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MINDY

On 1 January 20X9, Mindy acquired 80% of the equity share capital of Zelner in a share exchange of two shares in Mindy for three shares in Zelner. The issue of shares has not yet been recorded by Mindy. At the date of acquisition shares in Mindy had a market value of $6 each. Below are the summarised draft financial statements of both entities.

A. Statement of profit or loss for the year ended 31 December 20X9

 

Mindy

Zelner

$000

$000

Revenue

102,000

49,200

Cost of sales

(59,900)

(31,000)

 

–––––––

––––––

Gross profit

42,100

18,200

Distribution costs

(8,000)

(5,000)

Administrative expenses

(11,900)

(9,000)

Finance costs

(4,200)

(980)

 

–––––––

–––––––

Profit before tax

18,000

3,220

Income tax expense

(6,040)

(1,000)

 

–––––––

–––––––

Profit for the year

11,960

2,220

 

–––––––

–––––––



Statements of financial position as at 31 December 20X9

 

 

Assets

Mindy

$000

Zelner

$000

Non‐current assets

Property, plant and equipment

 

70,500

 

24,600

Current assets Total assets

Equity and liabilities

25,000

–––––––95,500

–––––––

9,500

–––––––34,100

–––––––

Equity shares of $1each

60,000

9,000

Retained earnings

 

 

Non‐current liabilities:

11,200

–––––––71,200

4,130

–––––––13,130

10% loan notes

15,000

20,000

Current liabilities

 

Total equity and liabilities

9,300

–––––––95,500

–––––––

970

–––––––34,100

–––––––


The following information is relevant:

  1. At the date of acquisition, the fair values of Zelner’s net assets were equal to their carrying amounts.
  2. Sales from Zelner to Mindy in the post‐acquisition period were $7million. Zelner made a mark up on cost of 25% on these sales. One quarter of these goods remained in the inventory of Mindy at the year‐end.
  3. Other than where indicated, statement of profit or loss items are deemed to accrue evenly on a time basis.
  4. At 31 December 20X9, Zelner had a receivable due from Mindy of $1 million. This agreed with the amount payable to Zelner in Mindy's financial statements.
  5. Mindy has a policy of accounting for any non‐controlling interest at fair value. The fair value of the non‐controlling interest at the acquisition date was $9.9 million. Consolidated goodwill was not impaired at 31 December 20X9.

Required:

A. Prepare the consolidated statement of profit or loss for Mindy for the year ended 31 December 20X9
(Provide the final answer only)
B. Prepare the consolidated statement of financial position for Mindy as at 31 December 20X9
(Provide the final answer only)

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