QUESTION 11 Glasgow plc has an investment in one company, Dundee Ltd. Glasgow plc acquired four million ordinary shares in Dundee Ltd on 1 January 2021 in a share exchange. One new ordinary share in Glasgow plc was issued for every two ordinary shares in Dundee Ltd acquired. The market price of one new Glasgow plc share at that date was 4. The share issue transaction has not yet been recorded in the draft financial statements of Glasgow plc. The draft summarised statements of financial position of the two companies at 31 March 2021 are shown below: Glasgow plc Dundee Ltd ASSETS Non-current assets 2,600,000 6,000,000 Property, plant and equipment Intangible assets 3,000,000 5,600,000 6,000,000 Current assets Inventories 3,000,000 4,000,000 Trade receivables 5,300,000 1,400,000 Cash and cash equivalents 300,000 600.000 8,600,000 6,000,000 Total assets 14,200,000 12,000,000 EQUITY AND LIABILITIES Equity Ordinary share capital (1 shares) 8,000,000 5,000,000 Retained earnings (2,600,000) 4,200,000 Total equity 5,400,000 9,200,000 Non-current liabilities Provisions 3,900,000 1,000,000 Current liabilities Trade and other payables 4,900,000 1,800,000 Total equity and liabilities 14,200,000 12,000,000 ADDITIONAL INFORMATION (1) Dundee Ltd's profit for the year to 31 March 2021 was 3.2 million. Profits accrued evenly over the year. No dividends were paid or proposed during the period. (2) Glasgow plc prefers to measure goodwill and the non-controlling interest using the fair value method. The fair value of the non-controlling interest at 1 January 2021 was 2,100,000. Following the annual impairment review of goodwill at 31 March 2021 an impairment loss of 100,000 needs to be recognised in respect of Dundee Ltd. (3) The fair value of the assets and liabilities of Dundee Ltd at 1 January 2021 was the same as their carrying amount with the following exceptions: The fair value of brands not previously recognised has been quantified at 400,000. Glasgow plc's management are of the opinion that these brands have an indefinite life. At the year end the recoverable amount of the brands was assessed at 360,000. The fair value of inventory was 200,000 greater than its carrying amount. One fifth of this inventory remained on hand at the year end. The allowance for receivables was understated by 300,000. This allowance was also still required at the year end. Equipment had a fair value of 1 million in excess of its carrying amount. The remaining useful life of this equipment was five years at 1 January 2021. These fair values have not been recognised in the separate financial statements of Dundee Ltd. (4) Glasgow plc sold inventory with an invoice value of 900,000 to Dundee Ltd in February 2021. One quarter of the inventory remained in Dundee Ltd's factory at 31 March 2021. Glasgow plc calculates the transfer price of goods using a mark up of 50% on cost. (5) Glasgow plc has recently reached an agreement with HMRC regarding its tax payable for the year ended 31 March 2021. It has agreed to pay an additional 200,000 income tax. No liability for this amount has been included in the draft statement of financial position at 31 March 2021. (6) Glasgow plc raised a 250,000 invoice for intra group management fees due from Dundee Ltd on 25 March 2021. This invoice was not received by Dundee Ltd until 3 April 2021 and has not been included in Dundee Ltd's draft financial statements. Glasgow plc has included the amount due of 250,000 in trade receivables. There were no other outstanding balances between the two companies at 31 March 2021. REQUIRED: Prepare the consolidated statement of financial position of Glasgow plc as at 31 March 2021. Total 30 marks