QUESTION ONE (1): The following financial statements relate to Stalky Ltd and Fanny Ltd: Extract of Statement of Profit or Loss for the year ended 31 December 2020 Stalky Ltd Fanny Ltd GH000 GH000 Profit before tax 15,400 8,900 Tax (5,600) (4,850) Profit for the year 9,800 4,050 Statement of Financial Position as at 31 December 2020 Stalky Ltd Fanny Ltd GH000 GH000 Assets Non-current assets: Property, plant and equipment 122,500 75,000 Investment in Fanny Ltd 58,000 - 180,500 75,000 Current assets (including loan advanced to Fanny Ltd) 69,500 44,900 Total assets 250,000 119,900 Equity and liabilities Equity: Ordinary share capital (issued @ GH0.50) 50,000 20,000 10% Preference share capital 5,300 2,500 Retained earnings 89,700 46,400 Other reserves 11,000 1,000 156,000 69,900 Non-current liabilities 35,000 14,000 Current liabilities (including loan from Stalky Ltd) 59,000 36,000 Total equity and liabilities 250,000 119,900 Additional information: i) Stalky Ltd acquired 30 million ordinary shares of Fanny Ltd on 1 January 2019 when the book value of Fanny Ltds share capital (i.e. including preference share capital) plus reserves stood at GH58 million. Fanny Ltd has neither issued any share capital nor seen any change in its other reserves since the acquisition of shareholdings by Stalky Ltd. The recorded investment includes GH1.5 million due diligence costs incurred by Stalky Ltd to facilitate its acquisition of Fanny Ltd. Stalky Ltd has no interest in Fanny Ltds issued preference shares. ii) Fair value exercise conducted at the time of Fanny Ltds acquisition revealed the following matters: A piece of equipment with an actual carrying amount of GH10 million had an assessed fair value of GH16 million. The estimated remaining useful economic life of this equipment at acquisition was six years. An in-process research and development project existed at acquisition that met the recognition criteria of IAS 38: Intangible Assets. At that date, the fair value of the project 2 was GH5 million. The project started to generate economic benefits a year ago and is expected to contribute to the entity over a further four years. The above adjustments necessitated deferred tax provision of GH1 million at acquisition. By 31 December 2019, the provision required had reduced to GH0.9 million, and by 31 December 2020 had decreased further to GH0.7 million. Fanny Ltd has not yet incorporated the above fair value adjustments into its own financial statements. Depreciation and amortization are charged to cost of sales. iii) During the year, Stalky Ltd sold goods worth GH25 million to Fanny Ltd and made a mark-up of one-third in arriving at the selling price. At 31 December 2020, inventories of Fanny Ltd included GH4.8 million in respect of the goods supplied by Stalky Ltd. At 31 December 2019, Fanny Ltds inventories included GH3 million worth of goods purchased from Stalky Ltd at the same mark up on cost. Ignore deferred tax implications on these items. iv) The trade receivables of Stalky Ltd included GH8 million receivable from Fanny Ltd. This balance did not agree with the equivalent trade payable in the books of Fanny Ltd due to payment of GH2 million made on 30 December 2020 by Fanny Ltd to Stalky Ltd. v) The groups policy is to measure the non-controlling interests in subsidiaries at fair value. The fair value per ordinary share in Fanny Ltd at acquisition was GH1.50 and can be used for this purpose. Goodwill was impaired by 10% for the year ended 31 December 2019. A further impairment approximating 10% of the remaining goodwill is required in the current period. All impairment losses are charged to operating expenses. Required: 1) Prepare the Consolidated Statement of Financial Position as at 31 December 2020 for Stalky Ltd Group. 2) Write Notes to the Financial Statement