QUESTION 1 Nam Auto Ltd (Nam Auto, a Namibia stock exchange registered company has been operating in the automotive industry since the year 2000 and the company has been trading quite well and earning very good profits throughout the years. Mr Breakthrough, one of the company founders' decided to listen to his son Finance, a Chartered Accountant and Finance Director of Nam Auto who advised him to acquire shares in a profitable company in a lucrative industry as this would assist the company value and diversification. Mr Breakthrough brought this to the Board of Directors (Board) of Nam Auto in which Finance also sits. The Board was agreeable and Nam Auto decided to acquire 120 000 ordinary shares in Jewel Mobile on 1 January 2019. The retained earnings of Jewel Mobile at this date were N$47 000 and there were no other reserves. Nam Auto has controlled Jewel Mobile since this date. Finance's wife is the Finance director of Jewel Mobile and was very instrumental in facilitating the acquisition. The following are the Trial Balances of Nam Auto Limited (Nam Auto) and Jewel Mobile Limited (Jewel Mobile) for year ended 31 Dec 2021 Nam Auto N$ Jewel Mobile N$ Property Plant and equipment 535 000 462 000 Investment in Jewel Mobile Limited at fair value-120 000 180 000 ordinary shares Preference dividends paid Ordinary dividend paid 15 000 8 000 20 000 Income tax expense 129 485 100 746 Long term loan to Jewel Mobile Ltd 80 000 Trade and other receivables Cash and cash equivalents Share capital-300 000 ordinary shares 150 000 ordinary shares 10% 80 0000 Preference shares Retained earnings -1 January 2021 Profit before tax Long term borrowings Trade and other payables 76 755 260 320 (300000) 63 554 302 000 (150 000) (80 000) (245 560) (164 500) (446 500) (347 400) (200 000) (80 000) (84 500) (134 400) Additional information: 1. On the date of acquisition, land and buildings of Jewel Mobile with a carrying amount of N$120 000 were revalued to N$140 000. No entries relating to the revaluation were made in the books of Jewel Mobile. 2. At the acquisition date there were no unidentified assets, liabilities or contingent liabilities, and the fair values of all assets, liabilities and contingent liabilities were confirmed to be equal to the carrying amounts thereof, with the exception of the assets mentioned in additional information 1. Page 21 of 28