Answers

Professional Level – Essentials Module, Paper P2 (INT) Corporate Reporting (International) 1 (a) Bravado plc Consolidated Statement of Financial Position at 31 May 2009 $m Assets: Non-current assets: Property, plant and equipment W9 Goodwill W2 Investment in associate W3 Available for sale financial assets W10

June 2009 Answers

708 25 22·5 44·6 ––––––––– 800·1 ––––––––– 245 168 1 209 ––––––––– 623 ––––––––– 1,423·1 –––––––––

Current assets: Inventories W10 Trade receivables W11 Loans to directors Cash and cash equivalents

Total assets Equity and liabilities Equity attributable to owners of parent Share capital Retained earnings W5 Other components of equity W5

Non-controlling interest W7

520 256·32 9·5 ––––––––– 785·82 ––––––––– 148·88 ––––––––– 934·7 ––––––––– 140 39·4 ––––––––– 179·4 ––––––––– 217 92 ––––––––– 309 ––––––––– 488·4 ––––––––– 1,423·1 –––––––––

Non-current liabilities Long-term borrowings Deferred tax W10 Total non-current liabilities Current liabilities Trade and other payables W6 Current tax payable Total current liabilities Total liabilities Total equity and liabilities Working 1 Message Fair value of consideration for 80% interest Fair value of non-controlling interest Amount of identifiable net assets acquired Gain on bargain purchase Essentially the entries would be: DR CR CR CR Net identifiable assets Cash Gain on bargain purchase Equity – non-controlling interest $m 400

$m 300 86 ––––– 386 (400) ––––– (14) ––––– $m 300 14 86 –––– 400 ––––

–––– 400 ––––

13

Working 2 Mixted 1 June 2008 (128 – 10) Contingent consideration Total consideration transferred Fair value of equity interest held before business combination Fair value of consideration Fair value of non-controlling interest Identifiable net assets Increase in value Deferred tax (176 – 166) x 30% Goodwill Working 3 Clarity The gain of 1 recorded