Questions (4)

Prepare the consolidation statement

(a) Explain the required treatment of items (i) to (v), above, in order to comply with the relevant accounting standards and show the double entry to make corrections where necessary. 10 Marks QUESTION FOUR a) Jordan Lid acquired 70% of the shares of Lucas Ltd on 15t January 2013 which was the latter company's date of incorporation. The statements of financial position of the companies as at 315t December 2015 are given below: Jordan Ltd Lucas Ltd K' K' Non-current assets Property plant and equipment 50, 000 27, 500 Share investments 25, 000 10% debentures 14, 500 89, 500 27, 500 Current assets Inventory 40, 000 15, 000 Receivable from Lucas Ltd 3, 000 Other trade receivables 13, 000 2, 500 Cash and cash equivalents 10, 000 4. 000 Total assets 155, 500 49, 000 Equity and liabilities K1 ordinary shares 80, 000 30, 000 Share premium 20, 000 Revaluation reserve 6, 000 4, 000 Retained earnings 15, 000 6, 500 115, 000 40, 500 Non-current liabilities 10% debentures from Jordan Ltd 4, 500 7% loan notes 20, 000 2, 000 Payable to Jordan Ltd 2, 000 Other payables 20, 000 155, 000 49, 000 Notes: 1. Jordan Lid sold property plant and equipment to Lucas Lid during the year for K10, 000. The property plant and equipment had cost Jordan Lid K6, 000 and is depreciated at 25% per annum. 2. Lucas Ltd sold inventory to Jordan Ltd that had cost K5, 000 at cost plus 25%. 60% of this inventory is still in the books of Jordan Ltd. Prepare the consolidated statement of financial position for the Jordan Group of companies as at 315t December 2015. 15 Marks b) Princeton Lid bought 55% of the shares of Sandton Lid on 15t January 2015. The statements of profit or loss and other comprehensive income for the two companies on 31 st December 2015 are given below: Princeton Sandton K' 000 K' 000