At 1 October 2018 Cha Ltd had an investment in a subsidiary, Hei Ltd, as well as a number of other insignificant investments. On 1 January 2019 Cha Ltd acquired 80% of the ordinary share capital of Sai Ltd. The draft summarised statements of financial position of Cha Ltd, Hei Ltd and Sai Ltd as at 30 September 2019 are shown below. Cha Ltd Hei Ltd Sai Ltd ASSETS Non-current assets Property, plant and 562,000 374,000 235,000 equipment Investments 565,000 -- 1,127,000 374,000 235,000 Current assets Inventories 72,000 59,400 35,300 Trade and other 47,800 31,000 29,400 receivables Cash and cash 7,100 3,200 1,800 equivalents 126,900 93,600 66,500 Total assets 1,253,900 467,600 301,500 EQUITY AND LIABILITIES Equity Ordinary share capital 600,000 300,000 200,000 (1 shares) Share premium account 200,000 -- Retained earnings 280,900 89,700 45,600 1,080,900 389,700 245,600 Current liabilities Trade and other 93,000 40,900 31,900 payables Income tax 80,000 37,000 24,000 173,000 77,900 55,900 Total equity and liabilities 1,253,900 467,600 301,500 Additional information: Hei Ltd Sai Ltd Date of acquisition 1 Oct 2015 1 Jan 2019 Percentage holding acquired 65% 80% Consideration (note (2)) 295,000 250,000 Retained earnings at date of acquisition 42,400 51,000 Goodwill and non-controlling interest method Proportionate Fair value Cumulative goodwill impairment to 30 September 2018 6,000 - Goodwill impairment for year ended 30 September 2019 3,000 (1) At the dates of acquisition the fair values of the assets, liabilities and contingent liabilities of Hei Ltd and Sai Ltd were equal to their carrying amounts, with one exception. Sai Ltd has an internally-generated brand which was not recognised in its own financial statements. However, an independent expert valued this brand at 40,000, with a useful life of five years, at 1 January 2019, the date of acquisition of Sai Ltd by Cha Ltd. (2) The consideration for the acquisition of Hei Ltd was made up of cash of 190,000 paid on 1 October 2015 and a further cash payment of 105,000, deferred until 1 October 2016. An appropriate discount factor is 5% pa. Cha Ltd accounted for the deferred consideration correctly. (3) The fair value of the non-controlling interest in Sai Ltd on 1 January 2019 was 64,000. (4) On 1 October 2018 Cha Ltd sold a machine to Hei Ltd for 63,000. On that date the machine had a remaining useful life of six years and a carrying amount of 48,000. Requirements 4.1 Prepare the consolidated statement of financial position of Cha Ltd as at 30 September 2019. (19 marks) 4.2 Set out the journal entries that will be required on consolidation to recognise the goodwill relating to the acquisition of Sai Ltd in the consolidated statement of financial position of Cha Ltd as at 30 September 2019. (2 marks) 4.3 One month after the year end on 31 October 2019 Cha Ltd sold its 65% holding in Hei Ltd for 346,000. Hei Ltd made a profit for the month of October 2019 of 18,900. Calculate the profit or loss on disposal of Hei Ltd. (2 marks) At 1 October 2018 Cha Ltd had an investment in a subsidiary, Hei Ltd, as well as a number of other insignificant investments. On 1 January 2019 Cha Ltd acquired 80% of the ordinary share capital of Sai Ltd. The draft summarised statements of financial position of Cha Ltd, Hei Ltd and Sai Ltd as at 30 September 2019 are shown below. Cha Ltd Hei Ltd Sai Ltd ASSETS Non-current assets Property, plant and 562,000 374,000 235,000 equipment Investments 565,000 -- 1,127,000 374,000 235,000 Current assets Inventories 72,000 59,400 35,300 Trade and other 47,800 31,000 29,400 receivables Cash and cash 7,100 3,200 1,800 equivalents 126,900 93,600 66,500 Total assets 1,253,900 467,600 301,500 EQUITY AND LIABILITIES Equity Ordinary share capital 600,000 300,000 200,000 (1 shares) Share premium account 200,000 -- Retained earnings 280,900 89,700 45,600 1,080,900 389,700 245,600 Current liabilities Trade and other 93,000 40,900 31,900 payables Income tax 80,000 37,000 24,000 173,000 77,900 55,900 Total equity and liabilities 1,253,900 467,600 301,500 Additional information: Hei Ltd Sai Ltd Date of acquisition 1 Oct 2015 1 Jan 2019 Percentage holding acquired 65% 80% Consideration (note (2)) 295,000 250,000 Retained earnings at date of acquisition 42,400 51,000 Goodwill and non-controlling interest method Proportionate Fair value Cumulative goodwill impairment to 30 September 2018 6,000 - Goodwill impairment for year ended 30 September 2019 3,000 (1) At the dates of acquisition the fair values of the assets, liabilities and contingent liabilities of Hei Ltd and Sai Ltd were equal to their carrying amounts, with one exception. Sai Ltd has an internally-generated brand which was not recognised in its own financial statements. However, an independent expert valued this brand at 40,000, with a useful life of five years, at 1 January 2019, the date of acquisition of Sai Ltd by Cha Ltd. (2) The consideration for the acquisition of Hei Ltd was made up of cash of 190,000 paid on 1 October 2015 and a further cash payment of 105,000, deferred until 1 October 2016. An appropriate discount factor is 5% pa. Cha Ltd accounted for the deferred consideration correctly. (3) The fair value of the non-controlling interest in Sai Ltd on 1 January 2019 was 64,000. (4) On 1 October 2018 Cha Ltd sold a machine to Hei Ltd for 63,000. On that date the machine had a remaining useful life of six years and a carrying amount of 48,000. Requirements 4.1 Prepare the consolidated statement of financial position of Cha Ltd as at 30 September 2019. (19 marks) 4.2 Set out the journal entries that will be required on consolidation to recognise the goodwill relating to the acquisition of Sai Ltd in the consolidated statement of financial position of Cha Ltd as at 30 September 2019. (2 marks) 4.3 One month after the year end on 31 October 2019 Cha Ltd sold its 65% holding in Hei Ltd for 346,000. Hei Ltd made a profit for the month of October 2019 of 18,900. Calculate the profit or loss on disposal of Hei Ltd. (2 marks)