Prepare the consolidated statement of financial position of Ghana Ltd group as at 31 December 2013

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Here is the consolidated statement of financial position for Ghana Ltd group as at 31 December 2013. All figures are in GH¢'m.

Calculate Goodwill at Acquisition
- Consideration transferred (Ghana's investment): GH¢24,000
- Non-controlling interest (NCI) at acquisition (fair value): GH¢5,000 (given in e)
- Total consideration: GH¢24,000 + GH¢5,000 = GH¢29,000
- Fair value of identifiable net assets of Togo at acquisition (1 Jan 2011):
  
  Stated Capital: GH¢10,000
  
  Retained Earnings: GH¢11,600 (given in a)
  
  Fair value adjustment for plant: GH¢1,000 (given in b)
  
  Total Fair Value of Net Assets: GH¢10,000 + GH¢11,600 + GH¢1,000 = GH¢22,600
- Goodwill at acquisition: GH¢29,000 - GH¢22,600 = GH¢6,400
Adjust for Fair Value of Plant and Depreciation
- Fair value adjustment on plant: GH¢1,000
- Useful life: 10 years
- Annual depreciation on fair value adjustment: GH¢1,000 / 10 = GH¢100
- Period from acquisition (1 Jan 2011) to reporting date (31 Dec 2013): 3 years
- Total accumulated depreciation on fair value adjustment: GH¢100 $\times$ 3 = GH¢300
- Net carrying amount of fair value adjustment at 31 Dec 2013: GH¢1,000 - GH¢300 = GH¢700
Adjust for Unrealized Profit in Inventory
- Ghana sells goods to Togo at a markup of 25%. This means the profit margin on selling price is $\frac{25}{125} = 20\%$ .
- Goods sold by Ghana to Togo in 2013: GH¢3,000 (given in d)
- One-third of these goods are still in Togo's inventory: $\frac{1}{3} \times \text{GH¢}3,000 = \text{GH¢}1,000$
- Unrealized profit in closing inventory: $20\% \times \text{GH¢}1,000 = \text{GH¢}200$
Adjust for Inter-company Balances and Cash in Transit
- Togo's payable to Ghana: GH¢1,100 (given in c)
- Ghana's receivable from Togo: GH¢1,500 (given in c)
- Difference (cash in transit): GH¢1,500 - GH¢1,100 = GH¢400
- Consolidation adjustments:
  
  Eliminate GH¢1,100 from Trade Receivables and Trade Payables.
  
  Add GH¢400 to Cash and Cash Equivalents.
  
  Reduce Trade Receivables by GH¢400 (as it's no longer a receivable but cash in transit).
Calculate Goodwill at Reporting Date
- Goodwill at acquisition: GH¢6,400 (from Step 1)
- Impairment loss: GH¢2,000 (given in f)
- Goodwill at reporting date: GH¢6,400 - GH¢2,000 = GH¢4,400
Calculate Non-Controlling Interest (NCI) at Reporting Date
- NCI at acquisition: GH¢5,000
- Togo's post-acquisition retained earnings: GH¢15,800 (RE at 31/12/13) - GH¢11,600 (RE at 01/01/11) = GH¢4,200
- NCI share of post-acquisition retained earnings: $20\% \times \text{GH¢}4,200 = \text{GH¢}840$
- NCI share of fair value depreciation: $20\% \times \text{GH¢}300 = \text{GH¢}60$ (reduction)
- NCI share of goodwill impairment: $20\% \times \text{GH¢}2,000 = \text{GH¢}400$ (reduction)
- NCI at reporting date: GH¢5,000 + GH¢840 - GH¢60 - GH¢400 = GH¢5,380
Calculate Consolidated Retained Earnings
- Ghana's retained earnings: GH¢25,200
- Ghana's share of Togo's post-acquisition retained earnings: $80\% \times \text{GH¢}4,200 = \text{GH¢}3,360$
- Ghana's share of fair value depreciation: $80\% \times \text{GH¢}300 = \text{GH¢}240$ (reduction)
- Unrealized profit in inventory: GH¢200 (reduction, fully attributable to parent)
- Ghana's share of goodwill impairment: $80\% \times \text{GH¢}2,000 = \text{GH¢}1,600$ (reduction)
- Consolidated Retained Earnings: GH¢25,200 + GH¢3,360 - GH¢240 - GH¢200 - GH¢1,600 = GH¢26,520
Prepare Consolidated Statement of Financial Position
$\textbf{Ghana Ltd Group} \\ \textbf{Consolidated Statement of Financial Position} \\ \textbf{As at 31 December 2013}$ $\begin{array}{lrr} \textbf{Assets} & \textbf{GH¢'m} & \textbf{GH¢'m} \\ \text{Property, Plant and Equipment} & & \\ \quad \text{Ghana} & 33,400 & \\ \quad \text{Togo} & 20,400 & \\ \quad \text{Fair value adjustment (net)} & 700 & 54,500 \\ \text{Goodwill} & & 4,400 \\ \text{Current Assets} & & \\ \quad \text{Inventory} & & \\ \quad \quad \text{Ghana} & 11,500 & \\ \quad \quad \text{Togo} & 6,800 & \\ \quad \quad \text{Less: Unrealized profit} & (200) & 18,100 \\ \quad \text{Trade Receivables} & & \\ \quad \quad \text{Ghana} & 8,500 & \\ \quad \quad \text{Togo} & 5,900 & \\ \quad \quad \text{Less: Inter-company elimination} & (1,100) & \\ \quad \quad \text{Less: Cash in transit adjustment} & (400) & 12,900 \\ \quad \text{Cash and Cash Equivalent} & & \\ \quad \quad \text{Ghana} & 5,000 & \\ \quad \quad \text{Togo} & 2,900 & \\ \quad \quad \text{Add: Cash in transit} & 400 & 8,300 \\ \textbf{Total Assets} & & \boxed{\textbf{98,200}} \\ & & \\ \textbf{Equity and Liabilities} & & \\ \text{Equity attributable to owners of parent} & & \\ \quad \text{Stated Capital} & 40,000 & \\ \quad \text{Retained Earnings} & 26,520 & 66,520 \\ \text{Non-Controlling Interest} & & 5,380 \\ \textbf{Total Equity} & & \textbf{71,900} \\ & & \\ \text{Current Liabilities} & & \\ \quad \text{Trade Payables} & & \\ \quad \quad \text{Ghana} & 17,200 & \\ \quad \quad \text{Togo} & 10,200 & \\ \quad \quad \text{Less: Inter-company elimination} & (1,100) & 26,300 \\ \textbf{Total Equity and Liabilities} & & \boxed{\textbf{98,200}} \\ \end{array}$

Prepare the consolidated statement of financial position of Ghana Ltd group as at 31 December 2013

Answer

Step-by-step solution

Calculate Goodwill at Acquisition

Adjust for Fair Value of Plant and Depreciation

Adjust for Unrealized Profit in Inventory

Adjust for Inter-company Balances and Cash in Transit

Calculate Goodwill at Reporting Date

Calculate Non-Controlling Interest (NCI) at Reporting Date

Calculate Consolidated Retained Earnings

Prepare Consolidated Statement of Financial Position

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