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Accounting and Financial Statements for Interests in Other Entities

Unit: Financial Reporting

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December 2025

 1 Questions
Question 2
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​Hazel Limited, a public limited company which operates in motor vehicle industry has owned 75% of the voting share capital of Senter Limited, another public limited company in the same industry since 1 October 2021. The acquisition consideration comprised of cash payment of Sh.47 million made on 1 October 2021. The retained profit of Senter Limited at the date of acquisition amounted to Sh.19 milllion and had no other reserves. 

The completed financial statements for Hazel Limited and Senter Limited for the year ended 30 September 2025 are as follows.

Statement of profit or loss and other comprehensive income for the year ended 30 September 2025:

Hazel Limited
Senter Limited
Sh.“000”
Sh.“000”
Revenue
282,000
192,000
Cost of sales
(197,400)
 (153,600)
Gross profit 
84,600
38,400
Distribution costs 
(23,200)
(8,400)
Administrative expenses
 (36,800)
 (13,600)
Profit from operations
24,600
16,400
Finance costs 
(4,800)
(3,600)
Investment income 
 6,200
3,200
Profit before tax
26,000
16,000
Income tax expense
 (8,200)
 (5,200)
Profit for the year 
17,800
10,800
Other comprehensive income: 
Gain on property revaluation 
3,200
2,600
Total comprehensive income for the year  
21,000
13,400
 
Statements of financial position as at 30 September 2025:

Hazel Limited
Senter Limited
Sh.“000”
Sh.“000”
Non-current assets:
Property, plant and equipment
130,300
78,200
Investment in Senter Limited 
47,000
-
Other investments 
67,000
32,000
244,300
110,200
Current assets: 
Inventory
18,800
14,500
Trade receivables 
14,200
9,700
Cash and cash equivalents 
3,700
2,600
Total assets 
281,000
137,000
Equity and liabilities: 
Equity: 
Ordinary share capital (Sh.10 par value) 
50,000
20,000
Share premium
5,000
2,000
Revaluation surplus 
13,400
10,800
Retained profit 
153,500
50,400
Total equity 
221,900
83,200
Non-current liabilities: 
Long-term borrowings 
38,400
37,800
Deferred tax 
4,900
3,600
Current liabilities: 
Trade payables
13,200
10,600
Current tax 
2,600
1,800
Total equity and liabilities 
281,000
137,000

Additional information: 
  1. A fair value exercise conducted on 1 October 2021 revealed that the carrying amounts of Senter Limited net assets were equal to their fair values with the exception of an item of machinery which had a carrying amount of Sh.18 million below its fair value. As at 1 October 2021, the machinery had a remaining useful life of nine (9) years. Depreciation on machinery is charged to cost of sales. 
  2. Hazel Limited’s policy is to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interest in Senter Limited on 1 October 2021 was estimated at Sh.16 million. 
  3. On 28 September 2025, Senter Limited dispatched goods to Hazel Limited with a selling price of Sh.6 million. These goods were not received by Hazel Limited until 5 October 2025. Senter Limited applies a consistent mark-up on cost of 25% when arriving at its selling prices. 
  4. On 30 September 2025, Senter Limited’s records showed a receivable due from Hazel Limited of Sh.6 million. This differed from the equivalent payable in Hazel Limited’s records due to the goods-in-transit. 
  5. The investment income of Hazel Limited for the year ended 30 September 2025 includes Sh.2 million interest received on an 8% loan of Sh.25 million made to Senter Limited on 1 October 2024. The loan is repayable on 1 October 2028. 
  6. There has been no impairment losses within the group since acquisition.  

Required: 
 (a) Consolidated statement of profit or loss and other comprehensive income for the year ended 30 September 2025. 

 (b) Consolidated statement of financial position as at 30 September 2025. 


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August 2025

 1 Questions
Question 2a
​​The consideration given by an investor to acquire an interest in an investee may be settled in different forms. 

 Required: 
 Identify FOUR forms of consideration that might be used to settle the interest in an investee.


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April 2025

 1 Questions
Question 3
​ ​ ​ ​​On 1 January 2024, Pull Limited acquired an 80% controlling interest in Shape Limited when the retained earnings of Shape Limited amounted to Sh.3,200,000. The acquisition consideration consisted of an immediate cash payment of Sh.12,000,000 on 1 January 2024 and a further cash payment of Sh.12,100,000 deferred until 1 January 2026. Pull Limited has a cost of capital of 10%. 

 No accounting entries have been made in respect of the deferred cash consideration. 

 Pull Limited also acquired 50% of the equity interest in Jolty Limited and obtained joint control over Jolty Limited on 1 January 2024. The purchase consideration comprised an immediate cash payment of Sh.10,000,000 on 1 January 2024. The retained earnings of Jolty Limited stood at Sh.2,500,000 on 1 January 2024. 

 The following are draft statements of financial position of the three companies as at 31 December 2024:

Pull Limited 
Shape Limited
Jolty Limited
Assets
Sh.“000”
Sh.“000”
Sh.“000”
Non-current assets: 
Property, plant and equipment
36,400
18,500
14,600
Investments: 
       - Shape Limited 
12,000
-
-
       - Jolty Limited 
10,000
-
-
58,400
18,500
14,600
Current assets: 
Inventory
21,400
13,000
10,200
Trade receivables  
18,500
11,400
8,900
Cash and cash equivalents 
12,700
8,100
6,300
52,600
32,500
25,400
Total assets 
111,000
51,000
40,000
Equity and liabilities:
Equity 
Ordinary share capital (Sh.10 par value) 
50,000
20,000
15,000
Share premium 
5,000
2,000
1,500 
Retained earnings
13,200
6,100
3,800
Total equity 
68,200
28,100
20,300
Non-current liabilities: 
Long-term borrowings 
18,000
8,500
7,500
Current liabilities: 
Trade payables  
16,300
9,500
7,900
Current tax 
8,500
4,900
4,300
42,800
22,900
19,700
Total equity and liabilities
111,000
51,000
40,000

Additional information: 
  1. At the date of acquisition, the fair value of Shape Limited’s net assets approximated their carrying amounts, with the exception of some plant whose fair value was Sh.1,000,000 above its carrying amount. At this date, the plant had a remaining economic useful life of five years. No fair value adjustment was necessary in respect of Jolty Limited. 
  2. Pull Limited measures goodwill and the non-controlling interest using the fair value method. The fair value of the non-controlling interest of Shape Limited was Sh.5,700,000 at the date of acquisition. 
  3. During the year ended 31 December 2024, Shape Limited sold goods to Pull Limited for Sh.4,500,000 at a mark-up on cost of 25%. One third (⅓) of these goods were still held by Pull Limited at 31 December 2024 and the balance payable was still outstanding. 
  4. Impairment review performed on 31 December 2024 revealed that goodwill arising from the acquisition of Shape Limited had been impaired to the extent of 10%. The interest in Jolty Limited was unimpaired. 
 Required: 

 (a) Calculate the value of goodwill arising on acquisition of Shape Limited as at 31 December 2024.

 (b) Determine the value of interest in Jolty Limited as at 31 December 2024. 

 (c) Prepare the consolidated statement of financial position for Pull Group as at 31 December 2024.


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December 2024

 1 Questions
Question 2b
​ ​ ​​On 1 November 2023, Kip Ltd. acquired a 75% of interest in Limah’s equity shares. The acquisition was completed through a share for share transaction, where Kip Ltd. exchanged two of its own shares for every three Limah’s Ltd. shares acquired. On the acquisition date, Kip Ltd.’s share price was Sh.40 per share. 

 Summarised below are the statements of profit or loss and other comprehensive income for Kip Ltd. and Limah Ltd. for the financial year ended 30 April 2024:

Kip Ltd.
Limah Ltd. 
Sh.“000”
Sh.“000”
Revenue
1,800,000
960,000
Cost of sales 
(1,040,000) 
(440,000)
Gross profit 
760,000
520,000
Distribution costs 
(94,400)
(48,000)
Administrative expenses 
(108,000)
(92,000)
Finance cost 
(6,000)
(4,800)
Profit before tax 
551,600
375,200
Income tax expense 
(192,000)
(111,200)
Profit for the year
359,600
264,000
Other comprehensive income: 
Gain on revaluation of land 
10,000
4,000
Loss on fair value of equity financial assets 
(2,800)
 (1,600)
7,200
2,400
366,800
266,400

Additional information:  
1.
Details of equity as at 1 November 2023 before acquisition:
Kip Ltd.
Limah Ltd.
Sh.“000”
Sh.“000”
Ordinary shares of Sh.10 each 
1,000,000
640,000
Share premium
400,000
-
Revaluation reserve 
33,600
-
Equity reserve (financial asset) 
12,800
8,800
Retained earnings 
360,000
500,000
2.
Kip Ltd, follows a policy of revaluing land to market value at the end of each reporting period. Limah Ltd. had previously measured its land at historical cost before being acquired. Since the acquisition, Limah Ltd.’s land increased by Sh.4 million in value, which it has recorded in its financial statements.
3.
After the acquisition on 1 November 2023, Kip Ltd. transferred plant equipment to Limah Ltd. at an agreed value of Sh.20 million. This equipment had a carrying amount of Sh.16 million at the transfer date and a remaining useful life of 2.5 years. Kip Ltd. accounted for the gain from this transaction by reducing its depreciation expenses. Depreciation is charged to cost of sales.
4.
Following the acquisition, Limah Ltd. sold goods to Kip Ltd. worth Sh.160 million, which had originally cost Limah Ltd. Sh.120 million. Of these, goods worth Sh.48 million remained in Kip Ltd.’s inventory at the year end.
5.
There has been no impairment in the goodwill arising from Kip Ltd.’s acquisition of Limah Ltd.
6.
All items within the profit or loss and other comprehensive income statements are considered to accrue evenly throughout the year.
7.
Non-Controlling Interest (NCI) in Limah Ltd. was valued at Sh.400 million during acquisition.

