Penn Corporation acquired 360 million shares of the ordinary share captal of Speen for $452m and 60 Million shares of the ordinary share capital of Amersham for $40m on Ist January 20X7 when the Retained earnings balances were $50m in Speen and $15m in Amersham Penn, Speen and Amersham are public limited companies The statements of financial position of the three companies at 31 December 2009 are set out below: Penn Speen Amersham $m $m Sm Non-current assets Property, plant and equipment 176 172 78 Investment Property 60 0 0 Investments 492 0 78 728 172 78 Current assets Inventories 384 338 122 Trade receivables 275 188 30 Cash at bank 42 10 54 701 536 206 1429 708 284 Equity Share capital 0.5$ ordinary share: 592 200 100 Share premium 30 15 0 Retained earnings 350 150 60 972 365 160 Current liabilities Trade payables 457 343 124 1429 708 284 You are also given the following information: 1) The Group uses the fair value method to value the non-controlling interest. For this purpose, the Speed share price at the date of acquisition should be used. Speed share price at acquisition was$1.2 per share.. 2) In November 20X9 S sold some goods to Penn for $2 million. The mark-up on the cost accounts for 50%. By the reporting date 31 December 20X9, Penn had sold only 40% of these goods outside the group. 3) In the beginning of December 20Xx9 there was some other intercompany sales from Penn to Amersham $4million. It had cost Penn $3 million to produce these goods prior to the Sale. By the end of the reporting date 31 December 20X9, when the stock taking procedure was held it appeared that none of these goods were sold from Amersham warehouse. 4) At the date of acquisition speed had a plant which had a value of $70M. Due to its specifications the Management decided to estimate that the fair value of the plant and conducted showed that the fair value of the plant was around $120m. This fair value adjustment was never reflected in the company financials. The plant originally had been acquired on 1st January 20X5 and had originally 10 years of useful life. The useful life assumptions did not change after valuation activities. 5) One of the main reasons why Penn decided to acquire Speen shares was the portfolio of clients That were in Speen's possession. In the beginning of year 20X9 Speen had some quality problems with Its production, and consequently 3 main customers decided to quit from the agreement contract with Speen. The cash flow analysis doubtfully indicated some impairment traits within the business. The financial analysts estimated around 20% of goodwill impairment that should have been recognized by the reporting date - 31 December 20X9. 6) At the reporting date Penn recorded a payable to Speen of $16 M. This did not agree to the Corresponding amount in Speen's financial statements of S20 M. The difference is explained as cash in transit. 7) Penn classifies some of its buildings investment property. The rationale behind this arrangement is the fact that it is letting the building to Speen. (No profit is recognized from these operations). Required: Prepare any elimination entries necessary based on the information stated above Prepare any fair value adjustments necessary based on the information stated above Calculate Group Retained eaming for the date of consolidation as at 31 December 20X9 Calculate NCI for the date of consolidation as at 31 December 20X9 Calculate Investment amount for the date of consolidation as at 31 December 20X9 Hint: note 7 you should analyze the classification of the asset upon consolidation and make appropriate changes in the consolidated financial position Penn Corporation acquired 360 million shares of the ordinary share captal of Speen for $452m and 60 Million shares of the ordinary share capital of Amersham for $40m on Ist January 20X7 when the Retained earnings balances were $50m in Speen and $15m in Amersham Penn, Speen and Amersham are public limited companies The statements of financial position of the three companies at 31 December 2009 are set out below: Penn Speen Amersham $m $m Sm Non-current assets Property, plant and equipment 176 172 78 Investment Property 60 0 0 Investments 492 0 78 728 172 78 Current assets Inventories 384 338 122 Trade receivables 275 188 30 Cash at bank 42 10 54 701 536 206 1429 708 284 Equity Share capital 0.5$ ordinary share: 592 200 100 Share premium 30 15 0 Retained earnings 350 150 60 972 365 160 Current liabilities Trade payables 457 343 124 1429 708 284 You are also given the following information: 1) The Group uses the fair value method to value the non-controlling interest. For this purpose, the Speed share price at the date of acquisition should be used. Speed share price at acquisition was$1.2 per share.. 2) In November 20X9 S sold some goods to Penn for $2 million. The mark-up on the cost accounts for 50%. By the reporting date 31 December 20X9, Penn had sold only 40% of these goods outside the group. 3) In the beginning of December 20Xx9 there was some other intercompany sales from Penn to Amersham $4million. It had cost Penn $3 million to produce these goods prior to the Sale. By the end of the reporting date 31 December 20X9, when the stock taking procedure was held it appeared that none of these goods were sold from Amersham warehouse. 4) At the date of acquisition speed had a plant which had a value of $70M. Due to its specifications the Management decided to estimate that the fair value of the plant and conducted showed that the fair value of the plant was around $120m. This fair value adjustment was never reflected in the company financials. The plant originally had been acquired on 1st January 20X5 and had originally 10 years of useful life. The useful life assumptions did not change after valuation activities. 5) One of the main reasons why Penn decided to acquire Speen shares was the portfolio of clients That were in Speen's possession. In the beginning of year 20X9 Speen had some quality problems with Its production, and consequently 3 main customers decided to quit from the agreement contract with Speen. The cash flow analysis doubtfully indicated some impairment traits within the business. The financial analysts estimated around 20% of goodwill impairment that should have been recognized by the reporting date - 31 December 20X9. 6) At the reporting date Penn recorded a payable to Speen of $16 M. This did not agree to the Corresponding amount in Speen's financial statements of S20 M. The difference is explained as cash in transit. 7) Penn classifies some of its buildings investment property. The rationale behind this arrangement is the fact that it is letting the building to Speen. (No profit is recognized from these operations). Required: Prepare any elimination entries necessary based on the information stated above Prepare any fair value adjustments necessary based on the information stated above Calculate Group Retained eaming for the date of consolidation as at 31 December 20X9 Calculate NCI for the date of consolidation as at 31 December 20X9 Calculate Investment amount for the date of consolidation as at 31 December 20X9 Hint: note 7 you should analyze the classification of the asset upon consolidation and make appropriate changes in the consolidated financial position