The extract of statement of financial position for the year ended 30 June 2023 for Persian Ltd and Sumo Ltd are as follows:

On 01 July 2022, Persian Ltd acquired 551,250 ordinary shares of Sumo Ltd, that is, Persian Ltd holds 70% shares in Sumo Ltd. The purchase consideration was as follows:

• Cash paid $ 950,000
• A deferred cash settlement to be paid in three years time of $ 475,000
• By an exchange of one share in Persian Ltd for every four shares in Sumo Ltd. The market price of Persian Ltd share at the date of acquisition was $ 2.95 and the market price of each Sumo Ltd share at the date of acquisition was $ 3.15

Legal fees associated with the acquisition were $ 10,500.

The discount rate of Persian Ltd is 10 %.

(a) Calculate the fair value consideration (Costs of investment) transferred to acquire control of Sumo 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). [ 10 Marks]

On the acquisition date, the retained earnings of Sumo Ltd stood at $ 317,175 and share capital was $ 787,500. Sumo Ltd had developed a brand which has not been recognized in its financial statements. The board members of Persian Ltd are of the opinion that the brand, which has a fair value of $ 975,000 and a remaining term of three years to go as from the date of acquisition, should be accounted. The carrying value of Furniture and Fittings was in excess by $ 180,000 on the acquisition date. Furniture and Fittings had a lifetime of four years at the acquisition date. Included within the intangible assets of Sumo Ltd (at the acquisition and reporting date) is goodwill of $ 35,500 that arose on the purchase of the trade and assets of a sole-trader business.

(b) Calculate the net assets of Sumo Ltd at the date of acquisition (01 July 2022) and at the reporting date (30 June 2023). [ 10 Marks]

Goodwill has been impaired by $ 175,000 at the reporting date (30 June 2023).

(c) Calculate the goodwill using the proportion method at the date of acquisition (01 July 2022). [ 5 marks]

(d) Calculate the non-controlling interest (NCI) as at 30 June 2023. [ 2 Marks]

Persian Ltd has recently appointed an accountant, Mr Acerola, following the resignation of the previous group accountant. When Mr Acerola was preparing the group accounts for the year ended 30 June 2023, he found that only the cash consideration of $ 950,000 has been accounted. The par value of each ordinary share for Persian Ltd is $ 1.

(e) Calculate the group retained earnings as at 30 June 2023. [ 3 Marks]

(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 2023 showing clearly how the deferred payment and shares exchange should be accounted. [10 Marks]