Question 2 (25 marks) The following are the statements of financial position of Hungles Ltd and its subsidiary Chickled Ltd as at 31st August 2019: Hungles Chickled Non-current assets Investment in Chickled limited N$ N$ 628,500 605,000 400.000 Goodwill Total Non-current assets 1.028.500 805.000 Current assets Inventory Debtors Bank balance Total current assets Total assets 32.000 25.000 36,500 20,000 38.000 2 106.500 45,000 1.135 000 850.000 Equity and liabilities Ordinary shares N$2 each Retained profit 500.000 400,000 297.000 400.000 Total equity 797000 800,000 Current liabilities Trade creditors Bank overdraft Total current liabilities Total equity and liabilities 248.000 25.000 90000 25.000 338.000 50.000 1.135.000 850.000 Additional information 1) Hungles acquired its interest in Chickled as shown below Date - No. of shares acquired Cost of Investment NS Chickled Retained Earning 31/08/2011 - 80,000 shares 210,000 210,000 31/08/2015 - 80,000 shares 365,000 320,000 2) On 31/07/2017, it disposed of (sold) 40,000 shares and received $175,000. The retained earnings of Chickled on that date was $350,000. 3) The fair value of the existing holdings in Chickled was as follows Date Fair Value of Existing holdings NS 30/08/2015 218,000 30/08/2017 600.000 4) Chickled Ltd has not issued new shares since they were incorporated in the year 2010. 5) It is a group policy to value the Non-Controlling Interest (NCI) 31/08/2011 - 80,000 shares 210,000 31/08/2015 - 80,000 shares 365,000 210,000 320,000 2) On 31/07/2017, it disposed of (sold) 40,000 shares and received $175,000. The retained earnings of Chickled on that date was $350,000. 3) The fair value of the existing holdings in Chickled was as follows Date Fair Value of Existing holdings NS 30/08/2015 218,000 30/08/2017 600,000 4) Chickled Ltd has not issued new shares since they were incorporated in the year 2010. 5) It is a group policy to value the Non-Controlling Interest (NCI) using the proportion of net asset method. Required: a) In reference to IFRS 13 Fair value measurement Discuss the terms "highest and best use" as used in IFRS 13 and when consideration for highest and best use is needed (6 marks) ii. Identify at least two IFRS where IFRS 13 does not apply (2 marks) b) In reference to the above financial statements and additional information provided, Prepare the Consolidated Statement of financial position of Hungles and its subsidiary as at 31st August 2019. Show all your workings including relevant pro- forma consolidation journal entries. (17 marks) Question 2 (25 marks) The following are the statements of financial position of Hungles Ltd and its subsidiary Chickled Ltd as at 31st August 2019: Hungles Chickled Non-current assets Investment in Chickled limited N$ N$ 628,500 605,000 400.000 Goodwill Total Non-current assets 1.028.500 805.000 Current assets Inventory Debtors Bank balance Total current assets Total assets 32.000 25.000 36,500 20,000 38.000 2 106.500 45,000 1.135 000 850.000 Equity and liabilities Ordinary shares N$2 each Retained profit 500.000 400,000 297.000 400.000 Total equity 797000 800,000 Current liabilities Trade creditors Bank overdraft Total current liabilities Total equity and liabilities 248.000 25.000 90000 25.000 338.000 50.000 1.135.000 850.000 Additional information 1) Hungles acquired its interest in Chickled as shown below Date - No. of shares acquired Cost of Investment NS Chickled Retained Earning 31/08/2011 - 80,000 shares 210,000 210,000 31/08/2015 - 80,000 shares 365,000 320,000 2) On 31/07/2017, it disposed of (sold) 40,000 shares and received $175,000. The retained earnings of Chickled on that date was $350,000. 3) The fair value of the existing holdings in Chickled was as follows Date Fair Value of Existing holdings NS 30/08/2015 218,000 30/08/2017 600.000 4) Chickled Ltd has not issued new shares since they were incorporated in the year 2010. 5) It is a group policy to value the Non-Controlling Interest (NCI) 31/08/2011 - 80,000 shares 210,000 31/08/2015 - 80,000 shares 365,000 210,000 320,000 2) On 31/07/2017, it disposed of (sold) 40,000 shares and received $175,000. The retained earnings of Chickled on that date was $350,000. 3) The fair value of the existing holdings in Chickled was as follows Date Fair Value of Existing holdings NS 30/08/2015 218,000 30/08/2017 600,000 4) Chickled Ltd has not issued new shares since they were incorporated in the year 2010. 5) It is a group policy to value the Non-Controlling Interest (NCI) using the proportion of net asset method. Required: a) In reference to IFRS 13 Fair value measurement Discuss the terms "highest and best use" as used in IFRS 13 and when consideration for highest and best use is needed (6 marks) ii. Identify at least two IFRS where IFRS 13 does not apply (2 marks) b) In reference to the above financial statements and additional information provided, Prepare the Consolidated Statement of financial position of Hungles and its subsidiary as at 31st August 2019. Show all your workings including relevant pro- forma consolidation journal entries. (17 marks)