STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 20 17 P Ltd S Ltd ASSETS Non Current Asset Land 141 000 175 200 Machinery 253 800 288 000 Cost 423 000 360 000 Accumulated depreciation 169 200 72 000 Investment in S Ltd at fair value 197 010 45 000 Ordinary shares 142 800 39 000 8 Preference shares 54 210 Current Assets Trade receivables 94 800 115 320 Bank 95 400 65 520 Inventory 78 360 63 000 TOTAL ASSETS 860 370 707 040 EQUITY AND LIABILITIES EQUITIES Share capital Ordinary (100 000 60 000 shares) 100 000 60 000 Share capital 8 Preference (130 000 shares) 130 000 Mark to market reserve 11 886 Retained earnings 572 000 390 600 LIABILITIES Current Liabilities Deferred tax 2 724 Trade payables 107 760 44 040 ordinary dividends payable 66 000 72 000 Preference dividends payable 10 400 TOTAL EQUITY AND LIABILITIES 860 370 707 040 EXTRACT FROM THE STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 20 17 Details Mark to market reserve Retained earnings P Ltd P Ltd S Ltd Balance at 1 January 20 17 7 854 380 624 338 000 Changes in equity for 20 17 Total comprehensive income for the year Profit for the year 257 376 135 000 Other comprehensive income for the year 4 032 Ordinary dividend paid 66 000 72 000 Preference dividend paid 10 400 Balance at 31 December 20 17 11 886 572 000 390 600 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20 17 P Ltd S Ltd Revenue 824 549 624 600 Cost of sales 349 344 300 600 Gross profit 475 205 324 000 Other expenses 150 000 64 500 Depreciation 96 000 72 000 Gain on sale of machinery 60 000 Dividends received from S Ltd (includes preference dividends) 57 120 Profit before tax 346 325 187 500 Income tax expense 88 949 52 500 PROFIT FOR THE YEAR 257 376 135 000 Other comprehensive income for the year Items that will not be reclassified to profit or loss Fair value adjustments on equity investments 4 956 Investment in ordinary shares 3 600 Investment in preference shares 1 356 Income tax relating to mark to market reserve 924 Investment in ordinary shares 671 Investment in preference shares 253 Other comprehensive income for the year, net of tax 4 032 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 261 408 135 000 Additional information 1 P Ltd purchased the shares on 1 January 20 13, when the retained earnings of S Ltd was R79 200 P Ltd paid R132 000 for the investment in ordinary shares and R50 400 for the investment in reference shares 2 S Ltd purchased all its machinery on 1 January 20 17 from P Ltd S Ltd depreciates the machinery over the remaining useful life of the asset of five years 3 P Ltd sold the machinery at cost price plus 20 , and the machinery was not part of inventories in the records of P Ltd 4 P Ltd buys 60 of their inventory from S Ltd and the closing inventory includes 60 bought from S Ltd The inventory sales amounted to R135 600 in th current year The inventory at the beginning of the year amounted to R84 550 S Ltd marks up their sale at 20 at cost The amount owing at the end of the year was R34 400 (trade payable) and included in trade receivables 5 P Ltd classified the equity investment in S Ltd under IFRS 9 in the separate financial statements and recognised any fair value adjustments in the mark to market reserve (other comprehensive income) 6 P Ltd elected to measure the non controlling interests in the acquiree at their proportionate share of the acquirees identifiable net assets at the acquisition date 7 The company tax rate is 28 and capital gains tax (CGT) is calculated at 66,6 thereof Required Prepare the consolidated financial statements of the P Ltd Group for the reporting period ended 31 December 20 17 (includes Analysis and pro forma journal entries)

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STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 20.17 P Ltd S Ltd ASSETS Non- Current Asset Land 141 000 175 200 Machinery 253 800

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 20.17
	P Ltd	S Ltd
ASSETS
Non- Current Asset
Land	141 000	175 200
Machinery	253 800	288 000
Cost	423 000	360 000
Accumulated depreciation	- 169 200	- 72 000
Investment in S Ltd at fair value	197 010	-
45 000 Ordinary shares	142 800	-
39 000 8% Preference shares	54 210	-

Current Assets
Trade receivables	94 800	115 320
Bank	95 400	65 520
Inventory	78 360	63 000
TOTAL ASSETS	860 370	707 040

EQUITY AND LIABILITIES
EQUITIES
Share capital: Ordinary (100 000/60 000 shares)	100 000	60 000
Share capital: 8% Preference (130 000 shares)	-	130 000
Mark-to-market reserve	11 886	-
Retained earnings	572 000	390 600

LIABILITIES
Current Liabilities
Deferred tax	2 724	-
Trade payables	107 760	44 040
ordinary dividends payable	66 000	72 000
Preference dividends payable	-	10 400
TOTAL EQUITY AND LIABILITIES	860 370	707 040

EXTRACT FROM THE STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 20.17

Details	Mark-to-market reserve	Retained earnings


	P Ltd	P Ltd	S Ltd
Balance at 1 January 20.17	7 854	380 624	338 000
Changes in equity for 20.17
Total comprehensive income for the year:
Profit for the year		257 376	135 000
Other comprehensive income for the year	4 032	-	-
Ordinary dividend paid	-	- 66 000	- 72 000
Preference dividend paid	-	-	- 10 400
Balance at 31 December 20.17	11 886	572 000	390 600

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20.17

	P Ltd	S Ltd
Revenue	824 549	624 600
Cost of sales	- 349 344	- 300 600
Gross profit	475 205	324 000
Other expenses	- 150 000	- 64 500
Depreciation	- 96 000	- 72 000
Gain on sale of machinery	60 000	-
Dividends received from S Ltd (includes preference dividends)	57 120	-
Profit before tax	346 325	187 500
Income tax expense	- 88 949	- 52 500
PROFIT FOR THE YEAR	257 376	135 000
Other comprehensive income for the year
Items that will not be reclassified to profit or loss
Fair value adjustments on equity investments:	4 956	-
Investment in ordinary shares	3 600	-
Investment in preference shares	1 356	-
Income tax relating to mark-to-market reserve	- 924	-
Investment in ordinary shares	- 671	-
Investment in preference shares	- 253	-
Other comprehensive income for the year, net of tax	4 032	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	261 408	135 000

Additional information

1 P Ltd purchased the shares on 1 January 20.13, when the retained earnings of S Ltd was R79 200. P Ltd paid R132 000 for the investment in ordinary shares and R50 400 for the investment in reference shares.

2 S Ltd purchased all its machinery on 1 January 20.17 from P Ltd. S Ltd depreciates the machinery over the remaining useful life of the asset of five years.

3 P Ltd sold the machinery at cost price plus 20%, and the machinery was not part of inventories in the records of P Ltd.

4 P Ltd buys 60% of their inventory from S Ltd and the closing inventory includes 60% bought from S Ltd. The inventory sales amounted to R135 600 in th current year. The inventory at the beginning of the year amounted to R84 550. S Ltd marks-up their sale at 20% at cost. The amount owing at the end of the year was R34 400 (trade payable) and included in trade receivables.

5 P Ltd classified the equity investment in S Ltd under IFRS 9 in the separate financial statements and recognised any fair value adjustments in the mark-to-market reserve (other comprehensive income).

6 P Ltd elected to measure the non-controlling interests in the acquiree at their proportionate share of the acquirees identifiable net assets at the acquisition date.

7 The company tax rate is 28% and capital gains tax (CGT) is calculated at 66,6% thereof.

Required

Prepare the consolidated financial statements of the P Ltd Group for the reporting period ended 31 December 20.17 (includes Analysis and pro forma journal entries)