Problems with this assignment
Consolidated Financial Statements Buckthorn plc acquired 240,000 of Whitebeam Ltd's equity shares for 300,000 on 1 January 2018. At the date of acquisition Whitebeam Ltd had retained earnings of 190,000 The two companies' financial statements are presented as follows as at 31 December 2019 (two years after the acquisition): Statements of Financial Position as at 31 December 2019 Buckthorn ple '000 Whitebeam Ltd '000 Assets Non-current assets Property, plant and equipment Investment Whitebeam Ltd 200 1,940 300 2,240 200 Current assets Inventories Trade receivables Cash and bank 500 650 170 120 40 35 195 395 1320 3,560 Total assets Equity and liabilities Equity Share capital Retained earnings Revaluation surplus 100 240 2,000 500 20 2.520 340 Noncurrent liabilities Bank loan 500 Current liabilities Trade payables Tax payable 410 130 540 3,560 30 25 55 395 Total equity and liabilities Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2019 Whitebeam Buckthorn ple Ltd '000 '000 Sales revenue 5,000 1.000 Cost of sales 2.900 600 Gross profit 2,100 400 Other expenses 1.700 320 Profit before interest and tax 400 Interest expense 30 Profit before tax 370 80 Income tax expense 100 25 Profit for the year 270 SS Other comprehensive income: Gain on revaluation of property 20 Total comprehensive income for the year 290 Additional information: 1. On 31 December 2019 Buckthorn ple delivered goods to Whitebeam Ltd and sent an invoice to Whitebeam Ltd for 100,000. The goods had cost Buckthorn plc 80,000. Whitebeam Ltd received the goods and the invoice on 2 January 2020 and recorded the transaction then (thus, the transaction is only reflected in Buckthorn ple's financial statements but not yet in Whitebeam Ltd's statements). 2. It is the group policy to value the non-controlling interest at acquisition at fair value. The fair value of the non-controlling interest in Whitebeam Ltd at the date of acquisition was 60,000. 3. Goodwill has suffered no impairment. 4. Whitebeam Ltd has issued no shares since the acquisition. 5. Whitebeam Ltd has not declared or paid any dividends in 2019. REQUIRED: 1. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2019 and the statement of financial position as at 31 December 2019 for Buckthorn plc group. NB! It is essential that you show all your workings. 2. Explain why intra-group transactions and balances are eliminated in consolidation. Use the relevant examples from the statements that you have prepared in Requirement 1 to illustrate your explanation. Consolidated Financial Statements Buckthorn plc acquired 240,000 of Whitebeam Ltd's equity shares for 300,000 on 1 January 2018. At the date of acquisition Whitebeam Ltd had retained earnings of 190,000 The two companies' financial statements are presented as follows as at 31 December 2019 (two years after the acquisition): Statements of Financial Position as at 31 December 2019 Buckthorn ple '000 Whitebeam Ltd '000 Assets Non-current assets Property, plant and equipment Investment Whitebeam Ltd 200 1,940 300 2,240 200 Current assets Inventories Trade receivables Cash and bank 500 650 170 120 40 35 195 395 1320 3,560 Total assets Equity and liabilities Equity Share capital Retained earnings Revaluation surplus 100 240 2,000 500 20 2.520 340 Noncurrent liabilities Bank loan 500 Current liabilities Trade payables Tax payable 410 130 540 3,560 30 25 55 395 Total equity and liabilities Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2019 Whitebeam Buckthorn ple Ltd '000 '000 Sales revenue 5,000 1.000 Cost of sales 2.900 600 Gross profit 2,100 400 Other expenses 1.700 320 Profit before interest and tax 400 Interest expense 30 Profit before tax 370 80 Income tax expense 100 25 Profit for the year 270 SS Other comprehensive income: Gain on revaluation of property 20 Total comprehensive income for the year 290 Additional information: 1. On 31 December 2019 Buckthorn ple delivered goods to Whitebeam Ltd and sent an invoice to Whitebeam Ltd for 100,000. The goods had cost Buckthorn plc 80,000. Whitebeam Ltd received the goods and the invoice on 2 January 2020 and recorded the transaction then (thus, the transaction is only reflected in Buckthorn ple's financial statements but not yet in Whitebeam Ltd's statements). 2. It is the group policy to value the non-controlling interest at acquisition at fair value. The fair value of the non-controlling interest in Whitebeam Ltd at the date of acquisition was 60,000. 3. Goodwill has suffered no impairment. 4. Whitebeam Ltd has issued no shares since the acquisition. 5. Whitebeam Ltd has not declared or paid any dividends in 2019. REQUIRED: 1. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2019 and the statement of financial position as at 31 December 2019 for Buckthorn plc group. NB! It is essential that you show all your workings. 2. Explain why intra-group transactions and balances are eliminated in consolidation. Use the relevant examples from the statements that you have prepared in Requirement 1 to illustrate your explanation
