Old MathJax webview

please close my question

On 1 January 20X6, Dargent Co acquired 75% of Latree Co's equity shares by means of a share exchange of two shares in Dargent Co for every three Latree Co shares acquired. On that date, further consideration was also issued to the shareholders of Latree Co in the form of a $100 8% loan note for every 100 shares acquired in Latree Co. None of the purchase consideration, nor the outstanding interest on the loan notes at 31 March 20X6, has yet been recorded by Dargent Co. At the date of acquisition, the share price of Dargent Co and Latree Co is $3-20 and $1.80 respectively The summarised statements of financial position of the two companies as at 31 March 20x6 are: Dargent Co Latree Co s'000 $'000 Assets Non-current assets Property, plant and equipment (note (1) 75,200 31,500 Investment in Amery Co at 1 April 20x5 (note (lv) 4,500 79,700 31,500 Current assets Inventory (note (1) 19,400 18.800 Trade receivables (note (1) 14,700 12,500 Bank 1,200 600 35,300 31.900 Total assets 115,000 63,400 Equity and liabilities Equity Equity shares of $1 each 50.000 20.000 Retained earnings - at 1 April 20X5 20,000 19,000 - for year ended 31 March 20X6 16.000 8.000 86,000 47,000 Non-current liabilities 8% loan notes nil Current liabilities (note (1)) 24,000 16,400 29,000 16,400 Total equity and liabilities 115,000 63,400 The following information is relevant: (1) At the date of acquisition, the fair values of Latree Co's assets were equal to their carrying amounts. However, Latree Cooperates a mine which requires to be decommissioned in five years' time. No provision has been made for these decommissioning costs by Latree Co. The present value (discounted at 8%) of the decommissioning is estimated at $4m and will be paid five years from the date of acquisition (the end of the mine's life). (1) Dargent Co's policy is to value the non-controlling interest at fair value at the date of acquisition. Latree Co's share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest 5.000 (iii) The inventory of Latree Co includes goods bought from Dargent Co for $2.1m. Dargent Co applies a consistent mark-up on cost of 40% when arriving at its selling prices. On 28 March 20X6, Dargent Co despatched goods to Latree Co with a selling price of $700,000. These were not received by Latree Co until after the year end and so have not been included in the above inventory at 31 March 20X6. At 31 March 20X6, Dargent Co's records showed a receivable due from Latree Co of $3m, this differed to the equivalent payable in Latree Co's records due to the goods in transit. 45 The intra-group reconciliation should be achieved by assuming that Latree Co had received the goods in transit before the year end. (iv) The investment in Amery Co represents 30% of its voting share capital and Dargent Co uses equity accounting to account for this investment. Amery Co's profit for the year ended 31 March 20x6 was $6m and Amery Co paid total dividends during the year ended 31 March 20x6 of $2m. Dargent Co has recorded its share of the dividend received from Amery Co in investment income (and cash). (v) All profits and losses accrued evenly throughout the year. (vi) There were no impairment losses within the group for the year ended 31 March 20x6. Required: Prepare the consolidated statement of financial position for Dargent Co as at 31 March 20X6. On 1 January 20X6, Dargent Co acquired 75% of Latree Co's equity shares by means of a share exchange of two shares in Dargent Co for every three Latree Co shares acquired. On that date, further consideration was also issued to the shareholders of Latree Co in the form of a $100 8% loan note for every 100 shares acquired in Latree Co. None of the purchase consideration, nor the outstanding interest on the loan notes at 31 March 20X6, has yet been recorded by Dargent Co. At the date of acquisition, the share price of Dargent Co and Latree Co is $3-20 and $1.80 respectively The summarised statements of financial position of the two companies as at 31 March 20x6 are: Dargent Co Latree Co s'000 $'000 Assets Non-current assets Property, plant and equipment (note (1) 75,200 31,500 Investment in Amery Co at 1 April 20x5 (note (lv) 4,500 79,700 31,500 Current assets Inventory (note (1) 19,400 18.800 Trade receivables (note (1) 14,700 12,500 Bank 1,200 600 35,300 31.900 Total assets 115,000 63,400 Equity and liabilities Equity Equity shares of $1 each 50.000 20.000 Retained earnings - at 1 April 20X5 20,000 19,000 - for year ended 31 March 20X6 16.000 8.000 86,000 47,000 Non-current liabilities 8% loan notes nil Current liabilities (note (1)) 24,000 16,400 29,000 16,400 Total equity and liabilities 115,000 63,400 The following information is relevant: (1) At the date of acquisition, the fair values of Latree Co's assets were equal to their carrying amounts. However, Latree Cooperates a mine which requires to be decommissioned in five years' time. No provision has been made for these decommissioning costs by Latree Co. The present value (discounted at 8%) of the decommissioning is estimated at $4m and will be paid five years from the date of acquisition (the end of the mine's life). (1) Dargent Co's policy is to value the non-controlling interest at fair value at the date of acquisition. Latree Co's share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest 5.000 (iii) The inventory of Latree Co includes goods bought from Dargent Co for $2.1m. Dargent Co applies a consistent mark-up on cost of 40% when arriving at its selling prices. On 28 March 20X6, Dargent Co despatched goods to Latree Co with a selling price of $700,000. These were not received by Latree Co until after the year end and so have not been included in the above inventory at 31 March 20X6. At 31 March 20X6, Dargent Co's records showed a receivable due from Latree Co of $3m, this differed to the equivalent payable in Latree Co's records due to the goods in transit. 45 The intra-group reconciliation should be achieved by assuming that Latree Co had received the goods in transit before the year end. (iv) The investment in Amery Co represents 30% of its voting share capital and Dargent Co uses equity accounting to account for this investment. Amery Co's profit for the year ended 31 March 20x6 was $6m and Amery Co paid total dividends during the year ended 31 March 20x6 of $2m. Dargent Co has recorded its share of the dividend received from Amery Co in investment income (and cash). (v) All profits and losses accrued evenly throughout the year. (vi) There were no impairment losses within the group for the year ended 31 March 20x6. Required: Prepare the consolidated statement of financial position for Dargent Co as at 31 March 20X6