales. 4. At 31st December 2019 Zen Co's trade receivables include $ 75,000 due from RedBerry Co and RedBerry Co's trade payable include $ 75,000 due to Zen PLC. Question 1 You are required to: A. Prepare consolidate statement of financial position as at 31st December 2019 of RedBerry Co. (Provide Reference to IFRS wherever applicable and relevant workings) (Relevant workings 3 marks + consolidated statement of financial position 3marks) (Q.1 -A- 6 Marks) B. Briefly explain the concept of 'unrealised profit & Evaluate the adjustment of provision for unrealized profit if: At 31st December 2019, RedBerry Co sold goods to Zen Co for $ 30,000 at a Margin of 25%. 1/4th of these goods were still unsold by Zen Co at the end of the year. (Q.1-B: Total 4 Marks) (Total Marks Q.1= 10 Marks) Note: For solving question no. 1, you should use information given in Assignment Scenario 01