QUESTION TWO On 1 July 2019,John acquired 60% of the equity share capital of Kamata for Komillion in cash.Kamata already owned 60% of the equity share capital of Caleb at this date, having paid K4 million in cash. On 1 April 2020, John acquired 10% of the equity share capital of Caleb for K1million in cash. The statements of financial position of the three entities as at 30 June 2020 are given below: John Kamata Caleb K'000 K'000 K'000 NCA Property.plant and equipment 9,300 3,600 4,250 Investments 10,000 4,000 Current assets Inventory 1,750 700 400 Receivables 1,050 550 420 Cash 1,550 1,010 330 23,650 9,860 5,400 Equity Share capital 12,500 5,000 4,000 Share premium 2,500 2,000 Retained earnings 4,150 730 250 Non-current liabilities 2,000 750 250 Current liabilities Trade payables 1,890 980 180 Taxation 610 400 100 23,650 9,860 5,400 The following information is relevant: 1. On 1 July 2019, the balances on the retained earnings of Kamata and Caleb were K550,000 and K570,000 respectively. 2. As at 1 July 2019, a tangible non-current asset in the books of Kamata, with a remaining life of five years, was deemed to have a fair value of K250,000 in excess of its book value. The fair value of all other net assets were equal to their carrying values. 3. During the year ended 30 June 2020, Kamata sold goods to both John and Caleb at a mark-up of 20% on cost. The value of the goods held in inventory at the year-end were as follows: John K240,000 Caleb K120,000 4. The fair value of the non-controlling interest in Kamata was K800,000 on 1 July 2019. The fair value of the non-controlling interest in Caleb, taking into account effective ownership, was K1.3m on the same date. 5. Goodwill has not been impaired. Required: Prepare the consolidated statement of financial position of the Jon group as at 30 June 2020. It is group policy to value NCI at fair value. (30 marks) QUESTION TWO On 1 July 2019,John acquired 60% of the equity share capital of Kamata for Komillion in cash.Kamata already owned 60% of the equity share capital of Caleb at this date, having paid K4 million in cash. On 1 April 2020, John acquired 10% of the equity share capital of Caleb for K1million in cash. The statements of financial position of the three entities as at 30 June 2020 are given below: John Kamata Caleb K'000 K'000 K'000 NCA Property.plant and equipment 9,300 3,600 4,250 Investments 10,000 4,000 Current assets Inventory 1,750 700 400 Receivables 1,050 550 420 Cash 1,550 1,010 330 23,650 9,860 5,400 Equity Share capital 12,500 5,000 4,000 Share premium 2,500 2,000 Retained earnings 4,150 730 250 Non-current liabilities 2,000 750 250 Current liabilities Trade payables 1,890 980 180 Taxation 610 400 100 23,650 9,860 5,400 The following information is relevant: 1. On 1 July 2019, the balances on the retained earnings of Kamata and Caleb were K550,000 and K570,000 respectively. 2. As at 1 July 2019, a tangible non-current asset in the books of Kamata, with a remaining life of five years, was deemed to have a fair value of K250,000 in excess of its book value. The fair value of all other net assets were equal to their carrying values. 3. During the year ended 30 June 2020, Kamata sold goods to both John and Caleb at a mark-up of 20% on cost. The value of the goods held in inventory at the year-end were as follows: John K240,000 Caleb K120,000 4. The fair value of the non-controlling interest in Kamata was K800,000 on 1 July 2019. The fair value of the non-controlling interest in Caleb, taking into account effective ownership, was K1.3m on the same date. 5. Goodwill has not been impaired. Required: Prepare the consolidated statement of financial position of the Jon group as at 30 June 2020. It is group policy to value NCI at fair value. (30 marks)