Sab Theek Hai, a public listed company, acquired 75% of Ghabrana Nahi's ordinary shares on 1 April 20X4. Sab Theek Hai paid an immediate Rs.3.50 per share in cash and agreed to pay a further amount of Rs.108 million on 1 April 20X5. Sab Theek Hai's cost of capital is 8% per annum. Sab Theek Hai has only recorded the cash consideration of Rs.3.50 per share. The summarised statements of financial position of the two companies at 31 March 20X5 are shown below: Sab Theek Hai Ghabrana Nahi Rs.m Rs.m Rs.m Rs.m Property, plant and equipment (note (i)) 420 320 Development costs (note (iv)) Nil 40 Investments (note (ii)) 300 20 720 380 Current assets 133 91 Total assets 853 471 Equity and liabilities Ordinary shares of Rs.1 each 270 80 Reserves: Share premium 80 40 Revaluation surplus 45 Nil Retained earnings – 1 April 20X4 160 134 – year to 31 March 20X5 190 76 350 210 745 330 Non-current liabilities 10% intragroup loan (note (ii)) Nil 60 Current liabilities 108 81 Total equity and liabilities 853 471 The following information is relevant: (i) Sab Theek Hai has a policy of revaluing land and buildings to fair value. At the date of acquisition Ghabrana Nahi's land and buildings had a fair value Rs.20 million higher than their carrying amount and at 31 March 20X5 this had increased by a further Rs.4 million (ignore any additional depreciation). (ii) Included in Sab Theek Hai's investments is a loan of Rs.60 million made to Ghabrana Nahi at the date of acquisition. Interest is payable annually in arrears. Ghabrana Nahi paid the interest due for the year on 31 March 20X5, but Sab Theek Hai did not receive this until after the year end. Sab Theek Hai has not accounted for the accrued interest from Ghabrana Nahi. (iii) Ghabrana Nahi had established a line of products under the brand name of Titanware. Acting on behalf of Sab Theek Hai, a firm of specialists, had valued the brand name at a value of Rs.40 million with an estimated life of ten years as at 1 April 20X4. The brand is not included in Ghabrana Nahi's statement of financial position. (iv) Ghabrana Nahi's development project was completed on 30 September 20X4 at a cost of Rs.50 million. Rs.10 million of this had been amortised by 31 March 20X5. Development costs capitalised by Ghabrana Nahi at the date of acquisition were Rs.18 million. Sab Theek Hai's directors are of the opinion that Ghabrana Nahi's development costs do not meet the criteria in IAS 38 Intangible assets for recognition as an asset. (v) Ghabrana Nahi sold goods to Sab Theek Hai during the year at a profit of Rs.6 million, one-third of these goods were still in the inventory of Sab Theek Hai at 31 March 20X5. (vi) An impairment test at 31 March 20X5 on the consolidated goodwill concluded that it should be written down by Rs.20 million. No other assets were impaired. (vii) It is the group policy to measure non-controlling interest fair value. The fair value of the non-controlling interest in Ghabrana Nahi at the acquisition date was Rs.83 million. Required Calculate the following figures as they would appear in the consolidated statement of financial position of Sab Theek Hai at 31 March 20X5: (i) Goodwill
Sab Theek Hai, a public listed company, acquired 75% of Ghabrana Nahi's ordinary shares on 1 April 20X4. Sab Theek Hai paid an immediate Rs.3.50 per share in cash and agreed to pay a further amount of Rs.108 million on 1 April 20X5. Sab Theek Hai's cost of capital is 8% per annum. Sab Theek Hai has only recorded the cash consideration of Rs.3.50 per share. The summarised statements of financial position of the two companies at 31 March 20X5 are shown below:
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Sab Theek Hai |
Ghabrana Nahi |
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Rs.m |
Rs.m |
Rs.m |
Rs.m |
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Property, plant and equipment (note (i)) |
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420 |
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320 |
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Development costs (note (iv)) |
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Nil |
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40 |
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Investments (note (ii)) |
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300 |
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20 |
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720 |
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380 |
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Current assets |
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133 |
|
91 |
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Total assets |
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853 |
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471 |
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Equity and liabilities |
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Ordinary shares of Rs.1 each |
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270 |
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80 |
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Reserves: |
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Share premium |
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80 |
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40 |
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Revaluation surplus |
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45 |
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Nil |
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160 |
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134 |
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– year to 31 March 20X5 |
190 |
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76 |
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350 |
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210 |
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745 |
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330 |
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Non-current liabilities |
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10% intragroup loan (note (ii)) |
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Nil |
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60 |
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Current liabilities |
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108 |
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81 |
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Total equity and liabilities |
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853 |
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471 |
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The following information is relevant:
(i) Sab Theek Hai has a policy of revaluing land and buildings to fair value. At the date of acquisition Ghabrana Nahi's land and buildings had a fair value Rs.20 million higher than their carrying amount and at 31 March 20X5 this had increased by a further Rs.4 million (ignore any additional
(ii) Included in Sab Theek Hai's investments is a loan of Rs.60 million made to Ghabrana Nahi at the date of acquisition. Interest is payable annually in arrears. Ghabrana Nahi paid the interest due for the year on 31 March 20X5, but Sab Theek Hai did not receive this until after the year end. Sab Theek Hai has not accounted for the accrued interest from Ghabrana Nahi.
(iii) Ghabrana Nahi had established a line of products under the brand name of Titanware. Acting on behalf of Sab Theek Hai, a firm of specialists, had valued the brand name at a value of Rs.40 million with an estimated life of ten years as at 1 April 20X4. The brand is not included in Ghabrana Nahi's
(iv) Ghabrana Nahi's development project was completed on 30 September 20X4 at a cost of Rs.50 million. Rs.10 million of this had been amortised by 31 March 20X5. Development costs capitalised by Ghabrana Nahi at the date of acquisition were Rs.18 million. Sab Theek Hai's directors are of the opinion that Ghabrana Nahi's development costs do not meet the criteria in IAS 38 Intangible assets for recognition as an asset.
(v) Ghabrana Nahi sold goods to Sab Theek Hai during the year at a profit of Rs.6 million, one-third of these goods were still in the inventory of Sab Theek Hai at 31 March 20X5.
(vi) An impairment test at 31 March 20X5 on the consolidated
(vii) It is the group policy to measure non-controlling interest fair value. The fair value of the non-controlling interest in Ghabrana Nahi at the acquisition date was Rs.83 million.
Required
Calculate the following figures as they would appear in the consolidated statement of financial position of Sab Theek Hai at 31 March 20X5:
(i) Goodwill
(ii) Non-controlling interest
(iii) The following consolidated reserves:share premium, revaluation surplus and retained earnings.
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