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Consolidation accounting policies The consolidated financial statements incorporate the financial statements of the subsidiary (Smashed Limited) of Parts Palace Limited ("Parent') as at the reporting date. Parts Palace Limited and its subsidiary together are referred to in these financial statements as the "Group" or the consolidated entity. The subsidiary is an entity over which the Parent has control. The Parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The subsidiary is included in the consolidated financial statements using the acquisition method of consolidation. It is fully consolidated from the date on which control is transferred to the Parent. The Group recognises non-controlling interest at its proportionate share of subsidiary net identifiable assets. The Subsidiary, Smashed On 31 December 2016, Parts Palace Limited acquired 75% of the shares in Smashed Limited. On that date, the equity of Smashed Limited comprised: $ 000 Share capital Retained earnings 400 Equity $1,100 700 At acquisition, the book value of the assets and liabilities of Smashed Limited were considered to be at fair value, except for some non-depreciable assets (included under 'Other non-current assets and considered to be part of net identifiable assets) that had a book value of zero and where Parts Palace assessed their fair value to be $160,000. There has been no change to assessed value of these assets since acquisition Goodwill impairment At the most recent balance date (31 December 2019), the returns from Smashed were not as high as expected. The directors of Parts Palace considered that acquired goodwill had been impaired by $250,000. Tax and Deferred Tax Assume a tax rate of 30% wherever relevant (i.e., for both Phase 1 and Phase 2). Breakdown of Cost of Sales figures supplied below for 31 December 2019 Smashed Palace $000 $000s Opening inventory 450 400 Purchases 1250 550 Closing inventory 300 Cost of sales 1400 600 350 Smashed Financial statements Income statement for year end 31 December & Balance sheet as at 31 December 2019 Parts Palace 9000 Sales 4,200 Cost of sales 1,400 Gross profit 2,800 Operating expenses (incl. Interest, Depn & Impairment) 300 Other income (incl. Dividends & Interest) 400 Operating profit before tax 2,900 Income tax 500 Net Profit 2,400 9000s 1.600 600 1,000 400 400 Opening Retained earnings 500 1,500 3,900 800 Dividends paid Closing retained earnings 900 200 700 3,100 700 Share capital Total equity 2,200 5,300 1,400 200 130 Accounts Payable Deferred tax Other non-current liabilities Total liabilities 800 600 700 2,100 800 1,130 Total liabilities and equity 7,400 2,530 Cash Accounts Receivable Inventory Current assets 100 200 300 600 80 100 350 2,000 3,700 Investment in Smashed (at Cost) Plant (net) Other non-current assets Non-current assets 1,100 1,300 700 2,000 6,800 Total assets 7,400 2,530 Consolidated ($000s) Sales Beginning inventory Purchases Ending inventory Cost of sales Gross profit Operating expenses (incl. Interest, Depn & Impairment) Other income (incl. Dividends & Interest) Operating profit before tax Income Tax Net Profit Non controlling interest in profits Opening Retained earnings Dividends paid Closing retained earnings Share capital Non-controlling interest Total equity Accounts Payable Deferred tax Other non-current liabilities Total liabilities Total liabilities and equity Cash Accounts Receivable Inventory Current assets Investment in Smashed (at Cost) Plant (net) Goodwill (net) Other non-current assets Non-current assets Total assets Consolidation accounting policies The consolidated financial statements incorporate the financial statements of the subsidiary (Smashed Limited) of Parts Palace Limited ("Parent') as at the reporting date. Parts Palace Limited and its subsidiary together are referred to in these financial statements as the "Group" or the consolidated entity. The subsidiary is an entity over which the Parent has control. The Parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The subsidiary is included in the consolidated financial statements using the acquisition method of consolidation. It is fully consolidated from the date on which control is transferred to the Parent. The Group recognises non-controlling interest at its proportionate share of subsidiary net identifiable assets. The Subsidiary, Smashed On 31 December 2016, Parts Palace Limited acquired 75% of the shares in Smashed Limited. On that date, the equity of Smashed Limited comprised: $ 000 Share capital Retained earnings 400 Equity $1,100 700 At acquisition, the book value of the assets and liabilities of Smashed Limited were considered to be at fair value, except for some non-depreciable assets (included under 'Other non-current assets and considered to be part of net identifiable assets) that had a book value of zero and where Parts Palace assessed their fair value to be $160,000. There has been no change to assessed value of these assets since acquisition Goodwill impairment At the most recent balance date (31 December 2019), the returns from Smashed were not as high as expected. The directors of Parts Palace considered that acquired goodwill had been impaired by $250,000. Tax and Deferred Tax Assume a tax rate of 30% wherever relevant (i.e., for both Phase 1 and Phase 2). Breakdown of Cost of Sales figures supplied below for 31 December 2019 Smashed Palace $000 $000s Opening inventory 450 400 Purchases 1250 550 Closing inventory 300 Cost of sales 1400 600 350 Smashed Financial statements Income statement for year end 31 December & Balance sheet as at 31 December 2019 Parts Palace 9000 Sales 4,200 Cost of sales 1,400 Gross profit 2,800 Operating expenses (incl. Interest, Depn & Impairment) 300 Other income (incl. Dividends & Interest) 400 Operating profit before tax 2,900 Income tax 500 Net Profit 2,400 9000s 1.600 600 1,000 400 400 Opening Retained earnings 500 1,500 3,900 800 Dividends paid Closing retained earnings 900 200 700 3,100 700 Share capital Total equity 2,200 5,300 1,400 200 130 Accounts Payable Deferred tax Other non-current liabilities Total liabilities 800 600 700 2,100 800 1,130 Total liabilities and equity 7,400 2,530 Cash Accounts Receivable Inventory Current assets 100 200 300 600 80 100 350 2,000 3,700 Investment in Smashed (at Cost) Plant (net) Other non-current assets Non-current assets 1,100 1,300 700 2,000 6,800 Total assets 7,400 2,530 Consolidated ($000s) Sales Beginning inventory Purchases Ending inventory Cost of sales Gross profit Operating expenses (incl. Interest, Depn & Impairment) Other income (incl. Dividends & Interest) Operating profit before tax Income Tax Net Profit Non controlling interest in profits Opening Retained earnings Dividends paid Closing retained earnings Share capital Non-controlling interest Total equity Accounts Payable Deferred tax Other non-current liabilities Total liabilities Total liabilities and equity Cash Accounts Receivable Inventory Current assets Investment in Smashed (at Cost) Plant (net) Goodwill (net) Other non-current assets Non-current assets Total assets