Question
RedBerry Co Zen Co Assets $ $ Non current assets Tangible assets 471,000 110,000 Investments: Zen PLC 250,000 Current assets Inventories 220,600 75,600 Trade receivables
RedBerry Co | Zen Co | |
Assets | $ | $ |
Non current assets | ||
Tangible assets | 471,000 | 110,000 |
Investments: Zen PLC | 250,000 | |
Current assets | ||
Inventories | 220,600 | 75,600 |
Trade receivables | 290,400 | 140,700 |
Cash and cash equivalents | 60,000 | 75,450 |
Total Assets | 1,292,000 | 401,750 |
Equity and liabilities | ||
Share capital :Ordinary $1 shares | 750,000 | 150,000 |
Share premium | - | 18,750 |
Retained earnings | 112,000 | 80,000 |
Non- current liabilities: | ||
6% Loan | 85,000 | 60,000 |
Current liabilities | ||
Trade and other payables | 345,000 | 93,000 |
Total Equity & Liabilities | 1,292,000 | 401,750 |
Assignment Scenario 01
RedBerry Co and Zen Co
The following are the draft statement of Financial Position of RedBerry Co and its subsidiary Zen Co as at 31st December 2019 are given below:
Additional information:
- RedBerry Co acquired 120,000 shares in Zen Co on 1st Jan 2019 for a cost of $ 250,000when the retained earnings of Zen Co were $ 40,000. The fair value of the non-controlling interest in Zen Co at the date of acquisition was $44,000.
- At the date of acquisition, the fair value of the net assets of Zen Co approximated their carrying amounts, except for a plot of land owned by Zen Co. This land was held in the financial statements of Zen Co at its cost of $40,000 but was estimated to have a fair value of $95,000. This land is still owned by Zen Co at 31st December 2019.
- At 31st December 2019 RedBerry Co s inventory included $ 12,000 of goods purchased from Zen PLC. Zen Co earns a mark- up of 25% on sales.
Zen PLC. Zen Co earns a mark- up of 25% on sales.
- At 31st December 2019 Zen Co s trade receivables include $ 75,000 due from RedBerry Co and RedBerry Co s trade payable include $ 75,000 due to Zen PLC.
Question 1
You are required to:
- Prepare consolidate statement of financial position as at 31st December 2019 of RedBerry Co . (Provide Reference to IFRS wherever applicable and relevant workings)
(Relevant workings 3 marks + consolidated statement of financial position 3marks)
(Q.1 -A- 6 Marks)
- Briefly explain the concept of unrealised profit & Evaluate the adjustment of provision for unrealized profit if:
At 31st December 2019, RedBerry Co sold goods to Zen Co for $ 30,000 at a Margin of 25%. 1/4th of these goods were still unsold by Zen Co at the end of the year.
(Q.1 -B: Total 4 Marks) (Total Marks Q.1= 10 Marks)
Note: For solving question no. 1, you should use information given in Assignment Scenario 01.
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