ired 90% of the Equity Shares of Star. Star retained profits at the date of acquisition were $ 2, 640,000.     Balance Sheet as at 31 March 20x9.       Phar   Star     $000 $000 $000 $000 Non-Current Assets         PPE 2,544   2,388   Intangible Software -   2,520   Investments-Equity in Star 5, 036   -   Others 214   252

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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​On April 1, 20x8 Phar acquired 90% of the Equity Shares of Star. Star retained profits at the date of acquisition were $ 2, 640,000.

    Balance Sheet as at 31 March 20x9.

 

 

 

Phar

 

Star

 

 

$000

$000

$000

$000

Non-Current Assets

 

 

 

 

PPE

2,544

 

2,388

 

Intangible Software

-

 

2,520

 

Investments-Equity in Star

5, 036

 

-

 

Others

214

 

252

 

 

 

7,794

 

5,160

Current Assets

 

 

 

 

Inventories

863

 

672

 

Receivables

629

 

394

 

Stars Current Account

 

90

 

 

-

 

Cash

24

 

-

 

 

 

1,606

 

1,066

 

 

9,400

 

6,226

Capital and Reserves

 

 

 

 

Equity shares of $1 each

 

2,400

 

1,800

Share Premium

2,400

 

 

 

Retained Earnings

3,360

5,760

600

3,306

 

 

8,160

2,706

5,106

Non-Current Liabilities

 

 

 

 

Government Grants

 

276

 

240

Current Liabilities

 

 

 

 

Trade Payables

690

 

566

 

Phar current account

-

 

72

 

Income Tax Payable

274

 

210

 

Operating Overdraft

-

 

32

 

 

 

964

 

880

 

 

9,400

 

6,226

 

The following information is relevant:

a) Software of Star represents the depreciated cost of development of an integrated business accounting package. It was completed at a capitalized cost of $ 2, 880, 000 and went on sale on April 1, 20x8.  Star directors are depreciating the software on a straight-line basis over an eight-year life i.e., $ 360, 000 per annum. However, the directors of Phar are of the opinion that a six-year life would be more appropriate as sale of business software rarely exceed this period.
b) The inventory of Phar on March 31 20x9 contains goods at a transfer price of 30,000 that were supplied during the year by Star who had marked them up with a profit of 25% on cost.
c) On March 31, 20x9 Star remitted to Phar a cash payment of $18,000. This was not received by Phar until early April.

 

Required

Prepare the consolidated Balance Sheet of Phar as at March 31, 20x9.    

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