GENERAL NOTE:

P Co acquired 1,200,000 ordinary shares in S Co on 1 January 2015 for Rs 2,000,000 cash. At the date of acquisition, the retained profit of S Co was Rs 400,000.

ADDITIONAL INFORMATION

1. The fair values of the net assets of S Co at the date of acquisition were equal to their carrying amounts with exception of a freehold property which had a fair value of Rs 800,000 above its carrying amount. The freehold property consists of a building representing 50% of its total value which is depreciated on cost. The remaining useful life of the building is 40 years at the date of acquisition.

2. Its P Cos policy to value non controlling interest at fair value. At the date of acquisition, S Co shares had a share price of Rs 1.60 per share.

3. P Co also acquired 450,000 ordinary shares in A Co on 1 January 2014 for Rs1,000, 000 and the retained earnings at that date was Rs 300,000.

4. At 31 December 2020, P Cos inventory held Rs 200,000 bought form S co. It is the policy of S Co to marked up goods transferred at cost plus 25%.

5. In same period P co sold goods to A Co of which A Co had Rs160,000 in inventory and P Co had marked up these goods at 25%.

6. An impairment test was carried out and it was decided to written off the goodwill of S Co in full. In addition, the investment in A co was impaired by Rs184,000.

REQUIRED (a) Calculate the goodwill arising on the acquisition of S Co at 31 December 2020

b) Prepare a consolidated statement of financial position for P Co as at 31 December 2020

The statements of financial position of P Co, S Co and A Co at 31 December 2020 are giver The statements of financial position of P Co, S Co and A Co at 31 December 2020 are giver