The extract of statement of financial position for the year ended 30 June 2022 for Pears Ltd and Sapodille Ltd are as follows:

Extract of statement of financial position for the year ended 30 June 2022

Equity and liabilities Pears Ltd Sapodille Ltd Equity $ $ Share capital ($ 1 Each) 487,500 420,000 Share premium 300,000 - Retained earnings 262,500 337,500 Liabilities Non current liabilities 187,500 75,000 Current liabilities 150,000 15,000

On 01 July 2021, Pears Ltd acquired 252,000 ordinary shares of Sapodille Ltd and as a result, Pears Ltd holds 60% shares in Sapodille Ltd. The purchase consideration was as follows:

Cash paid $ 350,000

A deferred cash settlement to be paid in four years time of $ 500,000

By an exchange of two shares in Pears Ltd for every five shares in Sapodille Ltd. The market price of Pears Ltd share at the date of acquisition was $ 3.5 and the market price of each Sapodille Ltd share at the date of acquisition was $ 4.25

Legal fees associated with the acquisition were $ 155,000.

The discount rate of Pears Ltd is 15 %.

(a) Calculate the fair value consideration (Costs of investment) transferred to acquire control of Sapodille Ltd at the date of acquisition. Your answer should include a brief explanation if any of the above issue(s) is/are not required to be accounted in your working(s).

On the acquisition date, the retained earnings of Sapodille Ltd stood at $ 145,000 and share capital was $ 420,000. Sapodille Ltd holds a patent that has not been recognized in its financial statements. The directors of Pears Ltd are of the opinion that the patent should be accounted. The patent had a fair value of $ 350,000 and a remaining term five years to go as from the date of acquisition. The carrying value of Property and Plant was in excess by $ 120,000 on the acquisition date. Property and Plant had a lifetime of six years at the acquisition date. Included within the intangible assets of Sapodille Ltd (at the acquisition and reporting date) is goodwill of $ 25,000 which arose on the purchase of the trade and assets of a sole-trader business.

(b) Calculate the net assets of Sapodille Ltd at the date of acquisition (01 July 2021) and at the reporting date (30 June 2022).

Goodwill has been impaired by $ 120,000 at the reporting date (30 June 2022).

(c) Calculate the goodwill using the proportion method at the date of acquisition (01 July 2021).

(d) Calculate the non-controlling interest (NCI) as at 30 June 2022.

Pears Ltd has recently appointed an accountant, Mr G. Persimmon, following the resignation of the previous group accountant. When Mr G. Persimmon was preparing the group accounts for the year ended 30 June 2022, he found that only the cash consideration of $ 350,000 has been accounted. The par value of each ordinary share for Pears Ltd is $ 1. 4 (e) Calculate the group retained earnings as at 30 June 2022.

(f) Prepare an extract of equity (Ordinary shares, Share premium, Retained earnings and NCI) and liabilities section of the consolidated statement of financial position as at 30 June 2022 showing clearly how the deferred payment and shares exchange should be accounted.