The following are the abridged financial statements of Boston Ltd ("Boston") and its subsidiary Denim Ltd ("Denim"), that both sells consumer goods, at 31 December 2022. STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Assets Non-current assets Property, plant and equipment. Financial assets - Investment in Denim Ltd -Intellectual property Current assets Inventories Trade receivables Bank Sundry current assets Total assets Equity and liabilities Share capital and reserves Ordinary share capital (N$ 1/ share & N$ 0.25/share) General reserve Retained earnings Non-current & current liabilities Long term loan Trade payables Current tax payable Overdraft Other current liabilities Total equity and liabilities Gross Prolit Other expenses and other income Profit before tax Tax Profit for the year Boston Ltd N$ million Other comprehensive income Total comprehensive income 640 405 405 0 160 76 79 0 5 1 205 605 300 5 300 600 115 415 40 25 5 1:205 EXTRACT FROM THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Boston Ltd N$ million 180 60 120 30 90 Denim Ltd N$ million 90 340 30 0 30 70 22 41 4 3 440 340 200 0 140 100 20 57 20 0 3 440 Denim Ltd N$ million 100 80 20 5 15 99 15 1. 2. 3. 4. EXTRACT FROM THE STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 5. Balances 1/1/2021 Profit for the year Transfer to reserves Balances 31/12/2021 Profit for the year Transfer to reserves Ordinary dividend Balances 31/12/2022 Boston Ltd Retained Earnings N$ million 210 1 (1) 210 90 (3) (10) 287 General Retained reserve Earnings N$ million N$ million 1 1 2 3 Denim Ltd 5 120 5 in 125 15 140 Additional information: Boston acquired 600 million equity shares in Denim on 1 January 2021. The purchase consideration of N$ 405 million for the investment was paid for via a bank transfer at the acquisition date. General Reserve N$ million 0 0 0 At the date of acquisition the fair values of Denim's net assets were approximately equal to their carrying amounts, with the exception of its properties. These properties had a fair value of N$ 40 million in excess of their carrying amounts which would create additional depreciation of N$ 1 million per year in the subsequent post-acquisition periods. The fair value adjustment has not been reflected in Denim's statement of financial position. Denim sold Boston goods for N$ 8 million in the current 2022 financial period. N$ 4 million of these goods are included in the inventory of Boston at 31 December 2022. The profit made by Denim on these sales were a total of N$ 2 million. No goods were bought by Boston from Denim in the 2021 financial year due to the pervasive economic conditions of 2021. The gross profit percentage of 25 % is applied to all goods sold by Boston. Denim uses a gross profit percentage of 40% for all goods sold to external parties, this exclude sales to the parent company Boston. It is the entity's policy to value the non-controlling interests using the fair value of the subsidiary's identifiable net assets. The fair value of the non-controlling interests at the date of acquisition is N$ 125 million. 6. A final dividend of NS 10 000 was declared by Boston to be paid out before year-end to its shareholders. The amount was correctly reflected in the statement of changes in equity, however the Bank account hasn't been correctly updated with this payment. On further investigation, it was noted that another N$ 3 000 credit wasn't accounted for correctly to the bank account of Boston. Required a) Prepare all the at acquisition date pro-forma journal entries for the 2022 group financial statements. Journal narrations are not required. (8) b) Prepare a Statement of profit or loss and other comprehensive income for the year ended 31 December 2022 for the group in accordance with IFRS. The calculations for revenue and cost of sales needs to be clearly shown. Notes and comparative figures are not required. (16) c) Prepare a Statement of financial position as at 31 December 2022 for the group in accordance with IFRS. Notes and comparative figures are not required. One (1) mark will be allocated for Presentation Skills. (18)