Required: 
(i)
Calculate the value of goodwill arising on acquisition of Limah Ltd. 
(ii)
Prepare a consolidated statement of profit or loss and other comprehensive income for the year ended 30 April 2024.
    


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August 2024

 1 Questions
Question 2
​ ​ ​ ​ ​​The following information was extracted from the financial statements of Xcel Ltd., Yep Ltd. and Zed Ltd. for the year ended 30 June 2024. 

 Statement of financial position as at 30 June 2024:
Xcel Ltd.
Yep Ltd.
Zed Ltd.
Non-current assets: 
Sh.“million”
Sh.“million”
Sh.“million”
Property, plant and equipment
2,100
1,500
900
Intangible assets (including patents) 
400
300
200
Intangible assets (including patents) 
1,400
-
-
Current assets: 
Inventories
700
600
240
Trade receivables 
640
340
160
Financial assets at fair value 
360
260
240
Bank and cash balance
200
100
160
Total assets 
5,800
3,100
1,900
Equity and liabilities: 
Equity and reserves: 
Ordinary share capital (Sh.20 per share) 
1,600
400
200
Share premium 
400
200
100
Retained earnings
800
700
500
Shareholders funds 
2,800
1,300
800
Non-current liabilities: 
10% debentures 
1,200
400
400
Deferred tax 
500
200
100
Current liabilities: 
Trade payables 
600
700
300
Current tax 
500
300
200
Proposed dividends 
200
200
100
Total equity and liabilities  
5,800
3,100
1,900

Additional information:
1.
Xcel Ltd. acquired its investments as follows: 
Company
Number of shares acquired 
Cost of investment
Retained earnings 
Date of acquisition 
Sh.“million”
Sh.“million”
Yep Ltd. 
16 million 
960
300
1 July 2022
Zed Ltd. 
3 million
240
200
1 July 2023
  Xcel Ltd. also invested in half of the 10% debentures of Yep Ltd. The fair value of the non-controlling interest in Yep Ltd. amounted to Sh.240 million. 
2.
The group use the full goodwill method. However it does not armotise goodwill, instead goodwill is assessed for impairment annually. Impairment tests for the year ended 30 June 2024 revealed that none of the goodwill is impaired. 
3.
Immediately prior to the date of its acquisition, Yep Ltd. revalued its non-current assets in readiness for acquisition as shown below:
Carrying amount 
Fair value
Remaining useful life in years 
Sh.“million” 
Sh.“million” 
Equipment 
500
580
10
Patents
300
320
10
Equipment and patents are depreciated or amortised on a straight-line basis over their remaining useful life respectively by Xcel Ltd.
4.
During the year ended 30 June 2024, Xcel Ltd. sold non-current assets to Yep Ltd. for Sh.360 million. Xcel Ltd. marked-up the equipment at the rate of 20% per annum on cost. Yep Ltd. included the equipment in its non-current asset and charged depreciation at the rate of 20% per annum on cost.
5.
During the year ended 30 June 2024, Yep Ltd. sold inventories to Xcel Ltd. for Sh.300 million. Yep Ltd. marked-up these goods at 25% on cost. Half of these goods were still held by Xcel Ltd. at the year end.
6.
Xcel Ltd. owed Yep Ltd. Sh.200 million as at the year end with regards to the transaction in note 5 above. The books of Xcel Ltd. however showed that it owed Yep Ltd. Sh.160 million. Xcel Ltd. had sent a cheque to Yep Ltd. on 24 June 2024 which was not received by Yep Ltd. until 2 July 2024.

Required:
(a)
Calculate the value of the goodwill arising on acquisition of the investments in Yep Ltd. and Zed Ltd.
(b)
Prepare the group statement of financial position as at 30 June 2024. 


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April 2024

 1 Questions
Question 3
​ ​ ​ ​ ​​ Poloh Ltd. acquired 90% of the ordinary shares of Sh.10 par value in Soloh Ltd. on 1 November 2021 paying Sh.30 per share. The balance on Soloh Ltd.’s retained reserves at this date was Sh.9,600 million. 

 On 1 May 2023, Poloh Ltd. acquired 30 % of Aloh Ltd.’s Sh.10 ordinary shares for Sh.35 per share. 

 The statements of financial position of the three companies as at 31 October 2023 are provided below: 

 Statements of financial position as at 31 October 2023:
Poloh Ltd.
Soloh Ltd.
Aloh Ltd.
Sh.“million”
Sh.“million”
Sh.“million”
Non-current assets: 
Property, plant and equipment 
96,600
43,200
19,800
Investments
48,000
10,920
-
144,600
54,120
19,800
Current assets: 
Inventories
9,960
4,080
3,000
Trade receivables 
6,240
3,480
4,200
Bank balances
2,880
-
1,200
19,080
7,560
8,400
Total assets 
163,680
61,680
28,200
Equity and liabilities:
Equity:
Ordinary share capital (Sh.10 each) 
60,000
14,400
7,200
Revenue reserves 
87,600
26,400
16,800
147,600
40,800
24,000
Non-current liabilities: 
10% debentures
6,000
2,880
-
Current liabilities: 
Trade payables 
5,040
11,520
2,400
Current tax 
5,040
4,200
1,800
Bank overdraft 
-
2,280
-
10,080
18,000
4,200
Total equity and liabilities: 
163,680
61,680
28,200

Additional information:
1.
The details relating to revenue reserves were as follows:
Poloh Ltd.
Soloh Ltd. 
Aloh Ltd. 
Sh.“million”
Sh.“million”
Sh.“million”
Revenue reserves as at 1 November 2022
72,000
16,800
9,600
Retained earnings for the year ended 31 October 2023
15,600
9,600
7,200
87,600
26,400
16,800
2.
It is the group’s policy to value non-controlling interest at acquisition date at fair value. The fair value of non-controlling interest on 1 November 2021 was Sh.3,600 million.
3.
A cheque of Sh.480 million from Soloh Ltd. to Poloh Ltd. was not received until 3 November 2023. Intercompany balances are included in the accounts receivables and payables as appropriate.
4.
In October 2023, Poloh Ltd. sold goods to Aloh Ltd. for Sh.780 million. These were transferred at a mark-up of 30% on cost. Two thirds of these goods were still in the inventory of Aloh Ltd. as at 31 October 2023.
5.
Just prior to its acquisition, Soloh Ltd. was successful in applying for a six year licence to dispose of waste products. The licence was granted by the County government at no cost. However, Soloh Ltd. estimated that the licence was worth Sh.2,160 million at the date of acquisition.
6.
On 1 November 2021, Soloh Ltd. owned an investment property that had a fair value of Sh.1,440 million in excess of its book value. The value of this property has not changed since acquisition

Required:
 (a)
Computation of goodwill on each investment. 
 (b)
Group statement of financial position as at 31 October 2023. 


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December 2023

 1 Questions
Question 2
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​G Limited acquired 80% of the ordinary shares of Sh.10 par value in S Limited on 1 February 2023 at a cost of Sh.3,612 million. G Limited had acquired 4,500,000 shares at a cost of Sh.488 million in B Limited on 1 November 2021 when B Limited’s revenue reserves stood at Sh.50 million. 

