COUNTANCY AND AUDITING, PAPER$-$I

On $1$ January $2012,$ VX Co$.$ acquired $90\%$ of the equity share capital of GN Co$.$ in a share exchange in which VX Co$.$ issued two new shares for every three shares it acquired in GN Co$.$ Additionally, on $31$ December $2012,$ VX Co$.$ will pay the shareholders of GN Co$.$ PKR $1\mathrm{.}76$ per share acquired. VX Co's cost of capital is $10\%$ per annum.

At the date of acquisition, shares in VX Co$.$ and GN Co$.$ had a stock market value of PKR $6\mathrm{.}50$ and PKR $2\mathrm{.}50$ each, respectively.

Income statements for the year ended $30$ September $2012$

$\backslash$table$[[,$VX CO$,$GN CO$],[$Revenue$,$PKR$\text{'}000,$PKR$\text{'}000],[$Cost of sales,$64,600,38,000],[$Gross profit,$(51,200),(26,000)$