Paul, a public listed company, acquired 600 million equity shares in Atlas on 1 April 2017. The purchase consideration was made up of:

A share exchange of one share in Paul for two shares in Atlas. The value of each shares at that date was 75 cents.

The issue of MUR 100 10% loan note for every 500 shares acquired; and

A deferred cash payment of 11 cents per share acquired payable on 1 April 2018. The balance sheets of the two companies at 31 March 2018 are shown below:

The balance sheets of the two companies at 31 March 2018 are shown below:

The following information is relevant:

(i) At the date of acquisition, the fair values of Atlass net assets were approximately equal to their carrying amounts with the exception of its properties. These properties had a fair value of MUR 40 million in excess of their carrying amounts which would create additional depreciation of MUR 2 million in the post-acquisition period to 31 March 2018. The fair values have not been reflected in Atlass balance sheet.

(ii) Atlas sold Paul goods for MUR 15 million in the post-acquisition period. MUR 5 million of these goods are included in the inventory of Paul at 31 March 2018. The profit made by Atlas on these sales was MUR 6 million.

(iii) Atlass trade payable account (in the records of Paul) of MUR 7 million does not agree with Pauls trade receivable account (in the records of Atlas) due to cash in transit of MUR 4 million paid by Paul.

(iv) Due to the impact of the new listing rules, Paul has concluded that the consolidated goodwill has been impaired by MUR 27 million.

(v) It is the group policy to value the non-controlling interest at fair value and at the date of acquisition amount to MUR 90M.

(vi) Paul has only recorded the loan note.

REQUIRED (a) Prepare the consolidated statement of financial position as at 31 March 2018. [35 marks]

(b) Paul is planning to acquire 35% ordinary share capital in a company named Extreme. Explain how the investment should be accounted when preparing its consolidated financial for next year. Provide the relevant accounting entry.