The Statements of Financial Position of Penn, a specialist sports goods retailer, and two entities in which it holds substantial investments are shown below as at 31 March 2014. The following notes to the Statements of Financial Position must be considered: Note 1 - Investment by Penn in Speen On 1 April 2012, Penn purchased $2 millioa loan notes in Speen at par. On I April 2012, Pepn purchased 4 million of the ordinary shares in Speen for 57.5 million in eash, when Speen's reserves were 51.5 millbon. At this date the shares of Speen had a market price of 51.50 each. At the date of acquisition of the shares, Speen's property and plant incladed land teconded at a cost. of $920,000. At the date of acquisition, the fair value of the land was $1,115,000. No other adjustments in respect of fair value were required to Speen's assets and liabilities upon acquisition. Speen has not recorded the fair value in its own accounting records. Note 2 - Investment by Pean in Amenham On 1 October 2013, Pene acquired 1 million shares in Amersham, a sports goods munufacturer, when the reserves of Amersham were $3.9 million. The purchase consideration was $4.4 millioe. Since the acquisition, Penn has had the night to appoint two of the five directors of Ameraham and can exercise significant influence ever Amersham. No fair value adjustments were required in respect of Amersham's assets of liabilitics upoo acquisition. Note 3 -Gioodwill on acquisition Since acquiring its investment in Speen, Penn has adopted the requirements of IFRS 3 Barrierss Cambinations is respect of goodwill on acquisition. During March 2014, it coodoctod an impairment review of goodwill. As a result, the goodwill elenent of the investment in Amercharn is unaltered, but the value of goodvill on consolidation in respect of Spect is now 51.7 millive, if after impairment. Note 4 - Intra-group trading Speen supplies cricket bats to Pern. On 31 March 2014 Penn's inventories incladed tuts purchused at a total cost of 51 million from Specn. Speen's mark-up on buts is 25\% Required: (a) Esplain, with reasons, how the investments in Speen and Amersham will be treated in the consolidated financial statements of the Penn group. ( 5 marks) (b) Prepare the Censelidated Statement of Financial Pesirien for the Penn grewp at 31 March 2014. Full workings sbould be shown. (20 marks) The Statements of Financial Position of Penn, a specialist sports goods retailer, and two entities in which it holds substantial investments are shown below as at 31 March 2014. The following notes to the Statements of Financial Position must be considered: Note 1 - Investment by Penn in Speen On 1 April 2012, Penn purchased $2 millioa loan notes in Speen at par. On I April 2012, Pepn purchased 4 million of the ordinary shares in Speen for 57.5 million in eash, when Speen's reserves were 51.5 millbon. At this date the shares of Speen had a market price of 51.50 each. At the date of acquisition of the shares, Speen's property and plant incladed land teconded at a cost. of $920,000. At the date of acquisition, the fair value of the land was $1,115,000. No other adjustments in respect of fair value were required to Speen's assets and liabilities upon acquisition. Speen has not recorded the fair value in its own accounting records. Note 2 - Investment by Pean in Amenham On 1 October 2013, Pene acquired 1 million shares in Amersham, a sports goods munufacturer, when the reserves of Amersham were $3.9 million. The purchase consideration was $4.4 millioe. Since the acquisition, Penn has had the night to appoint two of the five directors of Ameraham and can exercise significant influence ever Amersham. No fair value adjustments were required in respect of Amersham's assets of liabilitics upoo acquisition. Note 3 -Gioodwill on acquisition Since acquiring its investment in Speen, Penn has adopted the requirements of IFRS 3 Barrierss Cambinations is respect of goodwill on acquisition. During March 2014, it coodoctod an impairment review of goodwill. As a result, the goodwill elenent of the investment in Amercharn is unaltered, but the value of goodvill on consolidation in respect of Spect is now 51.7 millive, if after impairment. Note 4 - Intra-group trading Speen supplies cricket bats to Pern. On 31 March 2014 Penn's inventories incladed tuts purchused at a total cost of 51 million from Specn. Speen's mark-up on buts is 25\% Required: (a) Esplain, with reasons, how the investments in Speen and Amersham will be treated in the consolidated financial statements of the Penn group. ( 5 marks) (b) Prepare the Censelidated Statement of Financial Pesirien for the Penn grewp at 31 March 2014. Full workings sbould be shown. (20 marks)
