Page 259 - SBR Integrated Workbook STUDENT S18-J19

Group accounting – Basic groups

Example 2 – continued

(i) During the year Strudel sold goods to Pancake for $40 million at a gross
profit margin of 40%. By the reporting date, Pancake has sold one
quarter of these goods to companies outside of the group.

(ii) At the date of acquisition all of Strudel’s assets were carried at fair value
with the exception of an item of plant, which had a fair value of $30
million above its carrying amount. At this date the plant had a remaining
useful life of 5 years.

(iii) Pancake valued the non-controlling interest of Strudel at the date of
acquisition at its fair value. The goodwill of Strudel has suffered
impairment during the year of $5 million. Any impairment of goodwill
should be accounted for as an administrative expense.

(iv) On 1 January 20X4, Pancake achieved significant influence over another
entity – Custard – by acquiring 30% of its ordinary share capital. Custard
made a profit for the year of $60 million. This profit was lower than
expected and the directors of Pancake determined that this investment
needs to be impaired by $0.5 million.

(v) Pancake has depreciated its property, plant and equipment but has not
yet accounted for the revaluation of its head office building. This building
had a carrying amount at 31 March 20X4 of $19 million and a fair value
of $14 million. There was a revaluation surplus relating to this asset of $1
million.

Prepare the consolidated statement of profit or loss and other
comprehensive income of the Pancake Group for the year ended 31
March 20X4.

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