QUESTION 1

Below are the statements of financial position of three companies as at 31 December 2017.

Bauble Jewel Gem

Co Co Co

GHS000 GHS000 GHS000

Non-current assets

Property, plant and equipment 720 60 75

Investments in group companies 185 100

905 160 75

Current assets 175 90 85

1,080 250 160

Equity

Share capital GHC1 ordinary shares 400 100 50

Retained earnings 560 90 70

960 190 115

Current liabilities 120 60 40

1,080 250 160

You are also given the following information:

i. Bauble Co acquired 65% of the share capital of Jewel Co on 1st January 2010 and 15% of Gem on 1st

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

st January 2010 1

st January 2011

GHC000 GHC000

Jewel Co 40 55

Gem Co 35 45

iii. 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.

iv. Revenues and profits should be deemed to accrue evenly throughout the year.

v. Following an impairment review, there was no impairment loss on any of the consolidated goodwill as

at 31st 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.

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 31st 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 Baubles 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 31st

December 2017.