 The financial statements of the three companies for the year ended 31 October 2023 are provided below:
Statement of profit or loss               
G Ltd.
S Ltd.
B Ltd.
Sh.“million”
Sh.“million”
Sh.“million”
Revenue
3,600
1,500
1,000
Cost of sales 
(1,400)
(600)
(400)
Gross profit
2,200
900
600
Investment income 
150
-
-
Administrative expenses 
(500)
(330)
(200)
Distribution costs 
(200)
(120)
(100)
Finance cost 
(80)
(60)
(40)
Profit before tax 
1,570
390
260
Income tax expense 
(300)
(150)
(80)
Profit after tax 
1,270
240
180
Dividends paid 
(600)
(120)
(100)
Retained profit for the year 
670
120
80

Statement of financial position as at 31 October 2023:
G Ltd. 
S Ltd. 
B Ltd. 
Sh.“million”
Sh.“million”
Sh.“million”
Non-current assets:
Property, plant and equipment 
5,000
4,200
1,900
Investment
4,500
450
-
9,500
4,650
1,900
Current assets: 
Inventory
1,200
900
500
Trade receivables 
900
900
350
Cash and cash equivalents 
400
300
150
2,500
2,100
1,000
Total assets 
12,000
6,750
2,900
Equity and liabilities: 
Ordinary share capital 
6,000
2,000
1,200
Share premium 
1,500
400
300
Retained profit 
2,500
1,950
300
10,000
4,350
1,800
Non-current liabilities:
10% loan stock 
800
1,000
400
Deferred tax
200
560
180
1,000
1,560
580
Current liabilities: 
Trade payables 
800
750
430
Accruals
40
30
50
Current tax
160
60
40
1,000
840
520
Total equity and liabilities 
12,000
6,750
2,900
 
Additional information: 
  1. On date of acquisition, the fair value of identifiable net assets of S Ltd. approximated their carrying amount except for an item of plant whose fair value was in excess of its carrying value by Sh.150 million. This item of plant had a remaining economic useful life of 5 years. 
  2. On 30 September 2023, S Ltd. sold goods worth Sh.100 million to G Ltd. reporting a gross profit margin of 20% on this sale. G Ltd. had neither received nor recorded those goods in its books of account as at 31 October 2023. 
  3. The group policy is to measure the non-controlling interest at their proportionate share of net assets in the subsidiary at the date of acquisition.
  4. The inter-company outstanding balances between G Ltd. and S Ltd. did not agree due to goods in transit as per note 2 above. As at 31 October 2023, the trade receivables of S Ltd included Sh.60 million due from G Ltd. Amount due from B Ltd. to G Ltd. stood at Sh.20 million. 
  5. Any goodwill on acquisition of the subsidiary or associate is considered impaired by 20%. 

 Required: 
 (a) Consolidated statement of profit or loss for the year ended 31 October 2023. 

 (b) Consolidated statement of financial position as at 31 October 2023. 


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August 2023

 2 Questions
Question 3
​ ​ ​​Pika Limited, a public limited entity intends to expand its operations by acquiring investments in other entities. On 1 November 2022, Pika Limited secured a 75% equity interest in Shiba Limited under the following terms: 

  • An immediate cash payment at a fair value of Sh.13 per share on 1 November 2022. 
  • An issue of three ordinary shares of Sh.10 par value in Pika Limited for every five shares acquired in Shiba Limited. The fair value of a Pika Limited share was Sh.13 per share at the date of acquisition. The share issue has not yet been recorded by Pika Limited. 
    On the same date, Pika Limited also acquired a 30% equity shareholding in Amua Limited paying Sh.24 million in cash.

The following draft statements of financial position as at 30 April 2023 relate to Pika Limited and Shiba Limited: 

Pika Limited 
Shiba Limited
Sh.“000”
Sh.“000”
Non-current assets: 
Property, plant and equipment 
135,000
100,400
Investments:  Shiba Limited (6 million shares at Sh.13 each) 
78,000
-
Investments:  Amua Limited 
24,000
-
237,000
100,400
Current assets: 
Inventory
28,400
12,100
Trade receivables 
27,500
19,900
Cash and cash equivalents 
10,600
6,800
Total assets 
303,500
139,200
Equity and liabilities: 
Equity: 
Ordinary shares of Sh.10 each 
160,000
80,000
Retained profit: As at 1 May 2022 
62,400
12,800
Retained profit:For the year ended 30 April 2023
21,700
10,800
Total equity 
244,100
103,600
Non-current liabilities: 
10% bank loans 
25,000
10,000
Deferred tax 
3,700
3,100
Current liabilities: 
Trade payables 
28,800
21,200
Current tax payable 
1,900
1,300
Total equity and liabilities 
303,500
139,200

Additional information: 
  1. At the date of acquisition, the fair values of Shiba Limited’s net assets approximated their carrying values with the exception of plant whose fair value exceeded its carrying amount by Sh.10 million. The plant had a remaining useful life of ten years at the date of Shiba Limited’s acquisition. The plant is being depreciated on a straight-line basis. The plant is still carried at its carrying value in Shiba Limited’s financial statements. No fair value adjustments were necessary on the acquisition of investment in Amua Limited. 
  2. On 28 April 2023, Shiba Limited sent goods at an invoice price of Sh.7 million to Pika Limited which Pika Limited neither received nor recorded until 5 May 2023. Shiba Limited had marked up those goods by 25% on cost. The agreed trade payables recorded in the books of Pika Limited before the above transactions were Sh.6 million. 
  3. Pika Limited’s policy is to measure the non-controlling interests at fair value at the date of acquisition. For this purpose, the directors of Pika Limited considered Shiba Limited’s share price of Sh.12 per share to be appropriate.
  4. Impairment tests performed on 30 April 2023 revealed that goodwill on acquisition of Shiba Limited had not been impaired, but due to declining sales of Amua Limited, the value of investment in Amua Limited had been impaired to the extent of Sh.2 million. 
  5. Amua Limited reported a profit after tax of Sh.4 million for the year ended 30 April 2023. 
  6. Assume all profits and losses of the three companies accrued evenly throughout the year. 

Required: 
 (a) Calculate the value of goodwill arising on acquisition of Shiba Limited. 

 (b) Determine the value of investment in Amua Limited as at 30 April 2023. 

 (c) Prepare a consolidated statement of financial position for Pika Group as at 30 April 2023. 


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Question 2a
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​Somalax Ltd. has its head office in town A and a branch in town B. Orders are received from customers by the head office, processed, packaged and sold at a profit of 12% of the selling price. Finished products are sent to the branch at selling price less 6%. 

 The following are extracts from the company as at 31 December 2022:

 Head Office         
Branch              
Sh.“000”
Sh.“000”
Sh.“000”
Sh.“000”
Bank balance 
316,000
124,000
Branch office current account 
720,000
Head office current account
562,080
Trade payables 
800,000
80,000
Trade receivables
560,000
300,000
Other general expenses 
800,000
80,000
Goods sent to branch 
3,196,000
3,138,080
Sales
5,600,000
3,000,000
Purchase of material 
8,000,000
Packaging material 
880,000
Fixtures
320,000
Capital
2,000,000
11,596,000
11,596,000
3,642,080
3,642,080

Additional information: 
  1. Fixtures are depreciated at the rate of 20% per annum on straight-line basis. 
  2. A provision is to be made for a bonus to the branch manager at the rate of 10% of the net profit after the bonus. 
  3. Finished products whose selling price to the public was Sh.61,618,000 were dispatched by head office to the branch on 30 December 2022 and were received on 10 January 2023. 
  4. The branch had sent cash amounting to Sh.100,000,000 to the head office on 28 December 2022. This amount was received on 8 January 2023. 
  5. Materials which cost the head office Sh.20,000,000 were considered worthless.
  6. There was a loss of packaging materials costing Sh.10,000,000 at the head office.
  7. There was a shortage of products from the head office at the branch valued at Sh.26,000,000. This loss was at invoice price by the head office to the branch. 

Required: 
 (i) The head office, branch and combined statement of profit or loss for the year ended 31 December 2022. 

 (ii) The head office, branch and combined statement of financial position as at 31 December 2022, in a columnar format. 


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April 2023

 1 Questions
Question 2
​ ​ ​​Riva Limited operates in a fast moving goods sub-sector. During the year ended 31 March 2023, Riva Limited expanded its operations by acquiring a controlling interest in Sai Limited and a significant influence over the activities of Tutu Limited. The following draft financial statements for the year ended 31 March 2023 relate to the three companies: 

 Statements of profit or loss for the year ended 31 March 2023:
Riva Limited  
Sai Limited 
Tutu Limited
Sh.“million”
Sh.“million”
Sh.“million”
Revenue
4,190
2,600
1,960
Cost of sales 
(2,730)
(1,400) 
(1,370)
Gross profit 
1,460
1,200
590
Distribution costs 
(300)
(200) 
(190)
Administrative expenses 
(500)
(400)
(160)
Profit from operations 
660
600
240
Investment income 
40
20
30
Finance costs   
 (80)
 (60)
-
Profit before tax
620
560
270
Income tax expense 
(180)
(160)
(70)
Profit for the year  
440
400
200

Statements of financial position as at 31 March 2023:
Riva Limited
Sai Limited
Tutu Limited
Assets:
Sh.“million”
Sh.“million”
Sh.“million”
Non-current assets: 
Property, plant and equipment
2,070
1,290
950
Investments
1,600
-
-
3,670
1,290
950
Current assets: 
Inventory
530
390
240
Trade receivables 
640
470
270
Financial assets at fair value through profit or loss
300
150
220
Cash and bank balances 
360
200
320
Total current assets 
1,830
1,210
1,050
Total assets 
5,500
2,500
2,000
Equity and liabilities: 
Equity: 
Ordinary share capital 
2,500
500
500
Share premium 
500
200
200
Retained profit 
1,020
800
500
Total equity 
4,020
1,500
1,200
Non-current liabilities: 
12.5% loan notes 
640
480
-
Deferred tax   
260
100
200
900
580
200
Current liabilities: 
Trade payables 
420
330
520
Current tax 
160
90
80
580
420
600
Total equity and liabilities 
5,500
2,500
2,000
 
