- 10 Marks
FR – L2 – Q76 – Business Combinations
Prepare Peak Ltd's consolidated statement of financial position as at 31 Dec 20X4 after acquiring 75% of Ridge Ltd.
Question
Peak Ltd
Statements of financial position at 31 December 20X4
| Peak Ltd | Ridge Ltd | |
|---|---|---|
| Assets | GH₵000 | GH₵000 |
| Non-current assets | ||
| Property, plant and equipment | 35,000 | 20,000 |
| Investment in Ridge Ltd | 12,000 | |
| Current assets | 16,000 | 14,000 |
| Total assets | 63,000 | 34,000 |
| Equity and liabilities | ||
| Capital and reserves | ||
| Share capital | 10,000 | 4,000 |
| Retained earnings | 13,000 | 12,000 |
| 23,000 | 16,000 | |
| Non-current liabilities | ||
| 8% Debenture loans | 20,000 | 9,000 |
| Current liabilities | 20,000 | 9,000 |
| Total equity and liabilities | 63,000 | 34,000 |
On 1 January 20X2, Peak Ltd acquired 75% of Ridge Ltd for GH₵12,000,000. At that date, the balance on Ridge Ltd’s retained earnings was GH₵8,000,000.
Required:
Prepare the consolidated statement of financial position of Peak Ltd as at 31 December 20X4.
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