The followings are the financial information of Parent and Daughter pre-acquisition date.

	Parent Ltd	Daughter Ltd
Cash	20,000	20,000
Other net assets	25,000	8,800
Net assets	45,000	10,800
Ordinary shares of 1 each	40,500	9,000
Retained earnings	4,500	1,800
Total equity	45,000	10,800

On 1 January 20XX Parent Ltd acquired all the ordinary shares in Daughter Ltd for 10,800 cash. The fair value of the net assets in Daughter Ltd was their book value.

Question 3

Assume that instead of the cash acquisition, Parent Ltd acquire 100% Daughter Ltd by the issue of 5,400 new ordinary shares. The fair value of a 1 ordinary share in Parent Ltd was 2. The fair value of the net assets in Daughter Ltd was their book value.

Required:

1. Prepare the statement of financial position of Parent Ltd reflecting the acquisition of Daughter Ltd as at 1 January 20XX.
2. Prepare the consolidated statement of financial position of Parent Ltd at 31^st December 20XX.