Additional information: 
  1. On 1 July 2022, Riva Limited acquired an 80% ordinary shareholding in Sai Limited for a cash consideration of Sh.1,100 million. The fair value of assets and liabilities of Sai Limited were equal to their carrying amounts at the date of acquisition. 
  2. The group policy is to measure the non-controlling interests at their proportionate share of net assets of the subsidiary at the date of acquisition. 
  3. On 1 January 2023, Riva Limited acquired a 40% ordinary shareholding in Tutu Limited for a cash consideration of Sh.500 million.
  4. During the post-acquisition period, Riva Limited sold goods to Sai Limited for Sh.300 million. Riva Limited reported a 20% profit margin on this sale. Half of these goods remained in the ending inventory of Sai Limited at the year end of 31 March 2023. 
  5. Included in the trade receivables of Riva Limited was Sh.80 million due from Sai Limited. In the books of Sai Limited, the amount due to Riva Limited was shown at Sh.60 million because Sai Limited had remitted Sh.20 million but Riva Limited had not recorded the remittance. 
  6. On 1 October 2022, Riva Limited sold an assembly plant to Sai Limited for Sh.400 million reporting a 25% profit margin on the selling price and netted off the profit against its cost of sales. The group charges depreciation on plant at the rate of 20% per annum on cost on full year basis in the year of asset purchase and none in the year of disposal. 
  7. Impairment tests carried out on 31 March 2023 revealed that neither the goodwill on acquisition nor the investment in associate had been impaired during the year. 8. None of the group companies paid dividends during the year to 31 March 2023. 

 Required: 
 (a) Consolidated statement of profit or loss for the year ended 31 March 2023. 

 (b) Consolidated statement of financial position as at 31 March 2023. 


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December 2022

 2 Questions
Question 3a
​ ​ ​​On 1 January 2022, H Limited acquired 80% of the 4 million, Sh.10 ordinary shares of S Limited issued at par value. 

 The acquisition consideration comprised of three new ordinary shares issued by H Limited in exchange for every five shares acquired in S Limited. 

 Additionally, H Limited will pay further consideration on 31 December 2022 of Sh.11 per share acquired. H Limited’s cost of capital is 10% per annum and the discount factor at 10% for one year is 0.9091. 

 At the date of acquisition, the fair values of ordinary shares in H Limited and S Limited were Sh.15 and Sh.12 respectively. 

 The following statements of profit or loss for the year ended 30 September 2022, relate to the two companies:

H Limited
S Limited
Sh.“000” 
Sh.“000” 
Revenue
546,000
420,000
Cost of sales 
(378,000) 
(300,000)
Gross profit 
168,000
120,000
Distribution costs 
(36,000)
(24,000)
Administrative expenses 
(42,000)
(28,000)
Profit from operations 
98,000
68,000
Investment income 
6,000
-
Finance costs 
(4,000)
(2,000)
Profit before tax 
92,000
66,000
Income tax expense 
(30,000)
(24,000)
Profit for the year
62,000
42,000

Additional information: 
  1. At the date of acquisition, the fair value of S Limited’s net assets approximated their carrying values with the exception of an item of plant and equipment which had a fair value of Sh.24 million above its carrying amount. The remaining economic useful life of the plant and equipment at the date of acquisition was six years. Depreciation is charged to cost of sales. 
  2. Sales from S Limited to H Limited in the post-acquisition period amounted to Sh.30 million. S Limited reported a gross profit margin of 25% on these sales. H Limited’s inventory includes one fifth (⅕) of these goods as at 30 September 2022. 
  3. H Limited’s policy is to value the non-controlling interests at fair value at the date of acquisition. For this purpose, S Limited’s share price at acquisition date can be deemed to be representative of the fair value of the shares held by the non-controlling interest. 
  4. H Limited’s investment income is dividend received from its investment in a 40% owned associate which it has held for several years. The associate reported a profit after tax of Sh.30 million for the year ended 30 September 2022. 
  5. As at 30 September 2022, no impairment of goodwill was considered necessary. 
  6. Assume that profits and losses accrued evenly throughout the year. 
  7. As at 1 October 2021, the retained earnings of S Limited were Sh.16 million. 

 Required: 
 (i) Calculate the goodwill arising on the acquisition of S Limited.

 (ii) Consolidated statement of profit or loss for H Group for the year ended 30 September 2022. 

 Note: All workings should be done to the nearest Sh.“000”. 


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Question 1b
​ ​​​​With reference to International Financial Reporting Standard (IFRS) 11 – Joint Arrangements: 

(i) Summarise TWO characteristics of a joint arrangement. 

(ii) Describe the TWO types of joint arrangements. 

(iii) Explain the salient provisions on what a joint operator recognises in relation to its interest in a joint operation.


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August 2022

 1 Questions
Question 2
​ ​ ​​Kuja Limited has owned 70% of Twende Limited’s equity share capital since 1 April 2017. 

 The acquisition consideration consisted of cash amounting to Sh.3,600 million paid on 1 April 2017. The retained earnings balance of Twende Limited at the date of acquisition stood at Sh.870 million and had no other reserves. 

 The draft financial statements for the two group companies for the year ended 31 March 2022 were as set out below: 

 Statement of profit or loss and other comprehensive income for the year ended 31 March 2022:
Kuja Limited
Twende Limited
Sh.“million”
Sh.“million”
Revenue
5,100
1,920
Cost of sales 
(4,050) 
(1,110)
Gross profit 
1,050
810
Distribution costs 
(240)
(210)
Administrative expenses 
(480)
(230)
Operating profit 
330
370
Investment income 
160
-
Finance costs 
(85)
(125)
Profit before tax 
405
245
Income tax expense 
(175)
(125)
Profit for the year 
230
120
Other comprehensive income: 
Gain on property revaluation 
180
100
Total comprehensive income for the year 
410
220

Statement of financial position as at 31 March 2022:
Kuja Limited
Twende Limited
Sh.“million”
Sh.“million”
Assets: 
Non-current assets: 
Property, plant and equipment 
5,300
5,050
Investment 
4,500
-
9,800
5,050
Current assets: 
Inventory
2,840
1,560
Trade receivables 
2,480
1,860
Cash and cash equivalents
1,780
1,030
Total assets 
16,900
9,500
Equity and liabilities: 
Equity :
Ordinary share capital
5,000
3,000
Share premium 
1,000
-
Revaluation surplus 
1,550
700
Retained earnings  
4,170
2,530
Total equity 
11,720
6,230
Non-current liabilities: 
10% loan notes 
1,700
1,050
Deferred tax
740
570
Current liabilities: 
Trade payables 
2,340
1,300
Current tax  
400
350
Total equity and liabilities 
16,900
9,500
 
Additional information: 
  1. A fair value exercise carried out on 1 April 2017 concluded that the carrying amounts of Twende Limited’s net assets approximated their fair values with the exception of an item of plant and equipment which had a carrying amount of Sh.100 million below its fair value. At 1 April 2017, the plant and equipment had a remaining economic useful life of ten years. Depreciation is charged to cost of sales. 
  2. It is the group’s policy to measure the non-controlling interests at fair value at the date of acquisition. The fair value of the non-controlling interest in Twende Limited on 1 April 2017 was estimated at Sh.1,370 million. 
  3. Kuja group adopts revaluation model to measure its property, plant and equipment as permitted by International Accounting Standard (IAS) 16 “Property, Plant and Equipment”. Revaluation surplus reported by Twende Limited relates to the revaluations conducted in the post-acquisition period. 
  4. During the year ended 31 March 2022, Twende Limited sold goods worth Sh.200 million to Kuja Limited. Twende Limited reports a gross profit markup of 25% on all its sales. Kuja Limited still had 25% of these goods in its inventory as at 31 March 2022.
  5. At 31 March 2022, Twende Limited’s records showed a receivable due from Kuja Limited of Sh.140 million which corresponded with the balance in Kuja Limited’s trade payables. 
  6. An impairment review conducted on 31 March 2022 revealed that goodwill arising on acquisition of Twende Limited was impaired by 10%. No impairment loss had been reported in prior years. 

Required: 
(a) Group statement of profit or loss and other comprehensive income for the year ended 31 March 2022.

(b) Group statement of financial position as at 31 March 2022. 


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April 2022

 1 Questions
Question 4b
​ ​​On 1 April 2021, Riziki Limited acquired 75% of the equity shares of Salama Limited when the retained earnings of Salama Limited stood at Sh.234 million. The acquisition consideration consisted of cash amounting to Sh.510 million and share exchange on the basis of 2 ordinary shares of Riziki Limited for every 3 ordinary shares acquired in Salama Limited. The market value of Riziki Limited's shares as at 1 April 2021 was Sh.16 per share. No accounting entries have been made in respect of the share exchange consideration. 

