Moon Ltd (Moon) is a local company listed on the JSE. One of Moons most recent investments is the investment in Planet Ltd (Planet).

As per below, the following trial balances were obtained from the financial records of Moon and Planet for the financial year ended 28 February 2023:

Notes:

On 1 June 2022, Moon acquired 100% of the ordinary share capital of Planet. Thereby Moon obtaining control over Planet. Planets retained earnings on 1 June 2022 was R50 150 and the ordinary share capital at acquisition was R100 000.

1. The following information relates to the at-acquisition matters:

(a) The purchase consideration payable by Moon was settled as follows:

• R110 000 settled in cash on 1 June 2022; and
• Moon issued 25 000 ordinary shares. On the date of acquisition, the market price (fair value) of the Moon shares was R2.00 each and market price (fair value) of Planet shares was R1.00 each.

(b) At acquisition date, all the assets and liabilities of Planet were considered to be fairly valued.

2. All income and expenses (as well as the related tax expense) of Planet were earned evenly throughout the current financial year.

3. At the end of the financial year, 28 February 2023, Moon determined, as part of its annual impairment test, that the recoverable amount of Planet as a cash generating unit is R680 000. The accountant did not take this information into account when the trial balances were created. Ignore tax and deferred tax consequences relating only to impairment losses.

Additional information:

• Moon and Planet both have a 28 February financial year end.
• Moon accounts for investments in subsidiaries at cost in accordance with IAS 27.10(a) in its separate financial statements.
• Moon is not a share dealer for income tax purposes.
• Assume a companies Income Tax rate of 28%.
• Ignore the effects of Value Added Tax (VAT).

REQUIRED:

[1.1] List three elements, in terms of IFRS 10, which an investor must have in order to have control over the investee. (3marks)

[1.2] Calculate the goodwill or gain on bargain purchase arising on the acquisition of Planet Ltd. (5marks)

[1.3]Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income of the Moon Ltd Group for the financial year ended 28 February 2023. Include all totals and sub-totals. (25marks)

Show and reference all your workings and calculations clearly.

Comparative figures and notes to the financial statements are not required.

***Please can you provide a detailed full answer based on the mark allocation***

\begin{tabular}{|l|r|r|r|r|} \hline Final Trial balances & \multicolumn{2}{|c|}{MoonLtd(R)} & \multicolumn{1}{c|}{ DR } & \multicolumn{2}{c|}{ CR } & \multicolumn{1}{c|}{ DR } & \multicolumn{1}{c|}{ CR } \\ \hline & & 1000000 & & 100000 \\ \hline Ordinary share capital & & ? & & 85750 \\ \hline Retainedearnings(1March2022) & & 475000 & & 302000 \\ \hline Trade and other payables & & 18200 & & \\ \hline Deferred tax liability & & & 953680 & \\ \hline Property,plant,andequipment(carryingvalue) & 2675000 & & & \\ \hline Tradeandotherreceivables & 691000 & & 231750 & \\ \hline Investment in Planet Ltd & & & & \\ \hline Sales & & 6300000 & & 5600000 \\ \hline Cost of Sales & 4200000 & & 4000000 & \\ \hline Other income & & 350000 & & 254000 \\ \hline Other expenses & 1450000 & & 885000 & \\ \hline Income tax expense & 266000 & & 271320 & \\ \hline & ? & & 6341750 & 6341750 \\ \hline \end{tabular}