Question

Below are the statements of financial position for Jupiter Plc, Neptune Limited, Pluto Limited and Venus Co for the year ended 30 April 2021.

i) Share CapitalNotes to the Above Accounts

• All ordinary shares other than those in Venus Co have a par value of 50 pence.
• Ordinary shares in Venus Co have a par value of K1.

ii)     Exchange Rates

• Rate at 1 May 2020: £1 = K10  £1 = €1.25
• Average for year to 30 April 2021: £1 = K10 £1 = €1.55
• Rate at 30 April 2021: £1 = K12 £1 = €1.60

iii) Neptune Limited

• Jupiter Plc purchased 7,500,000 ordinary shares in Neptune Limited on 31 October 2020. The purchase consideration was made up of 2 new ordinary shares in Jupiter valued at £1.20 each for every 3 shares held in Neptune Limited and £11,000,000 paid in 12 months’ time. Jupiter Plc has recorded the £11,000,000 payable in current borrowings and investments, but the accountant has not recorded the number or value of shares issued in Jupiter Plc’s investments.
• Jupiter Plc’s cost of capital is 10% and Neptune Limited’s cost of capital is 8%
• Profit for the year to 30 April 2021 for Neptune Limited was £1,000,000.
• At the date of acquisition, the fair value of Neptune Limited’s freehold properties was agreed to be £4,000,000 higher than book value; properties had an average remaining useful life of 10 years at the date of acquisition. This fair value adjustment has not been included in Neptune Limited’s books of account.
• It is group policy to capitalise development expenditure. Neptune Limited writes off development expenditure as it is incurred. At 31 October 2020 Jupiter Limited had written off development expenditure amounting to £600,000 and the total development expenditure written off up to 30 April 2021 amounted to £1,800,000.
• On 29 April 2021, Jupiter Limited remitted a payment to Pluto Limited for £100,000 to clear Jupiter Limited’s current account balance with Pluto Limited at the year end. Pluto Limited did not receive this cheque until 2 May 2021 and has not reflected this payment in trade receivables.
• At the date of acquisition, the non-controlling interest in Neptune Limited was agreed to have a fair value of £3,750,000.

iv) Pluto Limited

• Neptune Limited paid £1,648,000 to acquire 800,000 ordinary shares in Pluto Limited on 1 May 1996. Neptune Limited had no significant influence over Pluto Limited at this time as there was a controlling shareholder.
• Jupiter Plc paid £600,000 to acquire 300,000 ordinary shares in Pluto Limited on 1 May 2020.
• The retained earnings for Pluto Limited were as follows:

	£’000
1 May 1996	250
1 May 2020	895
31 October 2020	960

• The inventories of Jupiter Plc include goods which had cost Pluto Limited £2,300,000 and to which Pluto Limited had added a 25% mark up.
• At the point of acquisition, the non-controlling interest in Pluto Limited was agreed to have a fair value of £1,200,000

v)  Venus Co

• Venus Co is a company incorporated in Krulia.
• Jupiter Plc acquired 1,750,000 of the ordinary shares in Venus Co on 1 May 2020 at a cost of £400,000 when the retained earnings of Venus Co stood at K6,000,000.

• At the date of acquisition, the fair value of net assets was the same as the book value of net assets.

vi) Borrowings

• Jupiter Plc’s non-current liabilities includes borrowings which are denominated in Euros. The loan is for €4,000,000. This loan was last translated at 30 April 2020. No adjustment for movements in exchange rates have been made since this date. The loan remains in Jupiter Plc’s statement of financial position at the sterling value as at 30 April 2020

vii) Goodwill

• Positive goodwill is carried at cost and is reviewed annually for impairment.
• Negative goodwill is credited directly to retained earnings.
• An impairment review of goodwill had been carried out at year end and concluded that there had been no impairment of the goodwill associated with any of the investee companies.
• It is the group’s policy to value any non-controlling interests at their fair value.

YOU ARE REQUIRED TO:

Prepare the group statement of financial position for the Jupiter Plc Group as at 30 April 2021.
All your calculations should be made to the nearest £000.

 

Answer 1

Answer

                                                                           Jupiter     Neptune     Pluto     Venus     Group

Non-Current Assets

Property, Plant and Equipment                    22,500       10,500      5,500     10,500     49,000

Development Expenditure                            7,000         -                   1,000       -                 8,000

Investments                                                      12,000      1,700        750               -             14,450

                                                                            41,500      12,200      7,250     10,500     71,450

Current Assets

Inventories                                                          1,450       2,465        1,500       2,500      8,915

Trade and Other Receivables                         2,345       1,750        1,750       2,500        8,845

Cash and Cash Equivalents                                1,450       2,000        750       3,500        8,700

                                                                              5,245       6,215        4,000       8,500     24,460

Total Assets                                                       46,745      18,415       11,250      19,000     96,910

Equity

Ordinary Share Capital                                    10,000        5,000        1,000        5,000     21,000

Share Premium                                                   3,540         1,000         -                    -         4,540

Retained Earnings                                              7,826         4,000        3,360       10,000     25,186

                                                                            21,366       10,000        4,360       15,000     50,716

Non-Current Liabilities

Borrowings                                                       2,000        1,000                  -           1,000      4,000

Deferred Taxation                                             1,250        457                   100         500       2,307

                                                                          3,250        1,457                 100         1,500      6,307

Current Liabilities

Borrowings                                                           18,435       3,421        2,236      750       24,842

Trade and Other Payables                                   565       1,921        2,454       500       5,440

Current Taxation                                              3,129       1,616        2,100       1,250       7,995

                                                                            22,129       6,958      6,790      2,500     38,377

Total liabilities                                                   25,379       8,415       6,890     4,000     44,684

Total Equity and Liabilities                         46,745      18,415       11,250      19,000     96,910