On 1 July 2019, Parker purchased 85% of Skyklar by way of a share exchange of one new share in Parker for every two purchased in Skylar plus an immediate cash payment of $ 10.4 million. Parker’s share price at the acquisition date was $ 5. Only the cash element of the consideration has been recorded by Parker.

The Statement of Financial Positions of both companies as of 30 June 2020 are as follows:

The following information is relevant:

1. Skylar’s retained earnings at the date of acquisition were $ 3.8 million.

2. Parker’s policy is to value the non-controlling interest at fair value at the date of acquisition. The share price of Skyklar at the date of acquisition was $ 3.

3. An impairment test carried out on 30 June 2020 revealed that consolidated goodwill was impaired by $ 2 million.

4. Skylar sold goods to Parker in the post-acquisition period at a markup of 25% for $ 20 million and 1/4 of these goods are included in the inventory of Parker at 30 June 2020.

5. Parker’s trade payables of $ 3 million do not tally with Skylar’s trade receivables due to cash in transit of $ 1 million from Parker to Skylar.

6. The fair value of Skylar’s net assets differed from its carrying values on 1 July 2019. The plant had a fair value of $ 6 million in excess of its net book value and would create additional depreciation of $ 1.5 million in the post-acquisition period to 30 June 2020.

REQUIRED

Prepare the consolidated statement of the financial position of Parker as at 30 June 2020.
 

    

  

Non-current assets Property, plant and equipment Investments Current assets Inventory Trade receivables Bank Total assets Equity and liabilities Ordinary shares of $ 0.50 each Share premium Retained earnings Total equity Non-current liabilities 10% loan notes Parker Skylar $ 000 $ 000 38,600 17,000 55,600 20,000 1,500 21,500 15,000 8,000 14,500 7,000 6,000 8,000 35,500 23,000 91,100 44,500 60,000 8,000 8,000 8,100 10,000 76,100 18,000 5,000 2,000