QUESTION 1 (30 marks) The Cable Holding Company Ltd ('Cable') acquired 90% of the ordinary shares in a smaller competitor, the Wireless Company ('Wireless'), on 1 April 2020 in order to expand its product base. Purchase consideration amounted to $35 million in cash and 5 million ordinary shares in Cable, each with a market value of $7. At the acquisition date, Wireless had retained earnings amounting to $39 million. Both Cable and Wireless use 31 March as the annual financial reporting date. At 31 March 2021, the statements of financial position of the two companies were as follows: Cable Wireless $'000 $'000 Non-current assets Property, plant and equipment 195,000 65,000 Intangible assets (net) 30,500 Investment in Wireless 70,000 295,500 65,000 Current assets Inventories 41,500 14,600 Trade receivables 32,000 10,150 Cash 2,250 73,500 27,000 TOTAL ASSETS 369,000 92,000 Equity Share capital 50,000 25,000 Revaluation reserve 38,000 Retained earnings up to 1 April 20 100,000 39,000 Profit for the year ended 31 March 2021 25,000 6,000 213,000 70,000