Question 7

The following are the financial statements of the parent company Alpha plc, a subsidiary company Beta

and an associate company Gamma.

Statements of financial position as at 31 December 20X9

Alpha Beta Gamma

ASSETS

Non-cur rent assets

Land at cost 540,000 256,500 202,500

Investment in Beta 216,000

Investment in Gamma 156,600

Cur rent assets

Inventories 162,000 54,000 135,000

Trade receivables 108,000 72,900 91,800

Dividend receivable from Beta 12,420

Current account - Beta 10,800

Current account - Gamma 13,500

Cash 237,600 62,100 67,500

Total current assets 544,320 189,000 294,300

Total assets 1,456,920 445,500 496,800

EQUITY AND LIABILITIES

1 shares 540,000 67,500 27,000

Retained ear nings 769,500 329,400 391,500

1,309,500 396,900 418,500

Cur rent liabilities

Trade payables 93,420 24,300 59,400

Dividends payable 54,000 13,500 5,400

Current account - Alpha 10,800 13,500

Total equity and liabilities 1,456,920 445,500 496,800

On 1 January 20X5 Alpha plc acquired 80% of Beta plc for 216,000 when Beta plc's share capital

and reser ves were 81,000, and 30% of Gamma Ltd for 156,600 when Gamma Ltd's share capital and

reser ves were 40,500. The fair value of the land at the date of acquisition was 337,500 in Beta plc

and 270,000 in Gamma Ltd. Both companies have kept land at cost in their statement of financial

position. All other assets are recorded at fair value. There have been no fur ther share issues or purchases

of land since the date of acquisition.

At the year end, Alpha plc has inventory acquired from Beta plc and Gamma Ltd. Beta plc had invoiced

the inventory to Alpha plc for 54,000 - the cost to Beta plc had been 40,500 and Gamma Ltd

had invoiced Alpha plc for 13,500 - the cost to Gamma Ltd had been 8,100. Goodwill has been

impaired by 52,650. The whole of the impairment relates to Beta.

Non-controlling interests are measured using method 1.

Required:

Prepare Alpha plc's consolidated statement of financial position as at 31.12.20X9.