Pleasant Place Brewery Limited (PPBL) acquired 2 million equity shares in ABS Brewery

Ltd (ABL) on 1 January 2019, on which date the retained earnings of ABL stood at GHC

300,000. The agreed consideration was GHC 1.5 million cash and a further GHC 600,000

on January 2021 if ABL attained certain profit targets. PPBLs cost of capital is 15%.

The draft statement of financial position of PPBL and ABL on 31 December 2019 were as

follows:

PPBL ABL

GHC000 GHC000

PPE 2,500 2,000

Investment in ABL shares at cost 1,500

4,000 2,000

Current Assets:

Inventory 150 400

Receivables 800 350

Owings - 500

Cash and Cash Equivalents 100 -

1,050 1,250

Current Liabilities

Owed to ABL 500 350

Trade Payables 400

Net Assets 4,150 2,900

Stated Capital

Ordinary Shares @ GHC 0.50 2,250 1,250

Revaluation Surplus 600 250

Retained Earnings 1,300 1,400

4,150 2,900

Additional Information:

i. ABL has an internally developed brand MSC which was valued at GHC 250,000 at the

date of acquisition. There have been no changes in the share capital or revaluation surplus

of ABL since PPBL gained control.

ii. At 31 December, 2019, ABL had invoiced PPBL for transfer of malt (a basic raw material

for brewing) to the value of GHC 100,000 which had not been received by PPBL.

iii. There is no impairment of goodwill. It is the groups policy to value NCI at full fair value.

At the acquisition date, the NCI was valued at GHC 450,000.

Required:

Prepare the consolidated statement of financial position as at 31 December 2019.