UGT Plc is a company incorporated in Ghana in 2015 to produce and sell textiles, In order to consolidate its dominance in the Ghanaian market, the board of directors decided to acquire strategic shareholdings in two less dominant competitors, PUC Plc and WIU Plc.

On 1 January 2019 UGT Plc acquired the following ordinary shares in the Ghana Stock Exchange.

• 3 million of the 4 million equity shares inPUC Plc by an exchange of one share in UGT Plc for every two shares inPUC Plc plus GHS1.25 per acquiredPUC Plc's share in cash. The market price of each UGT Plc's share at the date of acquisition was GHS6.00 and the market price of eachPUC Plc's share at the date of acquisition was GHS3.25.

• 30% of the 4 million equity shares ofWIU Plc at a cost of GHS7.50 per share in cash. Only the cash consideration of the above investments has been recorded by UGT Plc.

The summarised draft financial statements of the three companies at 31 December 2019 are:

Statement of Financial Position as at 31 December 2019 UGT PUC WIU GHS'000 GHS'000 GHS'000 Non-current assets Property, plant and equipment (ii) (ix) 18,900 10,400 18,000 Investments in PUC and WIU 12,750 nil nil Investments in Other Securities (viii) 6,500 nil nil 38,150 10,400 18,000 Current assets Inventory (vi) 6,900 6,200 3,600 Trade receivables 3,200 1,500 2,400 Total assets 48,250 18,100 24,000 Equity and liabilities Stated capital 10,000 4,000 4,000 Revaluation Reserve 400 Retained Earnings 24,850 8,900 16,000 35.250 12.900 20.000 Non-current liabilities 10% Loan notes (i) 5,000 1,000 1,000 Net Pension Plan Obligation (iii) 150 Current liabilities 7.850 4,200 3,000 Total equity and liabilities 48,250 18,100 24,000Statement of profit or loss and other comprehensive income for the year ended 31 December 2019 UGT PUC WIU GHS'000 GHS'000 Revenue (vi) GHS'000 26,000 9,000 16,000 Cost of sales (vi) (13,000) (4,000) (10,000) Gross profit 13,000 5,000 6,000 Operating expenses (2,000) Other income: Profit on sale of plant (v) (1,400) (100) 500 Earnings before interest and tax 11,500 3,600 5,900 Finance costs (1,250) (200) (100) Profit before tax 10,250 3.400 5,800 Taxation (1,400) (500) (800) Profit for the year 8,850 2,900 5,000 Other comprehensive income 400 Total comprehensive income 9,250 2,900 5,000