Question

question 2
you receive the following trial balances:
trial balances at 31 march 20.5
\t\t\t\tp ltd dr/(cr) r\ts ltd dr/(cr) r
share capital - ordinary shares (100 000/50 000 shares)\t(100 000)\t(50 000)
retained earnings\t(80 000)\t(20 000)
trade and other receivables\t40 000\t15 000
inventories\t20 000\t35 000
trade and other payables\t(15 000)\t(18 000)
long - term borrowings\t(100 000)\t—
loan – s ltd\t80 000\t—
investment in s ltd – 50 000 shares at fair value (cost price: r80 000)\t80 000\t—
loan – p ltd\t—\t(80 000)
bank\t25 000\t58 000
property, plant and equipment\t50 000\t60 000
required
draft the consolidated statement of financial position of the p ltd group as at 31 march 20.5 in compliance with the requirements of ifrs if p ltd acquired its interest in s ltd at 31 march 20.5.

Explanation:

Step 1: Identify Control and Eliminate Intra - Group Balances

• P Ltd owns all 50,000 shares of S Ltd (since P's investment is 50,000 shares and S has 50,000 shares). So, P has control over S.
• Intra - group balances: Loan - P Ltd (S Ltd) and Loan - S Ltd (P Ltd) are equal (R80,000 each), so they are eliminated. Also, the investment in S Ltd (P Ltd) and the share capital and retained earnings of S Ltd are eliminated (in the consolidation process for the parent - subsidiary relationship).

Step 2: Calculate Consolidated Share Capital

• Share capital of P Ltd: R100,000 (since S's share capital is eliminated in consolidation as it's a subsidiary).

Step 3: Calculate Consolidated Retained Earnings

• Retained earnings of P Ltd: R80,000 (S's retained earnings is eliminated as part of the investment elimination).

Step 4: Calculate Consolidated Trade and Other Receivables

• Trade and other receivables of P Ltd: R40,000; S Ltd: R15,000.
• Consolidated amount: \(40000 + 15000=55000\)

Step 5: Calculate Consolidated Inventories

• Inventories of P Ltd: R20,000; S Ltd: R35,000.
• Consolidated amount: \(20000+35000 = 55000\)

Step 6: Calculate Consolidated Trade and Other Payables

• Trade and other payables of P Ltd: R15,000; S Ltd: R18,000.
• Consolidated amount: \(15000 + 18000=33000\)

Step 7: Calculate Consolidated Long - term Borrowings

• Long - term borrowings of P Ltd: R100,000 (S has no long - term borrowings).

Step 8: Calculate Consolidated Bank

• Bank of P Ltd: R25,000; S Ltd: R58,000.
• Consolidated amount: \(25000+58000 = 83000\)

Step 9: Calculate Consolidated Property, Plant and Equipment

• Property, plant and equipment of P Ltd: R50,000; S Ltd: R60,000.
• Consolidated amount: \(50000 + 60000=110000\)

Step 10: Prepare the Consolidated Statement of Financial Position Structure

Item	Amount (R)
Share capital - ordinary shares	100000
Retained earnings	80000
Assets
Trade and other receivables	55000
Inventories	55000
Bank	83000
Property, plant and equipment	110000
Liabilities
Trade and other payables	33000
Long - term borrowings	100000

Answer:

The consolidated statement of financial position of P Ltd Group as at 31 March 20.5 is as follows:

Equity and Liabilities	Amount (R)	Assets	Amount (R)
Share capital - ordinary shares	100000	Property, plant and equipment	110000
Retained earnings	80000
Total Equity	180000	Current Assets
Liabilities		Trade and other receivables	55000
Current Liabilities		Inventories	55000
Trade and other payables	33000	Bank	83000
Non - current Liabilities		Total Current Assets	193000
Long - term borrowings	100000
Total Liabilities	133000	Total Assets	\(110000 + 193000=303000\)
Total Equity and Liabilities	\(180000+133000 = 313000\) (Note: There was a miscalculation earlier, correct total assets and equity + liabilities should be equal. Let's recalculate properly: <br> Equity: 100000 (share capital) + 80000 (retained earnings) = 180000 <br> Liabilities: 33000 (trade payables) + 100000 (long - term borrowings) = 133000 <br> Total Equity + Liabilities: 180000+133000 = 313000 <br> Assets: <br> Trade receivables: 40000 + 15000 = 55000 <br> Inventories: 20000+35000 = 55000 <br> Bank: 25000+58000 = 83000 <br> Property, plant and equipment: 50000+60000 = 110000 <br> Total Assets: 55000+55000+83000+110000 = 303000. Wait, the error is in the intra - group elimination and investment treatment. Let's do the correct consolidation for investment: <br> Investment in S Ltd (P Ltd) is R80,000, Share capital of S Ltd is R50,000, Retained earnings of S Ltd is R20,000. The difference (80000-(50000 + 20000)) = R10,000 is goodwill (assuming no fair value adjustments). <br> So, correct assets: <br> Trade receivables: 40000 + 15000 = 55000 <br> Inventories: 20000+35000 = 55000 <br> Bank: 25000+58000 = 83000 <br> Property, plant and equipment: 50000+60000 = 110000 <br> Goodwill: 10000 <br> Total Assets: 55000+55000+83000+110000+10000 = 313000 <br> Now, Equity + Liabilities: 180000 (equity) + 33000 (trade payables) + 100000 (long - term borrowings) = 313000 <br> So the correct consolidated statement: <br>	Equity and Liabilities	Amount (R)	Assets	Amount (R)
Equity		Non - current Assets
Share capital - ordinary shares	100000	Property, plant and equipment	110000
Retained earnings	80000	Goodwill	10000
Total Equity	180000
Liabilities		Current Assets
Current Liabilities		Trade and other receivables	55000
Trade and other payables	33000	Inventories	55000
Non - current Liabilities		Bank	83000
Long - term borrowings	100000	Total Current Assets	193000
Total Liabilities	133000
Total Equity and Liabilities	313000	Total Assets	313000	)