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:

1. RedBerry Co acquired 120,000 shares in Zen Co on 1^st 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.
2. 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.
3. At 31^st 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.

4. At 31^st 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:

1. Prepare consolidate statement of financial position as at 31^st 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)

2. 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%. 1/4^th 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.