FR – May 2019 – L2 – Q1b – Consolidated Financial Statements (IFRS 10)

Prepare the consolidated statement of financial position of Ajakaye Group Ltd, considering fair value adjustments and intra-group transactions.

Question

You are provided with the following statement of financial position for Ajakaye Limited and Ajalorun Limited.

Statement of Financial Position as at 31 March 2019	Ajakaye Ltd (₦’000)	Ajalorun Ltd (₦’000)
Non-current assets
Property, Plant & Equipment	367,500	84,000
Investment	140,000	–
Total non-current assets	507,500	84,000
Current assets
Inventory at cost	154,000	49,000
Trade receivables	101,500	73,500
Bank balance	70,000	–
Total current assets	325,500	122,500
Total assets	833,000	206,500
Equity and liabilities
Ordinary shares at ₦1 each	490,000	119,000
Retained earnings	150,500	35,000
Total equity	640,500	154,000
Current liabilities
Trade payables	192,500	38,500
Bank overdraft	–	14,000
Total current liabilities	192,500	52,500
Total equity and liabilities	833,000	206,500

Additional Information:

Ajakaye Ltd acquired 70% of the issued ordinary share capital of Ajalorun Ltd four years ago, when the retained earnings of Ajalorun were ₦14 million. There has been no impairment of goodwill.
For the purpose of the acquisition, property, plant & equipment with a carrying amount of ₦35 million was revalued to its fair value of ₦42 million. The revaluation was not recorded in the accounts of Ajalorun Ltd. Depreciation is charged at 20% using the straight-line method.
It is the group’s policy to value non-controlling interest at fair value.
The market price of the shares of the non-controlling shareholders just before the acquisition was ₦1.50.
Ajakaye Ltd sells goods to Ajalorun Ltd at a markup of 25%. At 31 March 2019, the inventories of Ajalorun Ltd included ₦31.5 million of goods purchased from Ajakaye Ltd.
Ajalorun Ltd owes Ajakaye Ltd ₦24.5 million for goods purchased, and Ajakaye Ltd owes Ajalorun Ltd ₦10.5 million.

Required:
Prepare the consolidated statement of financial position of Ajakaye Group Ltd as at 31 March 2019.

Answer