The draft statements of financial position of the two companies as at 31 March 2022 are as presented below:

Riziki Limited
Salama Limited
Sh."000"
Sh."000"
Assets:
Non-current assets:
Property, plant and equipment
1,595,300
636,400
Investment
575,000
-
2,170,300
636,400
Current assets:
Inventory
165,000
160,000
Trade receivables
247,100
107,800
Bank
21,000
13,800
433,100
281,600
Total assets
2,603,400
918,000
Equity and liabilities:
Ordinary share capital (Sh.10 par value)
850,000
300,000
Retained earnings
743,400
358,000
1,593,400
658,000
Non-current liabilities:
8% debentures
460,000
40,000
Current liabilities:
Trade payables
442,000
167,200
Current tax payable
108,000
52,800
Total equity and liabilities
2,603,400
918,000

Additional Information:
1.
The fair values of Salama Limited's net assets approximated their carrying amounts with the exception of a specialised piece of equipment which had a fair value of Sh.120 million in excess of its carrying amount. This equipment had a ten-year remaining useful life on 1 April 2021. 
2.
It is the group's policy to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interest in Salama Limited on 1 April 2021 was estimated at Sh.144 million.
3.
During the year to 31 March 2022, Salama Limited sold goods to Riziki Limited for Sh.64 million earning a gross margin of 25% on the sale. Riziki Limited still held Sh.48 million worth of these goods in the inventory at 31 March 2022.
Salama Limited still had the full invoice value of Sh.64 million in its trade receivables at 31 March 2022. however, Riziki Limited's trade payables only showed Sh.34 million as it made a payment of Sh.30 million on 31 March 2022.
4.
.On 1 April 2021, Riziki Limited also acquired a 30% equity interest in Amua Ltd. for Sh.65 million in cash.
Amua Limited sustained heavy losses over the last few years and Riziki Limited hoped it would turn it around through its significant influence over Amua Limited.
 In the year ended 31 March 2022, Amua Limited made a loss of Sh.150 million.
5.
Impairment tests performed on 31 March 2022, revealed that the investment in Amua Limited had been impaired by Sh.5 million due to sustained trading losses. However, no impairment was required in respect of goodwill arising on acquisition of Salama Limited.

Required:
(i)
Determine the value of investment in Amua Limited as at 31 March 2022. 
(ii)
Calculate the value of goodwill arising on acquisition of Salama Limited.
(iii)
Consolidated statement of financial position for Riziki Group as at 31 March 2022.


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December 2021

 2 Questions
Question 4
​ ​ ​ ​ ​ ​ ​ ​ ​​On 1 January 2021, Rangi Ltd. acquired the following in Nzuri Ltd.: 

80% of the ordinary share capital of Nzuri Ltd. for Sh.20,560,000 
Half of the 10% debentures in Nzuri Ltd. 

The summarised financial statements of Rangi Ltd. and Nzuri Ltd. for the year ended 30 September 2021 were as follows: 

Income statements for the year ended 30 September 2021:

Rangi Ltd.
Nzuri Ltd.
Sh."000"
Sh."000"
Revenue
130,000
48,000
Cost of sales
(90,000)
(40,000)
Gross profit
40,000
8,000
Other income: Interest received
150
-
Other income: Dividend received
800
-
40,950
8,000
Expenses:
Distribution costs
(9,000)
(200)
Administrative expenses
(7,000)
(200)
Finance costs
-
(400)
Profit before tax
24,950
7,200
Income tax expense
(6,000)
(1,200)
18,950
6,000

Statement of financial position as at 30 September 2021:

Rangi Ltd.
Nzuri Ltd.
Sh."000"
Sh."000"
Non-current assets:
Property, plant and equipment
38,640
16,000
Investments
22,560
-
61,200
16,000
Current assets:
Inventories
12,000
6,000
Accounts receivable
8,400
6,800
Cash at bank
13,600
3,200
34,000
16,000
Total assets
95,200
32,000
Equity and liabilities:
Capital and reserves:
Ordinary shares of Sh.10 each
24,000
4,000
Retained earnings
51,200
16,800
75,200
20,800
Non-current liability:
10% debentures
-
4,000
Current liabilities:
Accounts payable
15,000
6,400
Current tax
5,000
800
20,000
7,200
Total equity and liabilities
95,200
32,000

Additional information: 
1.
The fair value of the assets of Nzuri Ltd. at the date of acquisition were the same as their book values except for an item of plant whose fair value was more by Sh.6.4 million. As at 1 January 2021, the plant had a remaining useful life of four years. Nzuri Ltd. depreciates plant on straight line basis on cost. 
2.
During the post acquisition period, inter-company trading that occurred included: 
  • Rangi Ltd. sold goods to Nzuri Ltd. for Sh.12 million. These goods had cost Rangi Ltd. Sh.18 million. 
  • Nzuri Ltd. sold some of the goods purchased from Rangi Ltd. at Sh.20 million for Sh.30 million.
3.
On 30 June 2021, Rangi Ltd. and Nzuri Ltd. paid dividends of Sh.2 million and Sh.1 million respectively. 
4.
Included in the accounts receivable and account payable is Sh.1.5 million being the amount Nzuri Ltd. owed Rangi Ltd.
5.
Goodwill is considered to be impaired by 25% as at 30 September 2021. Goodwill impaired is classified as an administrative expense by the group companies. 

Required: 
(a) Group income statement for the year ended 30 September 2021.

(b) Group statement of financial position as at 30 September 2021.


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Question 1c
​ ​​Describe two methods for translating foreign currencies into the local currency.


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September 2021

 1 Questions
Question 2
​ ​ ​ ​ ​ ​​Chanda Ltd. acquired 75% of the ordinary share capital of Pete Ltd. on 1 May 2020 through a share exchange of three shares of Chanda Ltd. for four shares acquired in Pete Ltd. On this date, the ordinary shares of Chanda Ltd. and Pete Ltd. were fair valued at Sh.40 and Sh.20 per share respectively.

 The share exchange has not yet been recorded by Chanda Ltd. 

Below are the draft financial statements for the two companies for the year ended 31 October 2020:

Statements of comprehensive income for the year ended 31 October 2020:
Chanda Ltd.
Pete Ltd.
Sh."Million"
Sh."Million"
Revenue
28,200
8,720
Cost of sales
(12,800)
(3,240)
Gross profit
15,400
5,480
Distribution costs
(2,320)
(640)
Administrative expenses
(3,680)
(1,120)
Investment income
1,840
80
Finance costs
(480)
(560)
Profit before tax
10,760
3,240
Income tax expense
(2,060)
(600)
Profit for the year
8,700
2,640
Other comprehensive income:
Gain on revaluation of land
112
120
Total comprehensive income
8,812
2,760

Statements of financial position as at 31 October 2020:
Chanda Ltd. 
Pete Ltd.
Sh."Million"
Sh."Million"
Assets:
Non-current assets:
Property, plant and equipment
24,360
7,560
Financial assets
8,120
2,520
32,480
10,080
Current assets:
Inventory
4,832
2,000
Trade receivables
4,768
1,960
Bank
3,200
1,320
12,800
5,280
Total assets
45,280
15,360
Equity and liabilities:
Equity:
Ordinary share capital (Sh.10 par value)
8,000
3,200
Revaluation surplus
2,260
420
Retained earnings
26,060
4,780
36,320
8,400
Non-current liabilities:
10% loan stocks
2,400
3,200
Current liabilities:
Trade payables
4,920
2,820
Current tax payable
1,640
940
6,560
3,760
Total equity and liabilities
45,280
15,360

Additional information: 
  1. A fair value exercise conducted on 1 May 2020 concluded that the carrying amounts of Pete Ltd.'s net assets approximated their fair values with the exception of an item of plant and equipment which had a fair value of Sh.320 million in excess of its carrying amount. As at 1 May 2020, the item of plant and equipment had a remaining life of four years. Depreciation is being charged on straight-line basis to cost of sales. 
  2. In the post-acquisition period, Chanda Ltd. sold goods worth Sh.1,560 million to Pete Ltd. Pete Ltd, had one quarter of these goods in inventory as at 31 October 2020. All ofthese goods had a mark-up on cost of 30%. 
  3. Chanda Ltd.'s trade receivables include Sh.320 million due from Pete Ltd. which did not reconcile with the corresponding trade payables. This was due to cash paid by Pete Ltd. which had not been received by Chanda Ltd. as at 31 October 2020. 
  4. Chanda Ltd. has a policy of measuring the non-controlling interests at fair value. As at 1 May 2020, the non-controlling interest in Pete Ltd. were fair valued on the basis of the market price of Pete Ltd.'s ordinary shares. 
  5. Goodwill arising on acquisition of Pete Ltd was impairment tested on 31 October 2020 and no impairment was deemed necessary.  
  6. All other comprehensive income occurred after 1 May 2020. Unless otherwise indicated, all other items of incomes and expenses are deemed to accrue evenly over the year. 

