QUESTION THREE

Black Plc has a number of subsidiaries, one of which, White Ltd., was acquired during the year ended 31 March 2010.

The draft consolidated financial statements for the year ended 31 March 2010 are as follows:

Consolidated Statement of Comprehensive Income of Black Plc for the year ended 31 March 2010

KMs

Operating profit 1,890

Loss on disposal of property, plant and equipment (85)

Interest (210)

1,595

Share of profits of associates 110

Profit on ordinary activities before taxation 1,705

Taxation (410)

1,295

Profit attributable to:

Owners of Black Plc 985

Non-controlling interest 310

Group profit 1,295

Statements of Financial Position are as follows:

Black Plc White Ltd.

Consolidated at acquisition at 31/3/2010 at 31/3/2009

KMs KMs KMs

Assets

Non-current assets

Property, plant and equipment (note 2) 2,440 1,400 460

Intangibles 460 420 -

Investment in associates 380 330 -

3,280 2,150 460

Current assets Inventories 685 600 180

Trade and other receivables 310 260 85

Cash and cash equivalents 0 60 15

Total assets 4,275 3,070 740

Equity and liabilities K1 ordinary shares 450 400 350

Share premium 250 100 80

Retained earnings 1,595 810 210

2,295 1,310 640

Non-controlling interest 250 210 -

2,545 1,520 640

Non-current liabilities

Long term loans 1,100 1,100 -

Current liabilities

Bank overdraft 80

Trade payables 210 190 80

Taxation 340 260 20

Total Equity and Liabilities 4,275 3,070 740

Additional information:

1. Black Plc acquired 80% of the ordinary shares of White Ltd on 1 July 2009 for K400 million in cash and issued 25 million K1 ordinary shares with a market value of K100 million. At the date of acquisition, White Ltds assets and liabilities were recorded at their fair value, with the exception of some plant which had a fair value of K100, 000 below its carrying value.

2. During the year, Black Plc made a further issue of ordinary shares, again, at a premium above nominal value.

3. The property, plant and equipment sold during the year had a carrying value of K140 million. Total depreciation charges for the year were K209 million.

REQUIRED:

Prepare a consolidated statement of cash flows in accordance with IAS 7 Statement of Cash Flows for the year ended 31 March 2010 using the indirect method. 20 Marks