Ok, no problem! I have changed the figure now.

FINANCIAL INFORMATION

Peter, a public listed company, acquired 600 million equity shares in Tom on 1 April 2021. The purchase consideration was made up of:

a share exchange of one share in Peter for two shares in Tom

the issue of 100 10% loan note for every 500 shares acquired, and

a deferred cash payment of 11 cents per share acquired payable on 1 April 2022.

Peter has only recorded the issue of the loan notes. The value of each Peter share at the date of acquisition was 75 cents and Peter has a cost of capital of 10% per annum which will give a relevant discount factor of 0.9091.

The statement of financial positions of the two companies on 31 March 2022 is shown below:

	Peter		Tom
	million	million	million	million
Non-Current Assets
		640		340
Property, plant and
equipment (note (i))
Investments		405		Nil
Intellectual property (note (ii))		Nil		30
		760		370
Current Assets
Inventory (note (iii))	76		22
Trade receivables (note (iii))	84		44
Bank	Nil	160	4	70
Total assets		920		440
Equity and Liabilities
Equity shares of 25 cents each		300		200
Retained earnings.
1 April 2021	210		120
year ended 31 March 2022	90	300	20	140
		600		340
Non-Current Liabilities
10% loan notes		120		20
Current liabilities
Trade payables (note (iii))	130		57
Current tax payable	45		23
Overdraft	25	200	Nil	80
Total equity and liabilities		920		440

The following information is relevant:

I. At the date of acquisition, the fair values of Toms net assets were approximately equal to their carrying amounts with the exception of its properties. These properties had a fair value of 40 million in excess of their carrying amounts, which would create additional depreciation of 2 million in the post-acquisition period to 31 March 2022. The fair values have not been reflected in Toms statement of financial position.

II. The intellectual property is a system of encryption designed for internet use. Tom has been advised that government legislation (passed since acquisition) has now made this type of encryption illegal. Tom will receive 10 million in compensation from the government. This was confirmed by letter from the government agency.

III. Tom sold Peter goods for 15 million in the post-acquisition period. 5 million of these goods are included in the inventory of Peter at 31 March 2022. The profit made by Tom on these sales was 6 million. The intercompany current accounts of the companies do not balance due to cash in transit of 4 million paid by Peter.

IV. Due to the impact of the above legislation, Peter has concluded that the consolidated goodwill has been impaired by 40 million since acquisition.

V. Peters policy is to value the non-controlling interests using the fair value of the subsidiarys identifiable net assets. The fair value of the non-controlling interests at the date of acquisition is 125 million.

REQUIREMENT:

Prepare the Consolidated Statement of Financial Position of the Peter group as at 31 March 2022. (All workings and details must be included)