Required: 
(a) Goodwill arising on acquisition of investment in Pete Ltd. 

(b) Consolidated statement of comprehensive income for the year ended 31 October 2020.

(c) Consolidated statement of financial position as at 31 October 2020. 


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May 2021

 1 Questions
Question 5
​ ​ ​​On 1 April 2018, Ambaza Ltd. acquired the following investments:

  • 1,320,000 equity shares in Rudisha Ltd. at a cost of Sh.27,300,000 when the retained earnings of Rudisha Ltd. were Sh. 12,500,000. 
  • 50% of Rudisha Ltd's 12% debentures at par.
The statement of financial position of the two companies as at 31 March 2020 were as follows:

Ambaza
Rudisha
Non-current assets:
Sh."000"
Sh."000"
Property, plant and equipment
37,300
24,060
Investments
52,600
4,800
89,900
28,860
Current assets:
Inventories
6,350
5,200
Accounts receivable
4,360
1,950
Bank
1,390
-
12,100
7,150
Total assets
102,000
36,010
Equity and liabilities:
Equity and reserves:
Ordinary share capital (Sh.10 each)
43,000
16,500
Retained earnings
34,560
8,190
77,560
24,690
Non current liabilities:
12% debentures
8,200
2,800
Deferred tax
3,900
1,200
12,100
4,000
Current liabilities:
Accounts payable
5,710
1,760
Taxation
5,330
2,410
Dividends
1,300
1,200
Bank overdraft
-
1,950
12,340
7,320
102,000
36,010

Additional information:
  1. The fair value of Rudisha Ltd.'s assets at the date of acquisition was equal to their carrying value except for an item of plant which had a fair value of Sh.1,600,000 in excess of its carrying value. The plant had a remaining useful life of 4 years. 
  2. On 15 March 2020, Rudisha Ltd. sold goods to Ambaza Ltd for Sh.700,000, all on credit terms. The goods had not been received by the company as at 31 March 2020 and were not included in closing inventory. No entry had been made in the books of Ambaza Ltd. in respect of this transaction. Rudisha Ltd. sells goods to all customers at a standard mark up of 16%%. 
  3. As at 31 March 2020, the account payable of Ambaza Ltd. included Sh.750,000 due to Rudisha Ltd. before taking into account the above transaction. 
  4. Ambaza Ltd. had not accounted for dividend receivable from Rudisha Ltd. 
  5. Goodwill arising on acquisition of Rudisha Ltd. was considered impaired by 20% as at 31 March 2020.
  6. The fair value attributable to non controlling interest amounted to Sh.6,800,000.
Required: 
Consolidated statement of financial position as at 31 March 2020.


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November 2020

 1 Questions
Question 3b
​​The following are the draft statements of financial position of Aby Limited and Benta Limited as at 30 April 2020.

Aby Limited
Benta Limited
Assets
Sh."million
Sh."million
Non-current assets:
Property, plant and equipment
25,200
5,420
Investments
8,120
Nil
33,410
5,420
Current assets
Inventory
2,750
1,295
Trade receivables
2,135
1,010
Cash and bank balances
1,220
575
Total assets
39,515
8,300
Equity and liabilities
Equity
Ordinary shares of Sh. 10 each
12,500
3,800
Revaluation surplus
2,700
260
Retained profit
13,600
2,350
28,800
6,410
Non-current liabilities:
Deferred consideration
1,800
Nil
Deferred consideration
2,450
500
Deferred tax
1,920
375
Current liabilities:
Trade payables
3,200
655
Current tax
1,345
360
Total equity and liabilities
39,515
8,300

Additional information:
1
On 1 May 2019, Aby Limited acquired 80% of the share capital of Benta Limited. At this date, the retained profit of Benta Limited amounted to Sh.2,200 million and the revaluation surplus stood at Sh.260 million. Aby Limited paid an initial cash consideration of Sh.5,940 million and agreed to pay the owners of Benta Limited a further Sh.1,800 million on 1 May 2021. The accountant of Aby Limited has recorded the full amounts of both elements of the consideration in investments. Aby Limited has a cost of capital of 8% and the appropriated discount factor is 0.857.
2
On 1 May 2019, the fair values of Benta Limited's net assets were equal to their carrying amounts with the exception of some inventory which had cost Sh.193 million but had a fair value of Sh.233 million. On 30 April 2020, 10% of these goods remained in the inventory of Benta Limited.
3
During the year, Aby Limited sold goods worth Sh.515 million to Benta Limited at a profit mark up of 25% above the cost. At 30 April 2020, Benta Limited still held Sh.75 million of these goods in its inventory
4
On 1 May 2019, Aby Limited also acquired an investment of 30% of the ordinary shares in Ceda Limited which cost Sh 380 million. Ceda Limited reported a profit of Sh.850 million during the year ended 30 April 2020
5
Aby Limited has a policy of valuing non-controlling interests at fair value. On 1 May 2019, the non-controlling interest in Benta Limited had a fair value of Sh.1,317 million.
6
Impairment tests carried out on 30 April 2020 concluded that the value of the investment in Ceda Limited was impaired by Sh.85 million while the consolidated goodwill was impaired by Sh. 100 million.

Required:
(i).  Calculate the carrying amount of the investment in Ceda Limited to be included within the consolidated statement of financial position using the equity method 
(ii). The consolidated statement of financial position for the Aby Group as at 30 April 2020


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November 2019

 1 Questions
Question 4b
​​On 1 July 2018, Beyond Ltd. held a number of insignificant investments in equity instruments that do not have a quoted price and are therefore carried at cost. During the year ended 30 June 2019, Beyond Ltd. acquired a subsidiary company, Horizon Ltd. and an associate company, Sky Ltd.

The draft summarised statements of financial position of Beyond Ltd. and its subsidiary company as at 30 June 2019 are shown below:

Assets
Beyond Ltd. 
Horizon Ltd.
Non-current assets:
Sh."000"
Sh."000"
Property, plant and equipment
1,162,800
321,390
Investments
774,500
-
1,937,300
321,390
Current assets:
Inventories
523,600
398,500
Trade and other receivables
401,860
203,650
Cash and cash equivalents
52,600
1,100
978,060
603,250
Total assets
2,915,360
924,640
Equity and liabilities:
Equity:
Ordinary share capital(Sh.10 each)
600,000
200,000
Share premium
100,000
50,000
Retained earnings
1,776,260
502,540
2,476,260
752,540
Current liabilities:
Trade and other payables
385,200
148,500
Income tax
53,900
23,600
439,100
172,100
Total equity and liabilities
2,915,360
924,640

Additional information:
1
Beyond Ltd. acquired 80% of the ordinary shares of Horizon Ltd. on 1 January 2019. The purchase consideration was made up of cash of Sh.650 million paid on 1 January 2019 and a further cash payment of Sh.147 million deferred until 1 January 2020. No accounting entries have been made in respect of the deferred cash payment. An appropriate discount rate is 5% per annum. Beyond Ltd. recognises goodwill on non controlling interest using the fair value method.
2
The fair value of the assets, liabilities and contingent liabilities as at 1 January 2019 were equal to their carrying value with the exception of a machine which had a fair value of Sh.60 million in excess of its carrying amount. This machine had a 6 years remaining useful life on 1 January 2019.
3
The fair value of the non contrólling interest in Horizon Ltd. on 1 January 2019 was estimated at Sh.150 million.
4
In June 2019, Horizon Ltd. sold goods to Beyond Ltd. for Sh.16 million. Half of these goods were still held in the stock of Beyond Ltd. on 30 June 2019. Horizon Ltd. marks up all goods by 20%.
5
On 30 June 2019, Horizon Ltd.'s trade receivables still included the Sh.16 million due from Beyond Ltd. However, Beyond Ltd.'s trade payables only included Sh.11 million in respect of this transaction as it had made a payment of Sh. 5 million to Horizon Ltd. on 30 June 2019.
6
On 1 July 2018, Beyond Ltd. acquired 30% of the ordinary shares in Sky Ltd. for cash payment of Sh.120.5 million which gave Beyond Ltd. significant influence over Sky Ltd. At that date, a property owned by Sky Ltd. had a fair value of Sh.50 million in excess of its carrying amount. This property had a remaining useful life of 20 years-on 1 July 2018.
7
In the year ended 30 June 2019, Horizon Ltd. made a profit of Sh.56.8 million out of which it paid a dividend of Sh.20 million on 30 April 2019. Beyond Ltd. debited the dividend received to cash and credited it to investments.

Required: 
Consolidated statement of financial position as at 30 June 2019.


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May 2019

 1 Questions
Question 2
​ ​​​Fanaka Ltd. acquired 90% of the ordinary shares of Sh.10 par value in Mali Ltd. on 1 January 2015 when Mali Ltd. had revenue reserves of Sh.1,500 million. 

Mali Ltd. acquired 160 million ordinary shares of Sh.10 par value in Kwetu Ltd. on 1 January 2016 when Kwetu Ltd. had revenue reserves of Sh.500 million. 

