) On 1 January 2022 Expand Plc acquired 90% of the equity share capital of Constant Plc in a share exchange in which Expand Plc issued two new shares for every three shares it acquired in Constant Plc. At the date of acquisition, shares in Expand Plc and Constant Plc had stock market values of 6.50 and 2.50 each, respectively.

Statement of Profit and Loss and Other Comprehensive Income for the year ended 30 September 2022 Expand Constant 000 000 Revenue 64,600 38,000 Cost of sales (51,200) (26,000) Gross profit 13,400 12,000 Distribution costs (1,600) (1,800) Administrative expenses (3,800) (2,400) Investment income 500 nil Finance costs (420) (100) Profit before tax 8,080 7,700 Income tax expense (2,800) (1,500) Profit for the year 5,280 6,200 Revaluation surplus 550 470 Comprehensive income 5,830 6,670 Additional information. Equity as at 1 October 2021: Equity shares of 1 each 30,000 10,000 Retained earnings 54,000 35,000

The following information is also relevant: i) At the date of acquisition, the fair values of Constants assets were equal to their carrying amounts with the exception of an item of plant had a fair value of 1.8 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. Expand had not incorporated this fair value change into its financial statements for the year ended 30 September 2022. (ii) Sales from Expand to Constant throughout the year ended 30 September 2022 had consistently been 800,000 per month. Expand made a mark-up on cost of 25% on these sales. Constant had 1.5 million of these goods in inventory as at 30 September 2019. (iii) At the date of acquisition Expand Plc had loaned Constant Plc 5 million at a preferential annual rate of 2%. Both companies had accounted for the interest. (iv) Although Constant Plc has been profitable since its acquisition by Expand Plc, the market for Constant Plcs products has been badly hit in recent months and Expand Plc has calculated the goodwill has been impaired by 2 million as at 30 September 2022. (v) The revaluations in both companies arose at the end of the year.

(1) Calculate the consolidated goodwill at the date of acquisition. (5 marks) (2) Prepare the consolidated profit and loss and other comprehensive income for Expand Plc for the year ended 30 September 2022.