Question 01

Lavender acquired six million of Twirl's ordinary shares on 1 October 2017 for an agreed consideration of Tk.24.85 million. The consideration was settled by a share exchange of five new shares in Lavender for every three shares acquired in Twirl, and a cash payment of Tk.4.85 million. The cash transaction has been recorded, but the share exchange has not.

The draft statements of financial position of the two companies at 30 September 2013 are:

Assets	Lavender	Twirl
	Tk. (000)	Tk. (000)	Tk. (000)	Tk. (000)
Non-Current Assets
Property, Plant and equipment		78,690		27,180
Investment in Twirl		4,850		nil
		83,540		27,180
Current Assets
Inventory	7,450		4,310
Accounts receivable	12,960		4,330
Cash and bank	nil		520
		20,410		9,160
Total Assets		103,950		36,340
Equity and Liabilities
Equity
Ordinary shares of RM1 each		20,000		8,000
Reserves
Share Premium	10,000		2,000
Retained earnings:
At 1 October 2012	51,260		6,000
For the year to 30 September 2013	12,000		8,000
		73,260		16,000
Total Equity		93,260		24,000
Non-Current liabilities:
88% Loan notes 20X4 % Loan note		nil		6,000
Current liabilities
Accounts payable and accruals	5,920		4,160
Bank overdraft	1,700		Nil
Provision for taxation	3,070		2,180
		10,690		6,340
Total equity and liabilities		103,950		36,340

The following information is relevant:

1. The fair value of Twirl's land at the date of acquisition was Tk.4 million in excess of its carrying value. Twirl's financial statements contain a note of a contingent asset for an insurance claim of Tk.800,000 relating to some inventory that was damaged by a flood on 5 March 2018.

The insurance company is disputing the claim. Lavender has taken legal advice on the claim and believes that it is highly likely that the insurance company will settle it in full in the near future. The fair value of Twirl's other net assets approximated to their carrying values.

1. At the date of acquisition Lavender sold an item of plant that had cost Tk.2 million to Twirl for Tk.2.4 million. Twirl has charged depreciation of Tk.240,000 on this plant since it was acquired.
2. Lavender's current account debit balance TK.820,000 with Twirl does not agree with the corresponding balance in Twirl's books. Investigations revealed that on 26 September 2018 Lavender billed Twirl Tk.200,000 for its share of central administration costs. Twirl has not yet recorded this invoice. Inter-company current accounts are included in accounts receivable or payable as appropriate.
3. It is group policy to value the non-controlling interest at its proportionate share of the fair value of the subsidiary's identifiable net assets.

Required:

Prepare the consolidated statement of financial position of Lavender on 30 September 2013. (Show all required workings).