prepare consolidated statement of financial position and consolidated statement of profit or loss and other financial income for the year ended 30 September 2020

At the date of acquisition, the fair values of Highvie's assets and liabilities were equal to their carrying amounts with the exception of Highvie's property which had a fair value of K8 million above its carrying amount. The property had a remaining useful economic life on 1 January 2020 of 40 years. Depreciation charge on the property is included in cost of sales. Highvie has not incorporated the fair value property increase into its entity financial statements. The policy of the Hamududu group is to revalue all properties to fair value at each year end. On 30 September 2020 , the increase in Hamududu's property has aiready been recorded, however, a further increase of K1.2 million in the value of Highvie's property since its value at acquisition and 30 September 2020 has not been recorded. (viii) Hamududu's policy is to value the non-controlling interest at its share of the fair value of the identifiable net assets of the subsidiary at the date of acquisition (proportionate goodwill method). (ix) Due to recent adverse publicity concerning one of Highvie's major product lines, the goodwill which was recognised on the acquisition of Highvie has been impaired by K1 million as at 30 September 2020. Goodwill impairment should be treated as an administrative expense. (x) Assume, except where indicated otherwise, that all items of income and expenditure accrue evenly throughout the year. QUESTION ONE On 1 January 2020, Hamududu Plc (Hamududu) acquired 80% of the equity share capital of Highvie Plc (Highvie). The consideration was satisfied by a share exchange of two shares in Hamududu for every three acquired shares in Highvie. At the date of acquisition, shares in Hamududu and Highvie had a market value of K6.00 and K5.00 each respectively. Hamududu will also pay cash consideration of 55 ngwee on 1 January 2021 , for each acquired share in Highvie. Hamududu has a cost of capital of 10% per annum. None of the consideration has been recorded by Hamududu. On 1 July 2020, Hamududu acquired 30% of Katongo Plc's (Katongo), equity for cash consideration amounting to K8.5 million which was settled immediately. The holding in Katongo gives Hamududu significant influence over Katongo's financial and operating policies. Katongo Plc has made a profit of K2.4 million during the year to 30 September 2020 and a gain on revaluation of its properties reported in other comprehensive income of K1.2 million. Investments (note(ii)) Current assets Inventory (note (iii)) Trade receivables (note (v)) Bank (note(v)) Total assets Equity and liabilities Equity Equity shares of K1 each Revaluation surplus (note (i)) Retained earnings Non-current liabilities 10% loan notes (note (ii)) Current liabilities Trade payables (note iv)) Bank Current tax payable Total equity and liabilities 10.500 47,900 27,800 8,600 2.400 8,400 18,000 65,900 600 8,000 35,800 20,000 18,000 4,000 7.000 45,100 25,000 5,000 2,000 6,800 7,200 3,400 1,600 15,800 8,800 65,900 35,800 The following information is rolevant: On 30 September 2020, Hmududu acquired an investment in Highvie's 10% loan notes at a cost of K2 million. This amount has been included within investments in Hamududu's non current assets. Sales from Highvie to Hamududu throughout the year ended 30 September 2020 had consistently been K600,000 per month. Highvie made a mark-up on cost of 25% on all these sales. Of the total inventory bought from Highvie in the post acquisition period, K1.2 million (at cost to Hamududu) is still in Hamududu's closing inventory at 30 September 2020. Sales from Highyie to Katongo from 1 July 2020 to 30 September 2020 amounted to K800,000. Highvie made a mark-up on cost of 25% on all these sales. Katongo still owns all the inventory it acquired from Highvie as at 30 September 2020 Highvie had a trade receivable balance owing from Hamududu of K2.4 million as at 30 September 2020. This differed from the equivalent trade payable of Hamududu due to a payment by Hamududu of K800,000 made in September 2020 which did not clear in Highvie's bank account until 4 October 2020 . Hamududu's policy for in transit items timing differences is to adjust the financial statements of the recipient group member. Highvie had a trade receivable balance owing from Katongo of K200,000 as at 30 September 2020 . This amount was the same as that reported by Katongo as payable to Highvie. Highvie and Katongo paid dividends amounting to K6 million and K4 million during September 2020, respectively. Hamududu has reported dividends received from its investees within investment income in its statement of profit or loss and other comprehensive income. Statements of profit or loss and other comprehensive income for the year