Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 The statements of profit and loss and other comprehensive income for Pluto Ltd and Gold Ltd for the year ended 31 December 2020

Question 2

The statements of profit and loss and other comprehensive income for Pluto Ltd and Gold Ltd for the year ended 31 December 2020 are shown below:

Pluto Gold
N$ N$
Revenue 520 000 450 000
Cost of sales (320 000) (300 000)
Gross Profit 200 000 150 000
Distribution costs (30 000) (42 000)
Administrative Expenses (45 000) (45 000)
Profit before tax 125 000 63 000
Income tax expenses (20 000) (18 000)
Profit for the year 105 000 45 000

On 1 January 2020 the companies had the following equity balances:

Pluto Gold
Share Capital N$ 5 000 000 N$ 1 000 000
Retained Earnings N$ 1 200 000 N$ 800 000
Other reserves N$ 600 000 N$ 200 000

Additional information:

Pluto acquired 70% of the ordinary share capital of Gold Ltd on 1 January 2018 for N$1,500,000.

At the date of acquisition Gold had a share capital balance of N$1,000,000 and retained earnings of N$500,000. The group policy is to value non-controlling interest at the proportion of the net assets at the date of acquisition.

Required:

a) Calculate goodwill to be recognized in the records of the Pluto Group on 1 January 2018 at acquisition of Gold Ltd. (6)

b) Prepare the pro-forma consolidation journals for the year ended 31 December 2020. Journal narrations are not required. (15)

c) Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2020. (9)

d) Calculate the total retained earnings balance to be included in the statement of financial position of the Pluto Group as at 31 December 2020. (5)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

=+(18.17) [ G(n)fn=F(x)G(x)-["F(t)8(t)dt ROEnEX

Answered: 1 week ago

Question

sharing of non-material benefits such as time and affection;

Answered: 1 week ago