Since its founding, Bata has been at the forefront of innovation; not only in the production and design of new styles, but in the creation of business models that permit a quick response to the ever-changing wants and needs of our customers. As a result, Bata enjoys a long history as a leading manufacturer and retailer of quality footwear, and proudly serves some one million customers each day.

Today the Bata Shoe Organization is a sprawling geo-centric company encompassing operations in more than 70 countries around the world. It serves over 1 million customers per day, employs more than 30,000 people, operates more than 5,000 international retail outlets, manages retail presence in over 70 countries and runs 27 production facilities across 20 countries.

Batas reach is worldwide; its presence is local. Our novel international manufacturing structure allows Bata facilities around the globe to respond to the unique needs and wants of local customers. As a result, Bata is honored to be a local company in every country it serves including Zambia. Bata Zambia has sales outlets throughout Zambia does it sales mostly on cash basis in the Zambian currency Kwacha. It has over 100 employees on its payroll who are paid in Kwacha. Bata continues to be guided by the same core principle it has followed for over one hundred years: to know its customers and to create the best possible products to meet their needs. In its expansion strategy, Bata Zambia a listed company at Lusaka Security exchange and subsidiary of Bata group, made an investment in Dunlop and Zamshoe On January 1, 2019, as follows;

1. Acquired for cash, 80 percent of the outstanding common stock of Dunlop at K2.8 per share.

The stockholders equity of Dunlop on January 1, 2019, consisted of the following:

Common stock, par value K1.00 K200, 000

Retained earnings K80, 000

2. Acquired for cash, 70% of the 600,000 outstanding common stock of Zamshoe Corporation at K1.60 per share. The stockholders equity of Zamshoe on January 1, 2019, consisted of the following:

Common stock, par value K0.40 K240, 000

Share premium 80,000

Retained earnings 160,000

a) Calculate the Good will if any on acquisition of these 2 investments and show the journal entry of how this was recorded by Bata Zambia. Assume that the Bata group uses the full goodwill method (7 marks)

b). What entries should have been made in the books of Bata Zambia in 2019 to record the above Investments. (6 marks)

An analysis of the retained earnings of each company for 2019 is as follows:

Bata Zambia Dunlop Zamshoe

Balance January 1 K 960,000 K 80,000 K160,000

Net income (loss) 418,400 144,000 (48,000)

Balance December 31 K1, 378,400 K224, 000 K 112,000

After seeing this analysis the non-controlling interest in Dunlop and Zamshoe would like to know how much their investments have grown or lost value.

c) Respond to the concerns of the non-controlling interest by computing the amount of noncontrolling interest in each subsidiarys stockholders equity at December 31, 2019.(6 marks)

d).What amount should be reported as consolidated retained earnings of Bata Zambia PLS and its subsidiaries as of December 31, 2019?(5 marks) Page 3 of 6

e) Briefly explain how the two investments will be treated by Bata Zambia when preparing group Cash flow (5 marks)

You are about to start preparing the consolidation financial statement for Bata Zambia. However You fellow accountant reminds you that there is no need for Bata Zambia to prepare consolidation financial statement since the consolidation financial statement will be prepared by the ultimate parent in Czech Republic.

f) Briefly explain the International Accounting Standards Board (IASB) guidance on this and advice if Bata Zambia PLC should prepare consolidation financial statement (6 marks)