The financial statements of the three companies for the year ended 31 December 2018 are provided below.

Income statement

Fanaka Ltd.
Sh."million"
Mali Ltd.
Sh."million"
Kwetu Ltd.
Sh."million"
Revenue
7,200
4,700
2,450
Cost of sales
(5,400)
(3,760)
(1,715)
Gross profit
1,800
940
735
Investment income
218
40
-
2,018
980
735
Operating expenses
(740)
(390)
(295)
Profit before tax
1,278
590
440
Income tax expense
(420)
(230)
(176)
Profit after tax
858
360
264
Dividend - Paid
(200)
(120)
(100)
               - Proposed
(300)
(120)
(100)
Retained profit
358
120
64

Statements of financial position as at December 2018:
Fanaka Ltd.
Sh."million"
Mali Ltd.
Sh."million"
Kwetu Ltd.
Sh."million"
Non-current assets:
Property, plant and equipment
15,500
9,700
6,500
Goodwill
-
-
500
Investment in - Mali Ltd.
8,400
-
-
                      - Kwetu Ltd.
-
3,500
-
Current assets
4,400
2,800
1,700
28,300
16,000
8,700
Equity and liabilities:
Ordinary share capital 
10,000
6,000
4,000
Share premium
4,000
2,500
2,500
Revenue reserves
3,800 
2,720
1,354
17,800
11,220
7,854
Non-current liabilities:
Bank loan
8,000
3,000
-
Current liabilities
2,500
1,780
846
10,500
4,780
846
28,300
16,000
8,700

Additional information:
1
​On 31 December 2017, Mali Ltd. held stock bought from Fanaka Ltd. for Sh.120 million and on which Fanaka Ltd. had made a profit of 33/,% on cost.
2
In the year ended 31 December 2018, Fanaka Ltd. made sales of Sh.400 million to Mali Ltd. at a profit of 20% on selling price. One quarter of the goods purchased by Mali Ltd. from Fanaka Ltd. in the year remained unsold as at 31 December 2018.
3
All the three companies paid the interim dividend on 15 June 2018. No company has accrued its share of proposed dividend from either its subsidiary or associate company.
4
​The inter-company outstanding balances as a result of trading were as follows:
  • Due from Fanaka Ltd. to Mali Ltd. Sh.45 million.
  • Due from Mali Ltd. to Kwetu Ltd. Sh.20 million.
5
Any goodwill on acquisition of the subsidiary or associate is considered impaired by 20%.
6
Fair value of tangible assets were not materially different from their book values on the date Fanaka Ltd. acquired its control in Mali Ltd. and on the date Mali Ltd. acquired its holding in Kwetu Ltd.
 
Required: 
(a) Consolidated income statement for the year ended 31 December 2018. 
(b) Consolidated statement of changes in equity. 
(c) Consolidated statement of financial position as at 31 December 2018.


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May 2018

 1 Questions
Question 5a
​​On I April 2017, H Ltd. acquired four million ofthe ordinary shares of S Ltd., paying Sh.4.50 per share. At the same time, H Ltd. purchased Sh.500,000 of S Ltd.'s 10% redeemable preference shares. At the acquisition date, the retained earnings of S Ltd. were Sh.400,000. 

The following are the draft statements of financial position ofthe two companies as at 31 March 2018:

H Ltd.
Sh."000"
S Ltd.
Sh."000"
Non-current assets:

Land and buildings
22,000
12,000
Plant and equipment
20,450
10,220
Investments in S Ltd.:
Equity
18,000
-
Preference shares
500
-
60,950
22,220
Current assets:
Inventories
9,850
6,590
Trade receivables
11,420
3,830
Cash and bank
490
-
21,760
10,420
82,710
32,640
Equity:
Ordinary shares (Sh. 1 each)
10,000
5,000
10% preference shares
-
2,000
Retained earnings
51,840
14,580
61,840
21,580
Non-current labilities:
10% Debentures 2022
12,000
4,000
Current liabilities:
Trade payables
6,400
4,510
Bank overdraft
-
570
Taxation
2,470
1,980
8,870
7,060
Total equity and liabilities
82,710 
32,640

Extracts from the income statement of S Ltd. before intra group adjustments for the year to 31 March 2018 were as follows:

Sh."000"
Profit before tax
5,400
Taxation expenses
(1,600)
3,800

Additional information:
1
 Included in the land and buildings of S Ltd. is a large piece of development land at a cost of Sh.5 million. The fair value of the land on the date S Ltd. was acquired was Sh.7 million and by 31 March 2018, this value had risen to Sh.8.5 million. The group's valuation policy for development land is that it should be carried at fair value and not depreciated.
2
On the date of acquisition of S Ltd., the company's plant and equipment included plant that had a fair value of Sh.4 million in excess of its carrying value.
This plant had a remaining useful life of 5 years. The group calculates depreciation on a straight-line basis.
The fair value of the other net assets of S Ltd. approximated their carrying values.
3
 During the year, S Ltd. sold goods to H Ltd. for Sh.1.8 million. S Itd. adds a 20% mark up on cost to all its sales. Goods with a transfer price of Sh.450,000 were included in the inventory of II L.td. as at-31 March 2018. The balance of the current accounts of H Ltd. and S Ltd. was Sh.240,000 on 31 March 2018.
4
An impairment test carried out on 31 March 2018 showed that the consolidated goodwill was impaired by Sh.1,488,000.
5
S Ltd. had paid its preference dividend in full and ordinary dividends of Sh.500,000.

Required: 
Consolidated statement of financial position of H Ltd. and its subsidiary S L.td. as at 31 March 2018.


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November 2017

 1 Questions
Question 2b
​​Mwanzo Ltd., Safari Ltd. and Upya Ltd. operate in the clothing industry. 
The following information relates to the financial position of the three companies as at 30 September 2017:

Mwanzo Ltd.
Sh."000"
Safari Ltd.
Sh."000"
Upya Ltd.
Sh."000"
Non-current assets:
Property, plant and equipment
7,960
4,600
2,680
Patents
500
840
Investments in: Safari Lid.
5,000
                         Upya Ltd.
1,600
                         Others
300
400
120
15,360
5,840
2,800
Current assets:
Inventories
1,140
800
600
Trade receivables
840
760
800
Bank
-
300
240
1,980
1,860
1,640
Total assets
17,340
7,700
4,440
Equity and liabilities:
Equity and reserves:
Ordinary shares of Sh.20 each
4,000
2,000
1,000
Reserves: Share premium
2,000
1,000
200
                 Revenue reserves
9,000
3,800
2,400
15,000
6,800
3,600
Non-current liabilities:
Deferred tax
400
-
160
Current liabilities:
Trade payables
1,500
900
560
Current tax
280
-
120
Bank overdraft
160
-
-
1,940
900
680
Total equity and liabilities
17,340 
7,700
4,440

Additional information:
1
Mwanzo Ltd. acquired its investments as shown below:
Company
Number of shares
acquired
Cost of
investment
Sh."000"
Retained
earnings 
Sh."000"
Date of
acquisition
Safari Ltd.
80,000
5,000
2,400
1 October 2015
Upya Ltd.
20,000
1,600
1,600
1 October 2016
2
At the date of its acquisition, the fair value of Safari Ltd.'s net assets were equal to their book values, with the exception of land that had a fair value of Sh.400,000 in excess of its book value
3
​On 1 September 2017. Mwanzo Ltd. processed an invoice for Sh.100,000 in respect of an agreed allocation of management fee to Safari Ltd. As at 30 September 2017, Safari Ltd. had not accounted for this transaction. Prior to this, the current accounts between the two companies had been agreed at Safari Ltd. owing Sh.140,000 to Mwanzo Ltd. (included in trade receivables and trade payables respectively).
4
​During the year ended 30 September 2017, Upya Ltd. sold goods to Mwanzo Ltd. at a selling price of Sh.280,000, which gave Upya Ltd. a profit of 40% on cost. Mwanzo Ltd. had halfof these goods in inventory as at 30 September 2017.
5
The fair value of the non-controlling interest (NCI) in Safari Ltd. was Sh.1,500,000.

Required: 
Group statement of financial position as at 30 September 2017.


