The following draft financial statements relate to Madiba, a public limited company. Madiba Group: Draft statements of profit or loss and other comprehensive income for the year ended 30 April 2019. Madiba Kshs 'm 800 -624 176 42 30 .70 Nyerere Kshs im 230 - 130 100 Obama Kshs'm 140 -72 118 Revenue Cost of Sales Gross Profit Other income Administrative costs Other expenses Operating profit Finance costs Finance income Profit before tax Income tax expense Profit for the year Other comprehensive income - revaluation surplus Total comprehensive income for year -10 120 -38 82 20 . 102 The following information is relevant to the preparation of the group statement of profit or loss and other comprehensive income: On 1 May 2017, Madiba acquired 60% of the equity interests of Nyerere, a public limited company. The purchase consideration comprised cash of KShs160 million and the fair value of the identifiable net assets acquired was KShs 220 million at that date. The fair value of the non-controlling interest (NCI) in Nyerere was KShs90 million on 1 May 2017. Madiba wishes to use the full goodwill' method for all acquisitions. The share capital and retained earnings of Nyerere were KShs 50 million and KShs 130 million respectively and other components of equity were KShs 12 million at the date of acquisition. The excess of the fair value of the identifiable net assets at acquisition is due to non-depreciable land. Goodwill has been impairment tested annually and as at 30 April 2018 had reduced in value by 20%. However at 30 April 2019, the impairment of goodwill had reversed and goodwill was valued at KShs4 million above its original value. This upward change in value has already been included in above draft financial statements of Madiba prior to the preparation of the group accounts.se Madiba disposed of an 8% equity interest in Nyerere on 30 April 2019 for a cash consideration of Kshs36 million and had accounted for the gain or loss in other income. The carrying value of the net assets of Nyerere at 30 April 2019 was KShs240 million before any adjustments on consolidation Madiba accounts for investments in subsidiaries using IFRS 9 Financial Instruments and has made an election to show gains and losses in other comprehensive income. The carrying value of the investment in Nyerere was KShs 180 million at 30 April 2018 and KShs 190 million at 30 April 2019 before the disposal of the equity interest.se Madiba acquired 60% of the equity interests of Obama, a public limited company, on 30 April 2017. The purchase consideration was cash of KShs140 million. Obama's identifiable net assets were fair valued at KShs172 million and the NCI had a fair value of KShs 28 million at that date. On 1 November 2018, Madiba disposed of a 40% equity interest in Obama for a consideration of KSh 100 million. Obama's identifiable net assets were KShs 180 million and the value of the NCI was KShs68 million at the date of disposal. The remaining equity interest was fair valued at KShs80 million. After the disposal, Madiba exerts significant influence. Any increase in net assets since acquisition has been reported in profit or loss and the carrying value of the investment in Obama had not changed since acquisition. Goodwill had been impairment tested and no impairment was required. No entries had been made in the financial statements of Madiba for this transaction other than for cash received. Madiba sold inventory to Nyerere for KShs 24 million at fair value. Madiba made a loss on the transaction of KShs4 million and Nyerere still holds KShs16 million in inventory at the year end. si 5. The following information relates to Madiba's pension scheme: KShs'm 96 Plan assets at 1 May 2018 Defined benefit obligation at 1 May 2018 100 Service cost for year ended 30 April 2019 Discount rate at 1 May 2018 10% Re-measurement loss in year ended 30 April 2019 Past service cost 1 May 2018 slip The pension costs have not been accounted for in total comprehensive income.se On 1 May 2017, Madiba purchased an item of property, plant and equipment for KShs24 million and this is being depreciated using the straight line basis over 10 years with a zero residual value. At 30 April 2018, the asset was revalued to KShs 26 million but at 30 April 2019, the value of the asset had fallen to KSh14 million. Madiba uses the revaluation model to value its non-current assets. The effect of the revaluation at 30 April 2019 had not been taken into account in total comprehensive income but depreciation for the year had been charged. On 1 May 2017, Madiba made an award of 8,000 share options to each of its seven directors. The condition attached to the award is that the directors must remain employed by Madiba for three years. The fair value of each option at the grant date was KShs 200 and the fair value of each option at 30 April 2019 was Kshs220. At 30 April 2018, it was estimated that three directors would leave before the end of three years. Due to an economic downturn, the estimate of directors who were going to leave was revised to one director at 30 April 2019. The expense for the year as regards the share options had not been included in profit or loss for the current year and no directors had left by 30 April 2019. A loss on an effective cash flow hedge of Nyerere of Kshs6 million has been included in the subsidiary's finance costs.se Ignore the taxation effects of the above adjustments unless specified. Any expense adjustments should be amended in other expenses. Required: (a) Prepare a consolidated statement of profit or loss and other comprehensive income for the year ended 30 April 2019 for the Madiba Group (b) Explain, with suitable calculations, how the sale of the 8% interest in Nyerere should be dealt with in the group statement of financial position at 30 April 2019. The following draft financial statements relate to Madiba, a public limited company. Madiba Group: Draft statements of profit or loss and other comprehensive income for the year ended 30 April 2019. Madiba Kshs 'm 800 -624 176 42 30 .70 Nyerere Kshs im 230 - 130 100 Obama Kshs'm 140 -72 118 Revenue Cost of Sales Gross Profit Other income Administrative costs Other expenses Operating profit Finance costs Finance income Profit before tax Income tax expense Profit for the year Other comprehensive income - revaluation surplus Total comprehensive income for year -10 120 -38 82 20 . 