QUESTION 1 Below are the statements of financial position of three companies as at 31 December 2017. Bauble Jewel Gem Co Co GHS'000 GHS'000 GHS'000 Non-current assets Property, plant and equipment Investments in group companies 75 60 100 720 185 905 175 1,080 160 75 85 Current assets 90 250 160 Equity Share capital - GHCI ordinary shares Retained earnings 400 560 100 90 960 120 1,080 Current liabilities 50 70 115 40 160 190 60 250 You are also given the following information: i. Bauble Co acquired 65% of the share capital of Jewel Co on 18 January 2010 and 15% of Gem on 1" January 2011. The cost of the combinations were GHC 140,000 and GHC 45,000 respectively. Jewel Co acquired 80% of the share capital of Gem Co on 1st January 2011 ii. The retained earnings balances of Jewel Co and Gem Co were: 1" January 2010 GHC000 Jewel Co 40 Gem Co 35 19 January 2011 GHC000 55 45 111 The fair values of Jewel's Property, Plant and Equipment were equal to their book values with the exception of its plant, which had a fair value of GHS 12,000 in excess of its book value at the date of acquisition. The remaining life of all of Jewel's plant at the date of its acquisition was four years and this period has not changed as a result of the acquisition. Depreciation of plant is on a straight-line basis and charged to cost of sales. Jewel has not adjusted the value of its plant as a result of the fair value exercise. Revenues and profits should be deemed to accrue evenly throughout the year. iv. V Following an impairment review, there was no impairment loss on any of the consolidated goodwill as at 31 December 2017 vi. Gem sells goods to Bauble at cost plus 30%. Bauble had GHS 12,000 of goods in its inventory included in the current assets at 31st December 2017 which had been supplied by Gem. Page 2 of 7 vii. In addition, on 28 December 2017, Gem processed the sale of GHS1,500 of goods to Bauble, which Bauble did not account for until their receipt on 2nd January 2018. The in-transit reconciliation should be achieved by assuming the transaction had been recorded in the books of Bauble before the year end. At 31" December 2017. Gem had a trade receivable balance in the current assets of GHS2,000 due from Bauble which differed to the equivalent balance in Bauble's books due to the sale made on 28 December 2017 viii. It is the group's policy to value the non-controlling interest at acquisition at its proportionate share of the fair value of the subsidiary's identifiable net assets. Required Prepare the consolidated statement of financial position for Bauble Co and its subsidiaries as at 31" December 2017. (20 Marks)
