QUESTION 1 30 MARKS The following information represents the abridged financial statements of Mega Ltd and its subsidiary Ultra Ltd: Statement of financial position as at 31 December 2018 Mega Ltd Ultra Ltd ASSETS Property, plant and equipment 270 000 340 000 Investment in Ultra Ltd: 48 000 shares at fair value 350 000 - (cost: N$ 330 000) Trade receivables 80 000 23 500 Inventories 350 000 218 000 Bank 65 000 - Total assets 1 115 000 581 500 EQUITY AND LIABILITIES Share capital 400 000 240 000 Mark-to-market reserve 20 000 10 000 Retained earnings 375 000 240 000 Long-term borrowings 43 000 21 000 Trade and other payables 277 000 23 500 Bank overdraft - 47 000 Total equity and liabilities 1 115 000 581 500 Statement of profit or loss and other comprehensive income for the year ended 31 December 2018 Mega Ltd Ultra Ltd Revenue 927 000 1 628 000 Cost of sales -472 000 -725 000 Gross profit 455 000 903 000 Other expenses -287 100 -472 000 Dividend received from Ultra Ltd 94 000 - Profit before tax 261 900 431 000 Income tax expense -198 000 -128 000 Profit for the year 63 900 303 000 Other comprehensive income Items that will not be reclassified to profit or loss Mark-to-market reserve 4 000 1 000 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 67 900 304 000 Extract from the Statement of changes in equity for the year ended 31 December 2018 Mark-to-market reserve Retained earnings Mega Ltd Ultra Ltd Mega Ltd Ultra Ltd Balance at 1 Jan 2018 15 000 8 000 215 000 170 000 Changes in equity for 2018 Total comprehensive income for the year: Profit for the year 63 900 303 000 Other comprehensive income for the year 4 000 1 000 Dividends -108 000 -120 000 Balance at 31 December 2018 19 000 9 000 170 900 353 000 Additional information: On 1 January 2018, the date on which Ultra Ltd acquired the interest in Mega Ltd, the equity of Mega Ltd consisted of: Share capital N$ 260 000 Mark-to-market reserve N$ 3 000 Revaluation reserve N$ 7 000 Retained earnings N$ 135 000 Ultra Ltd elected to measure non-controlling interests at fair value at the acquisition date. On 1 January 2018, the fair value of each non-controlling interests share was N$8,50 per share, based on market prices. Ultra Ltd classified the investment in Ultra Ltd under IFRS 9 in its separate financial statements and recognised fair value adjustments in a mark-to-market reserve (other comprehensive income). Ignore tax implications. REQUIRED Prepare consolidated financial statements for the Mega Ltd Group for the reporting period ended 31 December 2018. (30 marks