102 The following information is relevant to the preparation of the group statement of profit or loss and other comprehensive income: On 1 May 2017, Madiba acquired 60% of the equity interests of Nyerere, a public limited company. The purchase consideration comprised cash of KShs160 million and the fair value of the identifiable net assets acquired was KShs 220 million at that date. The fair value of the non-controlling interest (NCI) in Nyerere was KShs90 million on 1 May 2017. Madiba wishes to use the full goodwill' method for all acquisitions. The share capital and retained earnings of Nyerere were KShs 50 million and KShs 130 million respectively and other components of equity were KShs 12 million at the date of acquisition. The excess of the fair value of the identifiable net assets at acquisition is due to non-depreciable land. Goodwill has been impairment tested annually and as at 30 April 2018 had reduced in value by 20%. However at 30 April 2019, the impairment of goodwill had reversed and goodwill was valued at KShs4 million above its original value. This upward change in value has already been included in above draft financial statements of Madiba prior to the preparation of the group accounts.se Madiba disposed of an 8% equity interest in Nyerere on 30 April 2019 for a cash consideration of Kshs36 million and had accounted for the gain or loss in other income. The carrying value of the net assets of Nyerere at 30 April 2019 was KShs240 million before any adjustments on consolidation Madiba accounts for investments in subsidiaries using IFRS 9 Financial Instruments and has made an election to show gains and losses in other comprehensive income. The carrying value of the investment in Nyerere was KShs 180 million at 30 April 2018 and KShs 190 million at 30 April 2019 before the disposal of the equity interest.se Madiba acquired 60% of the equity interests of Obama, a public limited company, on 30 April 2017. The purchase consideration was cash of KShs140 million. Obama's identifiable net assets were fair valued at KShs172 million and the NCI had a fair value of KShs 28 million at that date. On 1 November 2018, Madiba disposed of a 40% equity interest in Obama for a consideration of KSh 100 million. Obama's identifiable net assets were KShs 180 million and the value of the NCI was KShs68 million at the date of disposal. The remaining equity interest was fair valued at KShs80 million. After the disposal, Madiba exerts significant influence. Any increase in net assets since acquisition has been reported in profit or loss and the carrying value of the investment in Obama had not changed since acquisition. Goodwill had been impairment tested and no impairment was required. No entries had been made in the financial statements of Madiba for this transaction other than for cash received. Madiba sold inventory to Nyerere for KShs 24 million at fair value. Madiba made a loss on the transaction of KShs4 million and Nyerere still holds KShs16 million in inventory at the year end. si 5. The following information relates to Madiba's pension scheme: KShs'm 96 Plan assets at 1 May 2018 Defined benefit obligation at 1 May 2018 100 Service cost for year ended 30 April 2019 Discount rate at 1 May 2018 10% Re-measurement loss in year ended 30 April 2019 Past service cost 1 May 2018 slip The pension costs have not been accounted for in total comprehensive income.se On 1 May 2017, Madiba purchased an item of property, plant and equipment for KShs24 million and this is being depreciated using the straight line basis over 10 years with a zero residual value. At 30 April 2018, the asset was revalued to KShs 26 million but at 30 April 2019, the value of the asset had fallen to KSh14 million. Madiba uses the revaluation model to value its non-current assets. The effect of the revaluation at 30 April 2019 had not been taken into account in total comprehensive income but depreciation for the year had been charged. On 1 May 2017, Madiba made an award of 8,000 share options to each of its seven directors. The condition attached to the award is that the directors must remain employed by Madiba for three years. The fair value of each option at the grant date was KShs 200 and the fair value of each option at 30 April 2019 was Kshs220. At 30 April 2018, it was estimated that three directors would leave before the end of three years. Due to an economic downturn, the estimate of directors who were going to leave was revised to one director at 30 April 2019. The expense for the year as regards the share options had not been included in profit or loss for the current year and no directors had left by 30 April 2019. A loss on an effective cash flow hedge of Nyerere of Kshs6 million has been included in the subsidiary's finance costs.se Ignore the taxation effects of the above adjustments unless specified. Any expense adjustments should be amended in other expenses. Required: (a) Prepare a consolidated statement of profit or loss and other comprehensive income for the year ended 30 April 2019 for the Madiba Group (b) Explain, with suitable calculations, how the sale of the 8% interest in Nyerere should be dealt with in the group statement of financial position at 30 April 2019