• The Castle group consist of the parent company, Castle (Pty) Ltd and its subsidiary Black (Pty) Ltd. The group’s financial year ends on 30 June. Statement of financial position as at 30 June 2022 N$ Castle (Pty) Ltd N$ Black (Pty) Ltd Non-current assets Property plant and equipment 2 220 000 490 000 Investments in Black - at cost - 160 000 ordinary shares 200 000 Current assets Inventories 420 000 350 000 Accounts receivable 485 000 220 000 Bank 228 000 - TOTAL ASSETS 3 553 000 1 060 000 Equity and liabilities Ordinary Share Capital N$2 shares 2 000 000 400 000 10% preference Share Capital (50 000 shares) - 50 000 Retained earnings 1 188 000 235 000 Current liabilities Accounts payable 365 000 310 000 Bank overdraft - 65 000 TOTAL EQUITY AND LIABILITIES 3 553 000 1 060 000 Extract statement of Comprehensive income for the period ended 30 June 2022 N$ Castle (Pty) Ltd N$ Black (Pty) Ltd Profit after tax 40 000 375 000 Extract statement of Changes in Equity for the period ended 30 June 2022 N$ Castle (Pty) Ltd N$ Black (Pty) Ltd Accumulated profit/(loss) - 1 July 2021 53 000 (40 000) Profit for the year 40 000 375 000 FACULTY OF COMMERCE, MANAGEMENT AND LAW OLD CURRICULUM MODULES Page 13 of 24 Dividends paid (Ordinary and preference) (12 000) (100 000) Retained income 30 June 2022 81 000 235 000 Additional information • Castle (Pty) Ltd acquired 160 000 shares in Black (Pty) Ltd on 1 July 2020 for N$200 000 when the equity of Black (Pty) Ltd consisted of ordinary share capital of N$400 000, preference share capital of N$50 000, and accumulated loss of N$220 000. All assets and liabilities were fairly valued at acquisition date except for a machinery which was undervalued by N$25 000. Black (Pty) Ltd agreed with the remaining useful life of 5 years. The fair value of the non-controlling interest was N$45 000. • The preference shareholders have a prior right to their dividend payment and will receive the return of their investment upon liquidation of the acquiree. All preference dividends have been paid up to and including 30 June 2022. The fair value of the preference shares at acquisition date was N$55 000. • Black (Pty) Ltd acquires all its inventory from Castle (Pty) Ltd at a 25% markup on cost. Inventory with a value of N$430 000 was sold to Black (Pty) Ltd during the year. On 30 June 2021 Black (Pty) Ltd had inventory of N$270 000 on hand. • It is the policy of Castle (Pty) Ltd to carry the non-controlling interest at their fair value. • Profit after tax of Castle (Pty) Ltd includes dividends received from Black (Pty) Ltd. All dividends are declared and payable in December each year. • Ignore tax • Comparatives are not required REQUIRED: Marks a) Provide the analysis of Ordinary owners’ equity of Black (Pty) Ltd 9 b) Provide the analysis of Preference owners’ equity of Black (Pty) Ltd 5 c) Provide the pro forma consolidation journal entries for the Castle Group for the year ended 30 June 2022. Clearly show the affected statements (SoCI, SoFP, SoCE) Journal narrations are not required 21