The statements of financial position of P Co, S Co and A Co at 31 December 2020 are given below: P Co Rs000 S Co Rs000 A Co Rs000 Non-current assets Property, plant and equipment 5 490 3 250 1 570 Investments 3 000 - - 8 490 3 250 1 570 Current assets Inventory 1 150 600 530 Trade receivables 660 580 740 Cash 100 240 40 1 910 1 420 1 310 Total assets 10 400 4 670 2 880 Equity and liabilities Equity Share capital Rs1 shares 4 000 2 000 1 500 Retained profit 2 920 1 770 780 6 920 3 770 2 280 Non current liabilities 10% debentures 1 000 200 - Current liabilities Trade payables 1 360 700 600 Bank overdraft 1 120 - - 2 480 700 600 Total equity and liabilities 10 400 4 670 2 880 Page 3 of 10 GENERAL NOTE: P Co acquired 1,200,000 ordinary shares in S Co on 1 January 2015 for Rs 2,000,000 cash. At the date of acquisition, the retained profit of S Co was Rs 400,000. ADDITIONAL INFORMATION 1. The fair values of the net assets of S Co at the date of acquisition were equal to their carrying amounts with exception of a freehold property which had a fair value of Rs 800,000 above its carrying amount. The freehold property consists of a building representing 50% of its total value which is depreciated on cost. The remaining useful life of the building is 40 years at the date of acquisition. 2. Its P Cos policy to value non controlling interest at fair value. At the date of acquisition, S Co shares had a share price of Rs 1.60 per share. 3. P Co also acquired 450,000 ordinary shares in A Co on 1 January 2014 for Rs1,000, 000 and the retained earnings at that date was Rs 300,000. 4. At 31 December 2020, P Cos inventory held Rs 200,000 bought form S co. It is the policy of S Co to marked up goods transferred at cost plus 25%. 5. In same period P co sold goods to A Co of which A Co had Rs160,000 in inventory and P Co had marked up these goods at 25%. 6. An impairment test was carried out and it was decided to written off the goodwill of S Co in full. In addition, the investment in A co was impaired by Rs184,000. REQUIRED (a) Calculate the goodwill arising on the acquisition of S Co at 31 December 2020. [10 marks] (b) Prepare a consolidated statement of financial position for P Co as at 31 December 2020. [23 marks] (c) Explain how investment in associate is accounted for under IAS 28 [7 marks]