anded 30 September 2020 Statements of financial position as at 30 September 2020 At the date of acquisition, the fair values of Highvie's assets and liabilities were equal to their carrying amounts with the exception of Highvie's property which had a fair value of K8 million above its carrying amount. The property had a remaining useful economic life on 1 January 2020 of 40 years. Depreciation charge on the property is included in cost of sales. Highvie has not incorporated the fair value property increase into its entity financial statements. The policy of the Hamududu group is to revalue all properties to fair value at each year end. On 30 September 2020 , the increase in Hamududu's property has aiready been recorded, however, a further increase of K1.2 million in the value of Highvie's property since its value at acquisition and 30 September 2020 has not been recorded. (viii) Hamududu's policy is to value the non-controlling interest at its share of the fair value of the identifiable net assets of the subsidiary at the date of acquisition (proportionate goodwill method). (ix) Due to recent adverse publicity concerning one of Highvie's major product lines, the goodwill which was recognised on the acquisition of Highvie has been impaired by K1 million as at 30 September 2020. Goodwill impairment should be treated as an administrative expense. (x) Assume, except where indicated otherwise, that all items of income and expenditure accrue evenly throughout the year. QUESTION ONE On 1 January 2020, Hamududu Plc (Hamududu) acquired 80% of the equity share capital of Highvie Plc (Highvie). The consideration was satisfied by a share exchange of two shares in Hamududu for every three acquired shares in Highvie. At the date of acquisition, shares in Hamududu and Highvie had a market value of K6.00 and K5.00 each respectively. Hamududu will also pay cash consideration of 55 ngwee on 1 January 2021 , for each acquired share in Highvie. Hamududu has a cost of capital of 10% per annum. None of the consideration has been recorded by Hamududu. On 1 July 2020, Hamududu acquired 30% of Katongo Plc's (Katongo), equity for cash consideration amounting to K8.5 million which was settled immediately. The holding in Katongo gives Hamududu significant influence over Katongo's financial and operating policies. Katongo Plc has made a profit of K2.4 million during the year to 30 September 2020 and a gain on revaluation of its properties reported in other comprehensive income of K1.2 million. Investments (note(ii)) Current assets Inventory (note (iii)) Trade receivables (note (v)) Bank (note(v)) Total assets Equity and liabilities Equity Equity shares of K1 each Revaluation surplus (note (i)) Retained earnings Non-current liabilities 10% loan notes (note (ii)) Current liabilities Trade payables (note iv)) Bank Current tax payable Total equity and liabilities 10.500 47,900 27,800 8,600 2.400 8,400 18,000 65,900 600 8,000 35,800 20,000 18,000 4,000 7.000 45,100 25,000 5,000 2,000 6,800 7,200 3,400 1,600 15,800 8,800 65,900 35,800 The following information is rolevant: On 30 September 2020, Hmududu acquired an investment in Highvie's 10% loan notes at a cost of K2 million. This amount has been included within investments in Hamududu's non current assets. Sales from Highvie to Hamududu throughout the year ended 30 September 2020 had consistently been K600,000 per month. Highvie made a mark-up on cost of 25% on all these sales. Of the total inventory bought from Highvie in the post acquisition period, K1.2 million (at cost to Hamududu) is still in Hamududu's closing inventory at 30 September 2020. Sales from Highyie to Katongo from 1 July 2020 to 30 September 2020 amounted to K800,000. Highvie made a mark-up on cost of 25% on all these sales. Katongo still owns all the inventory it acquired from Highvie as at 30 September 2020 Highvie had a trade receivable balance owing from Hamududu of K2.4 million as at 30 September 2020. This differed from the equivalent trade payable of Hamududu due to a payment by Hamududu of K800,000 made in September 2020 which did not clear in Highvie's bank account until 4 October 2020 . Hamududu's policy for in transit items timing differences is to adjust the financial statements of the recipient group member. Highvie had a trade receivable balance owing from Katongo of K200,000 as at 30 September 2020 . This amount was the same as that reported by Katongo as payable to Highvie. Highvie and Katongo paid dividends amounting to K6 million and K4 million during September 2020, respectively. Hamududu has reported dividends received from its investees within investment income in its statement of profit or loss and other comprehensive income. Statements of profit or loss and other comprehensive income for the year anded 30 September 2020 Statements of financial position as at 30 September 2020