QUESTION ONE a) Below are the separate statements of financial position of Ghana Ltd and its two investee companies as at 31 December 2017 Chana Ltd Nigeria Ltd Togo Ltd GH'm GHe'm GH'm Non-current assets Property, plant and equipment 2,458 1,410 870 Investment in Nigeria 500 Investment in Togo 27 240 2.985 1,650 870 Current assets Inventories 450 260 Trade receivables 610 365 139 Cash 240 95 116 1,300 660 515 Total Assets 4.285 2.310 1.385 Equity Ordinary share capital @GHleach 500 200 100 Share premium 250 120 50 Retained earnings 2.405 1.572 850 3.155 1,892 1.000 Current liabilities Trade payables 1,130 418 385 200 Page 1 of 6 4.285 2.310 1.385 The following information is relevant: ) On 1 January 2016, Chana Ltd acquired 60% of the equity share capital Nigeria Ltd. The consideration consisted of the following elements: cash of GH 500 million, a share exchange of two shares in Chana Ltd for every five acquired shares in Nigeria Ltd, GH 200 million to be paid after 2 years of acquisition and GH 400 million to be paid at the end of the fifth year of acquisition of Nigerta earns a return of 25% on its equity. No entries have been made in the financial statements except the cash offer. At the date of acquisition, shares in Chana Ltd had a market value of GHc4 each and the shares of Nigeria Ltd had a stock market price of GHC3 cach. The cost of capital of Ghana is 10%. 11) On 30 July 2015 Ghana acquired 10% of Togo Ltd and on the same day Nigerla acquired 80% of Togo III) During the year, Nigeria sold goods to Togo of GH260 million including a mark-up of 25%. All of these goods remain in Inventores at the year end. IV) Nigeria Ltd sold goods to Ghana for GH300 million at a margin of 20% and only quarter of these goods were left in Inventories at the year end. ) The retained earnings of the three companies at the acquisition dates was: 30 July 2015 1 January 2016 GHe'm GHe'm Ghana 1.610 1.860 Nigeria 700 950 Togo 40 100 vt) At the date of acquisition, the fair values of Nigeria Ltd's assets were equal to their carrying amounts with the exception of its property. This had a fair value of GH 10 million below its carrying amount and a remaining useful life 5years. Nigeria Ltd has not incorporated this value change into its separate financial statements. VII) The fair value of Ghana's 10% holding In Togo on 1 January 2016 was GH50 million Chana and Nigeria hold their investments in subsidiaries at cost in their separate financial statements. vill) It is group policy to value the non-controlling Interests at fair value at acquisition. For this purpose, Nigeria's share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest. However, the directors valued the non controlling interests in Togo at GH210million on 1 January 2016. Ix) It was determined at the year-end that 20% of the goodwill relating to the acquisition of Nigeria and Togo were impaired. Page 2 of 6 Required Prepare the consolidated statement of financial position of Chana group Ltd as at 31 December 2017 (22marks) QUESTION ONE a) Below are the separate statements of financial position of Ghana Ltd and its two investee companies as at 31 December 2017 Chana Ltd Nigeria Ltd Togo Ltd GH'm GHe'm GH'm Non-current assets Property, plant and equipment 2,458 1,410 870 Investment in Nigeria 500 Investment in Togo 27 240 2.985 1,650 870 Current assets Inventories 450 260 Trade receivables 610 365 139 Cash 240 95 116 1,300 660 515 Total Assets 4.285 2.310 1.385 Equity Ordinary share capital @GHleach 500 200 100 Share premium 250 120 50 Retained earnings 2.405 1.572 850 3.155 1,892 1.000 Current liabilities Trade payables 1,130 418 385 200 Page 1 of 6 4.285 2.310 1.385 The following information is relevant: ) On 1 January 2016, Chana Ltd acquired 60% of the equity share capital Nigeria Ltd. The consideration consisted of the following elements: cash of GH 500 million, a share exchange of two shares in Chana Ltd for every five acquired shares in Nigeria Ltd, GH 200 million to be paid after 2 years of acquisition and GH 400 million to be paid at the end of the fifth year of acquisition of Nigerta earns a return of 25% on its equity. No entries have been made in the financial statements except the cash offer. At the date of acquisition, shares in Chana Ltd had a market value of GHc4 each and the shares of Nigeria Ltd had a stock market price of GHC3 cach. The cost of capital of Ghana is 10%. 11) On 30 July 2015 Ghana acquired 10% of Togo Ltd and on the same day Nigerla acquired 80% of Togo III) During the year, Nigeria sold goods to Togo of GH260 million including a mark-up of 25%. All of these goods remain in Inventores at the year end. IV) Nigeria Ltd sold goods to Ghana for GH300 million at a margin of 20% and only quarter of these goods were left in Inventories at the year end. ) The retained earnings of the three companies at the acquisition dates was: 30 July 2015 1 January 2016 GHe'm GHe'm Ghana 1.610 1.860 Nigeria 700 950 Togo 40 100 vt) At the date of acquisition, the fair values of Nigeria Ltd's assets were equal to their carrying amounts with the exception of its property. This had a fair value of GH 10 million below its carrying amount and a remaining useful life 5years. Nigeria Ltd has not incorporated this value change into its separate financial statements. VII) The fair value of Ghana's 10% holding In Togo on 1 January 2016 was GH50 million Chana and Nigeria hold their investments in subsidiaries at cost in their separate financial statements. vill) It is group policy to value the non-controlling Interests at fair value at acquisition. For this purpose, Nigeria's share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest. However, the directors valued the non controlling interests in Togo at GH210million on 1 January 2016. Ix) It was determined at the year-end that 20% of the goodwill relating to the acquisition of Nigeria and Togo were impaired. Page 2 of 6 Required Prepare the consolidated statement of financial position of Chana group Ltd as at 31 December 2017 (22marks)