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On 1 January 2 0 2 3 Haverford Ltd . acquired 9 0 % of the equity share capital of Victular Ltd . in a
On January Haverford Ltd acquired of the equity share capital of
Victular Ltd in a share exchange in which Haverford issued two new shares for
every three shares it acquired in Victular.
At the date of acquisition, shares in Haverford and Victular had stock market values
of and each, respectively.
Statement of Profit or Loss for the year ended September
Haverford Victular
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Investment income nil
Finance costs
Profit before tax
Income tax expense
Profit for the year
Revaluation surplus
Comprehensive income
Additional information.
Equity as at October :
Equity shares of each
Retained earnings
The following information is also relevant:
i At the date of acquisition, the fair values of Victulars assets were equal to their
carrying amounts with the exception of:
An item of plant had a fair value of million above its carrying amount. The
remaining life of the plant at the date of acquisition was three years. Depreciation
is charged to cost of sales.
Haverford had not incorporated this fair value change into its financial
statements.
ii Sales from Haverford to Victular throughout the year ended September
had consistently been per month. Haverford made a markup on cost
of on these sales. Victular had million of these goods in inventory as
at September
iii At the date of acquisition Haverford had lent Victular million at a preferential
annual rate of Both companies had accounted for the interest.
iv Although Victular has been profitable since its acquisition by Haverford, the
market for Victulars products have been badly hit in recent months and
Haverford has calculated the goodwill has been impaired by million as at
September
v The revaluations in both companies arose at the end of the year.
Required:
a Calculate the consolidated goodwill at the date of acquisition.
b Prepare the consolidated profit and loss and other comprehensive income for
Haverford for the year ended September
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