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. Finances 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

Jewel Mobile

Property Plant and equipment 535 000 462 000

Investment in Jewel Mobile Limited at fair value-120 000 ordinary shares 180 000

Preference dividends paid 8 000

Ordinary dividend paid 15 000 20 000

Income tax expense 129 485 100 746

Long term loan to Jewel Mobile Ltd 80 000

Trade and other receivables 76 755 63 554

Cash and cash equivalents 260 320 302 000

Share capital- 300 000 ordinary shares (300000)

- 150 000 ordinary shares (150 000)

- 10% 80 0000 Preference shares (80 000)

Retained earnings -1 January 2021 (245 560) (164 500)

Profit before tax (446 500) (347 400)

Long term borrowings (200 000) (80 000

) Trade and other payables (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 . Profit before tax is made up of the following: Nam Auto Jewel Mobile N$ N$

Gross profit 419 800 328 000

Other income 67 200 53 200

Other expenses (35 200) (22 600)

Finance costs (8 000) (11 200)

4. On 1 January 2021 a long-term loan of N$80 000 was made by Nam Auto to Jewel Mobile and it was repayable in full on 1 January 2025. Interest was calculated at 14% per annum and had been paid to Nam Auto Limited for the current year.

5. purchased a machine from Nam Auto for N$140 000 on 1 July 2021. The carrying amount of the machine on 1 July 2021 was N$ 100 000. The machine was originally purchased by Nam Auto on 1 July 2018 for N$250 000. Both companies depreciate machinery over the useful life time of 5 years using the straight-line method. The expected useful life of the machine remained unchanged.

6. In both companies each share carries 1 vote.

7. The fair value of the equity investment is equal to the cost price thereof, unless otherwise stated. The equity investment is measured at fair value through other comprehensive income.

8. At the end of the current year goodwill was assessed for impairment and it was found that goodwill had not been impaired. The group uses the partial goodwill method to recognize goodwill.

REQUIRED: A .Prepare the consolidated annual financial statements of the Nam Auto Limited Group for the year ended 31 December 2021. Your answer must comply with the requirements of lnternational Financial Reporting Standards.