QUESTION 1 (CONSOLIDATED FINANCIAL STATEMENTS: IFRS 10, IFRS 3) (30 Marks) The following are the statements of financial position of Pelhams Ltd and Selbourne Ltd as at 30 June 2019. Selbourne Ltd Pelhams Ltd Non-Current Assets : Land Plant and Equipment Investments 4 500 2 400 8 000 14 900 2 500 1 750 0 4 250 Current Assets Inventory Receivables Bank 3 200 1 400 600 5 200 20 100 900 650 150 1 700 5 950 TOTAL ASSETS Equity and Liabilities Equity ordinary share capital- N$0,50 Retained earnings 5 000 8 300 13 300 1 000 3 150 4 150 Liabilities Non-Current liabilities 8% Loan notes Current Liabilities Total Equity and Liabilities 4 000 2 800 20 100 500 1 300 5 950 Additional information: Note 1 Pelhams Ltd acquired 75% of Selbourne Ltd on 1 July 2016 when the balance on Selbourne Ltd Retained Earnngs was N$1 150. Pelhams paid N$3 500 for its investment in the share capital of Selbourne. At the same time Pelhams invested in 60% of Selbourne's Loan stock. Note 2: Page 10 of 20 At the reporting date Pelhams recorded a payable to Selbourne of N$400. This did not agree to the corresponding amount in Selbourne's financial Statements of N$500. The difference is explained as cash in transit. Note 3: Note 3: At the date of acquisition, it was determined that Selbourne's land, carried at a cost of N$2 500 had a fair value of N$3 750. Selborne's plant was determined to have a fair value of N$500 in excess of its carrying value and had a remaining life of 5 years at this time. These values had not been recorded by Selbourne Ltd. Note 4: The Pelhams group uses the fair value method to value the Non- Controlling interest. For this purpose, the subsidiary share price at the date of acquisition should be used. The subsidiary share price at acquisition was N$2,20 per share. Note 5: Goodwill has impaired by N$100 Required: 1.1 Prepare the Consolidated Statement of Financial Position as at 30 June 2019 1.2 Discuss the difference between deferred consideration and contingent consideration TOTAL 25 5 30