Question 4 The income statements for the years ended 30 November 2017 and the statements of financial position as at 30 November 2017 for Ace Plc and Marc Plc are set out below: Income Statements for the year ended 30 November 2017 Ace Plc Marc Plc Revenues Cost of Goods Sold Gross Profit Distribution costs Operating Profit 99,800 45,000 54,800 (30,050) 24.750 30,000 20,000 10,000 (6,000) 4,000 Investment Income Profit before tax Corporate Tax Profit after tax 2,750 27,500 (12,500) 15,000 4.000 (1,500) 2,500 Statement of Financial Position as at 30 November 2017 Ace Plc Mare Plc Fixed Assets Land and buildings Equipment Fixtures 50,000 20,000 15,000 85,000 25,000 15,000 10,000 50,000 Investment in Marc Plc 70,000 Current assets Debtors Bank 5.000 15,000 20,000 5,000 7,500 12,500 Current liabilities Creditors (20,000) (10,000) Net Assets 165,000 57,500 Capital and reserves Share capital Reserves Profit for the year 130,000 20,000 15,000 165,000 50,000 5,000 2,500 57,500 Additional information: 1. Ace Ple acquired 90% of the shares of Marc Plc as at 1 December 2017 2. On the date of acquisition, the fair value of Marc Plc's Fixtures was 14,000 while the fair value of their Equipment was 11,000. 3. Depreciation charged on the additional fair value of Fixtures was straight-line 20%. 4. Total dividend paid by Marc Plc is 3,000, including the dividend paid to Ace Plc. 5. Intra-company sales from Ace Plc to Marc Plc during the year cost 5,000 plus mark-up of 40%. Half of these goods remained in the inventory at the end of the year. Required: (a) Prepare the consolidated income statement for Ace Plc after acquiring Marc Plc as at 1 December 2017. Clearly demonstrate all your workings. (15 marks) (b) Prepare the consolidated statement of financial position for Ace Plc after acquiring Marc Plc as at 1 December 2017. Clearly demonstrate all your workings. (10 marks) [Total: 25 marks]