Question
The following summarised statements of financial position related to the TEALAND group of companies as at 31 st August 2021. TEA plc LAND Ltd Non-Current
The following summarised statements of financial position related to the TEALAND group of companies as at 31st August 2021.
TEA plc LAND Ltd
Non-Current Assets 000 000
Tangible Assets 45,000 15,000
Investment in LAND 14,000
Current Assets
Inventory 7,600 2,500
Receivables 5,000 400
Cash 3,000 100
Total Assets 74,600 18,000
Equity and Liabilities
Equity
Share Capital (1 par) 50,000 10,000
Retained Earnings 15,200 2,500
65,200 12,500
Current Liabilities
Payables 9,400 5,500
Total Equity and Liabilities 74,600 18,000
Additional Information
- TEA plc purchased 7,000,000 shares in LAND Ltd on 1st September 2020, when LANDs retained earnings balance was 1,500,000.
- During the year LAND Ltd sold goods to TEA plc, the profit being to TEA Ltd as 30% of the selling price. At the end of the period 500,000 of these goods remained in inventories.
- An annual impairment review took place and you are informed that you need to write off an impairment loss on goodwill of 500,000.
- The TEALAND group has the policy to value the non-controlling interest at its fair value. The fair value was given as 3,000,000.
Note: round figures to whole numbers
Required:
- Prepare the consolidated statement of financial position for the TEALAND Group for the year ended 31st August 2021.
- Write a report to the TEALAND group that identifies how a contingent liability and a contingent asset should be accounted for and/or disclosed.
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