Q3) On 1 Jan 20X4, Plastik acquired 80% of the equity share capital of Subtrak. The consideration was satisfied by a share exchange of two shares in Plastik for every three acquired shares in Subtrak. At the date of acquisition, shares in Plastik and Subtrak had a market value of $3 and $250 each respectively. Plastik will also pay cash consideration of 275 cents on 1 Jan 20X5 for each acquired share in Subtrak. Plastik has a cost of capital of 10% per annum. None of the consideration has been recorded by Plastik. Below are the summarised draft FS of both Co.

STATEMENTS OF PROFIT OR LOSS & OCI FOR THE YEAR ENDED 30 SEP 20X4

Plastik

Subtrak

$'000

$'000

Revenue

62,600

30,000

Cost of sales

(45,800)

(24,000)

Gross profit

16,800

6,000

Distribution costs

(2,000)

(1,200)

Administrative expenses

(3,500)

(1,800)

Finance costs

(200)

-

Profit before tax

11,100

3,000

Income tax expense

(3,100)

(1,000)

Profit for the year

8,000

2,000

Other comprehensive income:

Gain on revaluation of property

1,500

-

Total comprehensive income

9,500

2,000

STATEMENTS OF FINANCIAL POSITION AS AT 30 SEPTEMBER 20X4

PlastikSubtrak

$'000$'000

ASSETS

Non-current assets

Property, plant and equipment18,70013,900 Investments: 10% loan note from Subtrak (note(ii))1,000-

Current assets

19,700

13,900

Inventory (note(iii))

4,300

1,200

Trade receivables (note(iv))

4,700

2,500

Bank

-300

9,000

4,000

Total assets

EQUITY AND LIABILITIES

Equity

Equity shares of $1 each

28,700

10,000

28,700

9,000

Revaluation surplus (note(i))

2,000

-

Retained earnings 6,3003,500

Non-current liabilities

18,300

12,500

10% loan notes (note(ii))

2,500

1,000

Current liabilities

Trade payables (note(iv))

3,400

3,600