o On 1 April 2011 P acquired 4 million of S's equity shares paying GH$4.50 cash, at which time the retained earnings of S were GH&8.4million. The market price of each Sill share at the date of acquisition was GH$4.00 each.

o Reproduced below are the draft Statements of Financial Position of the two companies at 31

March 2014:

Non-Current Assets.

Land and Buildings

Plant & Equipment

Investment

Total assets

Current assets

Inventory

Receivables

Cash at bank

Total current assets

Total

Question 2

P

GHe'000

22.000

20,450

18.500

60,950

9,850

11,420

490

21,760

82,710

S

GHe'000

12,000

10,220

-

22,220

6,590

3,830

-

10,420

32,640

Egully & Liabililies

Equity shares of GHel each

Retained Earnings

P. (GH&'000)

10.000

51,840

61.840

S (GH&'000)

5.000

16,580

21,580

Current labilities

Bank overdraft

Payables

Tax

Total

17.600

3.270

20.870

82,710

570

7.810

2.680

11.060

32.640

o The following information is relevant:

o (i) Included in the land and buildings of Sill is a large area of development land at its cost of GH&5million. Its fair value at the date Sill was acquired was GH&7million and by 31 March 2014 this had risen to GH&8.5 million. The group valuation policy for development land is that it should be carried at fair value and not depreciated.

o (il) Also at the date of Sill's acquisition the plant and equipment included plant that had a fair value of GH&4million in excess of its carrying value.

This plant had a remaining life of 5 years at that date. The group calculates depreciation on a straight-line basis. The fair value of Sill's other net assets approximated to their carrying values.

o (iiil The balance on the current accounts of the parent and subsidiary included in receivables and payables was agreed at GH&240,000 on 31 March

2014.

o (iv) An impairment test at 31 March 2014

concluded that consolidated goodwill was impaired by GH&200,000.

o Prepare the Consolidated Statement of Financial

Position for the Pill group as at 31 March 2014.