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The statements of financial position of H Ltd, S Ltd, A Ltd, J Ltd and B Ltd as at 31 October 2009 are as follows:

The statements of financial position of H Ltd, S Ltd, A Ltd, J Ltd and B Ltd as at 31 October 2009 are as follows:
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Additional information:
1. H Ltd purchased 75% of the ordinary shares of S Ltd on 1 November 2007, when the balance of the earnings of S Ltd was sh. 80 million.
2. S Ltd purchased 30% of the ordinary shares of A Ltd on 1 November 2007 were sh. 140 million.
3. H Ltd and another company, Ukwala Ltd, each bought 50% of the share capital of J Ltd on 1 May 2009. H Ltd and Ukwala Ltd have a joint control of J Ltd. Both companies are to account for their Joint venture using proportionate consolidation; combining items on a line by line basis. J Ltd’s retained earnings on 1 May 2009 were sh. 110 million.
4. On 1 May 2009, H Ltd acquired 45 million ordinary shares of shs. 10 each in B Ltd when the retained earnings of B Ltd were sh.400 million.
5. On 1 May 2009, the fair values of the identifiable net assets of B Ltd, approximated book value except for leasehold whose book value was sh. 40 million below its fair value. The property is depreciated to nil residual value over the term of the lease. On 1 May 2009, there were 10 years remaining of the lease.
6. On 1 November 2007, the book value of the identifiable net assets of A Ltd was sh. 20 million below their fair value. The assets revalued are not to be depreciated.
7. Included in the closing inventory of H Ltd is shs. 12 million worth of goods purchased from J Ltd which cost sh. 8 million.
8. In the year ended 31 October 2009, H Ltd sold goods to B Ltd at a price of sh. 15 million. H Ltd had marked up these goods by 50% on cost. B Ltd held 50% of these goods in its closing inventory on 31 October 2009.
9. As at 31 October 2009, H Ltd owed J Ltd sh. 12 million. As at the same date, S Ltd owed H Ltd sh. 13 million and A Ltd Sh 20 million. All the current accounts between the companies were in agreement.
10. As at 31 October 2009, it was estimated that since the date of acquisition, goodwill had suffered impairment loss by the following percentages:
S Ltd = 40%
B Ltd = 25%
The goodwill of J Ltd and the premium on acquisition of A Ltd had not been impaired since the date of acquisition.
11. It is groups’ policy to value the non-controlling interest at fair value or the market value. The fair value of the non-controlling interest in S Ltd at the date of acquisition was Sh. 120 million, while the fair value of the non-controlling interest in B Ltd, at the date of acquisition was shs. 124 million.

Required:
Consolidated statement of financial position as at 31 October 2009, J Ltd should be accounted for using the proportionate consolidation method as per IAS 31(Interest in Joint ventures)

Answers

Kavungya
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Kavungya answered the question on December 10, 2021 at 11:43

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