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Kovid Ltd is S Ltd and Huhan Ltd is P Ltd. QUESTION 1 100 MARKS STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 20.20 Huhan

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Kovid Ltd is S Ltd and Huhan Ltd is P Ltd.
QUESTION 1 100 MARKS STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 20.20 Huhan Ltd Kovid Ltd ASSETS Fixed property Plant Gross carrying amount Accumulated depreciation Furniture Gross carrying amount Accumulated depreciation Investment in S Ltd at fair value: 80 000 shares (cost: R147000) Investment in unlisted shares 196 000 17 920 28 000 10 080 7 000 14 000 7 000 135 800 14 000 35 000 21 000 4 200 14 000 9 800 147 000 35 000 Current account: S Ltd Trade receivables Inventories Bank Total assets 28 000 63 000 22 400 75 390 556 710 32 200 39 200 89 250 349 650 200 000 296 510 100 000 177 200 EQUITY AND LIABILITIES Share capital (200 000/100 000 shares) Retained earnings Current account: P Ltd Dividend payable Trade and other payables Total equity and Liabilities 14 000 46 200 556 710 12 250 21 000 39 200 349 650 EXTRACT FROM THE STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 20.20 Huhan Ltd Kovid Ltd Retained Earnings 240 000 160 000 Balance at 1 July 20.19 Changes in equity for 20.18 Total comprehensive income for the year Profit for the year Ordinary dividend paid and provided Balance at 30 June 20.20 76 510 20 000 296 510 32 200 15 000 177 200 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 20.20 Huhan Ltd Kovid Ltd Revenue 280 000 210 000 Cost of sales (154 000) (154 000) Gross profit 126 000 56 000 Other expenses (42 210) (12 670) Dividend received 15 750 1 400 Interest received 6 720 Profit before tax 106 260 44 730 Income tax expense (29 750) (12 530) PROFIT FOR THE YEAR 76 510 32 200 Other comprehensive income for the year TOTAL COMPREHENSIVE INCOME FOR THE YEAR 76 510 32 200 Additional information Huhan Ltd acquired the interest in Kovid Ltd on 30 June 20.17 when the equity of Kovid Ltd was as follows: Share capital R100 000 Retained earnings R49 000 On 1 January 20.18, Huhan Ltd sold non-depreciable fixed property with an original cost price of R70 000 to Kovid Ltd for R79800. The property is classified as property, plant and equipment and is still in the possession of Kovid Ltd. . On 30 June 20.19, Kovid Ltd sold furniture that cost R12 500 and on which accumulated depreciation to the amount of R3500 was recognised, to Huhan Ltd for R14 000. Huhan Ltd classifies this furniture under property, plant and equipment. Kovid Ltd purchases all its inventories from Huhan Ltd at cost price plus 25%. Total inventories to the value of R105 000 were sold to Kovid Ltd by Huhan Ltd during the reporting period. Inventories in the records of Kovid Lid were R35 000 on 1 July 20. 19. At the end of the reporting period, Kovid Ltd still owed Huhan Ltd R32 200 in respect of the inventories purchased from Huhan Ltd. These amounts are included in trade receivables and trade and other payables. On 30 June 20.18, Kovid Ltd sold 2 machines with a carrying amount of R25 200 each to Huhan Ltd for a total amount of R56 000. Huhan Ltd uses the plant in the production of inventories. Both companies write off depreciation on plant at 20% per annum on the diminishing balance method. On 29 June 20.20, Huhan Ltd sold one of the machines at a slight profit that was set off against other expenses. Assume a company tax rate of 28%. Huhan Ltd recognised the equity investment in Kovid Ltd in its separate financial records using the cost price method. Huhan Ltd elected to measure any non-controlling interests in an acquiree at their proportional share of the acquiree's identifiable net assets at acquisition date. Required Prepare the consolidated financial statements of the P Ltd Group for the reporting period ended 30 June 20.20 (show analysis of owner equity of the subsidiary and Pro forma journal entries) 100 marks QUESTION 1 100 MARKS STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 20.20 Huhan Ltd Kovid Ltd ASSETS Fixed property Plant Gross carrying amount Accumulated depreciation Furniture Gross carrying amount Accumulated depreciation Investment in S Ltd at fair value: 80 000 shares (cost: R147000) Investment in unlisted shares 196 000 17 920 28 000 10 080 7 000 14 000 7 000 135 800 14 000 35 000 21 000 4 200 14 000 9 800 147 000 35 000 Current account: S Ltd Trade receivables Inventories Bank Total assets 28 000 63 000 22 400 75 390 556 710 32 200 39 200 89 250 349 650 200 000 296 510 100 000 177 200 EQUITY AND LIABILITIES Share capital (200 000/100 000 shares) Retained earnings Current account: P Ltd Dividend payable Trade and other payables Total equity and Liabilities 14 000 46 200 556 710 12 250 21 000 39 200 349 650 EXTRACT FROM THE STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 20.20 Huhan Ltd Kovid Ltd Retained Earnings 240 000 160 000 Balance at 1 July 20.19 Changes in equity for 20.18 Total comprehensive income for the year Profit for the year Ordinary dividend paid and provided Balance at 30 June 20.20 76 510 20 000 296 510 32 200 15 000 177 200 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 20.20 Huhan Ltd Kovid Ltd Revenue 280 000 210 000 Cost of sales (154 000) (154 000) Gross profit 126 000 56 000 Other expenses (42 210) (12 670) Dividend received 15 750 1 400 Interest received 6 720 Profit before tax 106 260 44 730 Income tax expense (29 750) (12 530) PROFIT FOR THE YEAR 76 510 32 200 Other comprehensive income for the year TOTAL COMPREHENSIVE INCOME FOR THE YEAR 76 510 32 200 Additional information Huhan Ltd acquired the interest in Kovid Ltd on 30 June 20.17 when the equity of Kovid Ltd was as follows: Share capital R100 000 Retained earnings R49 000 On 1 January 20.18, Huhan Ltd sold non-depreciable fixed property with an original cost price of R70 000 to Kovid Ltd for R79800. The property is classified as property, plant and equipment and is still in the possession of Kovid Ltd. . On 30 June 20.19, Kovid Ltd sold furniture that cost R12 500 and on which accumulated depreciation to the amount of R3500 was recognised, to Huhan Ltd for R14 000. Huhan Ltd classifies this furniture under property, plant and equipment. Kovid Ltd purchases all its inventories from Huhan Ltd at cost price plus 25%. Total inventories to the value of R105 000 were sold to Kovid Ltd by Huhan Ltd during the reporting period. Inventories in the records of Kovid Lid were R35 000 on 1 July 20. 19. At the end of the reporting period, Kovid Ltd still owed Huhan Ltd R32 200 in respect of the inventories purchased from Huhan Ltd. These amounts are included in trade receivables and trade and other payables. On 30 June 20.18, Kovid Ltd sold 2 machines with a carrying amount of R25 200 each to Huhan Ltd for a total amount of R56 000. Huhan Ltd uses the plant in the production of inventories. Both companies write off depreciation on plant at 20% per annum on the diminishing balance method. On 29 June 20.20, Huhan Ltd sold one of the machines at a slight profit that was set off against other expenses. Assume a company tax rate of 28%. Huhan Ltd recognised the equity investment in Kovid Ltd in its separate financial records using the cost price method. Huhan Ltd elected to measure any non-controlling interests in an acquiree at their proportional share of the acquiree's identifiable net assets at acquisition date. Required Prepare the consolidated financial statements of the P Ltd Group for the reporting period ended 30 June 20.20 (show analysis of owner equity of the subsidiary and Pro forma journal entries) 100 marks

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