- 12 Marks
FR – L2 – Q82 – Business Combinations
Prepare Furry Ltd's consolidated statement of financial position as at 31 Dec 20X4, adjusting for intra-group inventory and cash in transit.
Question
The summarised statements of financial position of Furry Ltd and Webber Ltd as at 31 December 20X4 were as follows.
| Assets | Furry Ltd GH₵000 | Webber Ltd GH₵000 |
|---|---|---|
| Non-current assets | ||
| Property, plant and equipment | 120,000 | 60,000 |
| Investments | 55,000 | — |
| Current assets | ||
| Cash | 11,000 | 4,000 |
| Investments | — | 3,000 |
| Trade receivables | 72,600 | 19,100 |
| Current account – Furry Ltd | — | 3,200 |
| Inventory | 17,000 | 11,000 |
| Total | 275,600 | 100,300 |
| Equity and liabilities | Furry Ltd GH₵000 | Webber Ltd GH₵000 |
|---|---|---|
| Capital and reserves | ||
| Share capital | 120,000 | 60,000 |
| Capital reserve | 23,000 | 16,000 |
| Retained earnings | 91,900 | 7,300 |
| Current liabilities | 38,000 | 17,000 |
| Total | 275,600 | 100,300 |
The following information is relevant:
(1) On 31 December 20X1, Furry Ltd acquired 48,000 shares in Webber Ltd for GH₵55,000,000 cash. Webber Ltd has 60,000 shares in total.
(2) The inventory of Furry Ltd includes GH₵4,000,000 goods from Webber Ltd invoiced to Furry Ltd at cost plus 25%.
(3) The difference on the current account balances is due to cash in transit.
(4) The balance on Webber Ltd’s retained earnings was GH₵2,300,000 at the date of acquisition. There has been no movement in the balance on Webber Ltd’s capital reserve since the date of acquisition.
Required:
Prepare the consolidated statement of financial position of Furry Ltd and its subsidiary Webber Ltd as at 31 December 20X4.
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