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Boo acquired 80% of Goose's equity shares for $300,000 on 1 January 20X8. At the date of acquisition Goose had retained earnings of $190,000. On 31 December 20X8 Boo dispatched goods which cost $80,000 to Goose, at an invoiced cost of $100,000. Goose received the goods on 2 January 20X9 and recorded the transaction then. The two companies' draft financial statements as at 31 December 20X8 are shown below.  

STATEMENTS OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME 
FOR THE YEAR ENDED 31 DECEMBER 20X8

   
  Boo Goose
   $'000  $'000
Revenue  5,000  1,000
Cost of sales      2,900      600
Gross profit  2,100  400
Other expenses      1,700       320
Profit before tax  400  80
Income tax expense          130          30
Profit for the year   270   50
Other comprehensive income:    
     Gain on revaluation of property    20    –
Total comprehensive income for the year              290              50

     

 

 

 

 

 

 

 

 

         

 

                         

STATEMENTS OF FINANCIAL POSITION         
AT 31 DECEMBER 20X8
   
            $'000         $'000
Assets    
Non-current  assets          
Property, plant and equipment 1,940 200
Investment in Goose    300     –
  2,240 200
Current assets    
Inventories   500   120
Trade receivables   650    40
Bank and cash      170      35
  1,320 195
Total assets 3,560 395
     
Equity and liabilities    
Equity    
Share capital   2,000   100
Retained earnings       500   240
Revaluation surplus       20      –
    2,520   340
Current liabilities    
Trade payables     910   30
Tax      130   25
Total equity and liabilities 3,560 395

Requirements:

Prepare OCI

Marks: 10

Discuss

Marks: 5