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May 2017

 1 Questions
Question 4
​ ​​The following financial statements relate to Hema Ltd. and its investment companies Shuka Ltd. and Ajabu Ltd. for the year ended 30 April 2017: 

Income statement for the year ended 30 April 2017

Hema Ltd.
Sh "million"
Shuka Ltd.
Sh "million"
Ajabu Ltd.
Sh "million"
Revenue
1,200
600
300
Cost of sales
(650)
(250)
(100)
Gross profit
550
350
200
Investment income
70
-
1
Distribution cost
(100)
(40)
(30)
Administrative expense
(130)
(90)
(50)
Finance cost
(40)
(20)
(20)
Profit before tax
350
200
101
Income tax expense
(70)
(50)
(31)
Profit for the year
280
150
70
Dividends paid
(50)
(50)
(30)
Retained profit for the year
230
100
40
Retained profit brought forward
480
275
160
Retained profit carried forward 
710
375
200

Statement of financial position as at 30 April 2017

Hema Ltd.
Sh. "million" 
Shuka Ltd.
Sh. "million" 
Ajabu Ltd.
Sh. "million" 
Assets
Non-current assets:
Property, plant and equipment
1,250
800
650
Intangible assets
200
70
80
Investments
850
50
20
2,300
920
750
Current assets:
Inventory
200
75
60
Trade and other receivables
300
90
80
Financial assets at fair value
30
20
10
Cash and cash equivalents
150
40
40
680
225
190
Total assets
2,980
1,145
940
Equity and liabilities:
Equity:
Ordinary share capital
1000
200
200
Share premium 
300
50
50
Revaluation reserve
200
50
50
Retained profits 
710
375
200
2,210
675
500
Non-current liabilities:
10% loan stock
500
200
200
Current liabilities:

Trade and other payables
250
250
220
Current tax
20
20
20
270
270
240
Total equity and liabilities
2,980
1,145
940

Additional information:
1
Hema Ltd. acquired the investments in other companies as follows:
Company
Date
Shareholding
Cost of
purchase
Sh. "million"
Revaluation
reserve
Sh. "million"
Retained
profits
Sh. "million"
Shuka Ltd.
1 May 2014
80%
300
20
80
Ajabu Ltd.
1 May 2015
40%
200
25
150
Hema Ltd. also invested in half of the 10% loan stock in Shuka Ltd.
2
The fair value of the non-controlling interest in Shuka Ltd. was Sh.75 million on 1 May 2014.
3
During the year ended 30 April 2017, Hema Ltd. sold goods to Shuka Ltd. and Ajabu Ltd. as follows:

Selling price
Sh. "million"
Mark up
%
% of goods
held in stock
Shuka Ltd.
100
25
50
Ajabu Ltd.
50
25
Nil
4
On 1 May 2016, Hema Ltd. sold Shuka Ltd. an item of plant for Sh.200 million reporting a 25% profit on cost of the plant. The group charges depreciation at 20% per annum on cost of plant. 
5
All the goodwill of the two companies in which Hema Ltd. has invested are estimated to be impaired by 60% to the year ended 30 April 2017. 20% ofthe impairment relates to the current year.
6
Trade receivables and trade payables included Sh.50 million due from Shuka Ltd. to Hema Ltd. and Sh.10 million due from Ajabu Ltd. to Hema Ltd.
7
All dividends and interest had been paid by the end of the year.

Required:
(a).  Consolidated income statement for the year ended 30 April 2017. 
(b).  Statement of changes in equity for the year ended 30 April 2017. 
(c).  Consolidated statement of financial position as at 30 April 2017.


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November 2016

 1 Questions
Question 4
​​The following information was extracted from the financial statements of A Ltd., B Ltd and C Ltd. for the year ended 30 September 2016: 

Statement of financial position as at 30 September 2016:

A Ltd.
Sh. "million"
B Ltd.
Sh. "million"
C Ltd.
Sh. "million"
Non-current assets:
Property, plant and equipment
950
750
450
Investments
700
-
-
Intangible assets
200
150
100
Current assets:
Inventories
250
200
120
Trade receivables
220
170
80
Financial assets at fair value
180
130
120
Cash and bank balances
100
50
80
Total assets
2,600
1,450
950
Equity and liabilities:

Equity and reserves

Ordinary share capital (Sh.10 par value)
500
200
100
Share premium
200
100
50
Retained earnings
400
350
250
Shareholders funds
1,100
650
400
Non-current liabilities:

10% debentures 
600
200
200
Deferred tax 
250
100
50
Current liabilities:
Trade payables
300
250
150
Current tax
250
150
100
Proposed dividends
100
100
50
Total equity and liabilities
2,600
1,450
950

Additional information:
1
A Ltd. acquired its investments as shown below:

Company
Number of shares
acquired
Cost of investment
Sh. "million"
Retained earnings
Sh. "million"
Date
of acquisition
B Ltd.
16 million
480
150
1 October 2014
c Ltd.
3 million
120
100
1 October 2015
A Ltd. also invested in half of the 10% debentures of B Ltd. The fair value of the non-controlling interest in B Ltd. amounted to Sh.120 million.
2
Immediately prior to the date of its acquisition, B Ltd. revalued its non-current assets in readiness for the acquisition as shown below:
Item
Carrying amount
Sh. "million"
Fair value
Sh. "million"
Remaining life
(Years)
Equipment
250
290
10
Patents
150
160
5
Equipment and patents are depreciated or amortised on a straight-line basis over their remaining useful lives respectively.
3
During the year, A Ltd. sold a non-current asset to B Ltd. for Sh.180 million. A Ltd. marked up the equipment at 20% on cost. B Ltd. included the equipment in its non-current assets and charged depreciation at the rate of 20% per annum on cost.
4
B Ltd. sold inventories to A Ltd. during the year for Sh.150 million. B Ltd. marked up these goods at 50% on cost. Half of these goods were still held by A Ltd. as at the year end.
5
A Ltd. owed B Ltd. Sh.100 million as at the year end with regard to the transaction in note 4 above. The books of A Ltd. however showed that it owed B Ltd. only Sh.80 million. A Ltd. had sent a cheque to B Ltd. on 25 September 2016 which was not received by B Ltd. until 5 October 2016.
6
The group uses the full goodwill method. However, it does not amortise goodwill, instead goodwill is assessed for impairment annually. Impairment test for the year ended 30 September 2016 revealed that none of the goodwill had suffered any impairment since acquisition.

Required: 
Group statement of financial position as at 30 September 2016.


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May 2016

 1 Questions
Question 4
​​Jamii Ltd is a listed company operating in the service industry. During the year ended 30 April 2016, the company acquired two companies, Bora Ltd. and Njema Ltd. as part of its expansion plan. The following statements of comprehensive income relate to Jamii Ltd. and its investee companies Bora Ltd. and Njema Ltd. for the year ended 30 April 2016:

Jamii Ltd.
Sh. "million"
Bora Ltd.
Sh. "million"
Njema Ltd.
Sh. "million"
Revenue
102,180
52,800
33,150
Cost of sales
(76,635) 
(36,990)(26,520)
Gross profit
25,545
15,810
6,630
Investment income
584
60
-
26,129
15,870
6,630
Operating expenses:

Distribution expenses
(12,810)
(7,260)
(2,880)
Administrative expenses
(7,779)
(4,815)
(1,695)
Finance costs
(720)
(600)
(45)
Profit before taxation
4,820
3,195
2,010
Income tax expense
(1,530)
(1,125)
(645)
Profit after tax
3,290
2,070
1,365
Other comprehensive income:
Revaluation of intangible asset
-
530
-
Total comprehensive income
3,290
2,600
1,365

Additional information:
1
On 1 May 2015, Jamii Ltd. acquired 80% of 1,125 million ordinary shares of Sh.10 each in Bora Ltd. for Sh.18,000 million. As at that date, the share premium account of Bora Ltd. had a balance of Sh.3,750 million while retained profit was Sh.3,705 million. 
2
​On 1 November 2015, Jamii Ltd. acquired 50% of 600 million ordinary shares of Sh.10 each of Njema Ltd. for Sh.6,300 million. As at that date, the share premium account of Njema Ltd. had a balance of Sh.1,500 million. The retained profit as at 1 May 2015 was Sh.2,085 million. The profit of Njema Ltd. accrued evenly throughout the year. The investment should be accounted for using the equity method.
3
On the date of acquisition of Bora Ltd., the property, plant and equipment of the company had a fair vałue which was in excess of book value by Sh.390 million, with a remaining useful life of 5 years.
4
The fair value of net assets acquired in Njema Ltd. approximated the book value as at the date of acquisition.
5
During the year ended 30 April 2016, Bora Ltd. sold goods worth Sh.6,000 million to Jamii Ltd. Bora Ltd. had marked up the goods by 25% above the cost. One quarter of these goods were included in the closing inventory of Jamii Ltd.
6
The goodwill arising on acquisition of the investee companies had suffered impairment losses to the extent of 25% during the year ended 30 April 2016. The group's policy is to apply the partial goodwill method.
 
Required: 
(a).  Computation of goodwill on each investment. 
(b).  Group statement of comprehensive income for the year ended 30 April 2016. 
(c).  Group statement of changes in equity for the year ended 30 April 2016.


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November 2015

 1 Questions
Question 5
​ ​​The following is an extract of the financial statements of A Ltd., B Ltd. and C Ltd. for the year ended 30 September 2015:

                Income statement for the year ended 300 September 2015
A Ltd.
Sh."million"
B Ltd.
Sh."million"
C Ltd.
Sh."million"
Revenue
9,120 
4,940
4,560
Cost of sales
(3,610)
(1,092)
(1,064)
Gross profit
5,510
3,848
3,496
Distribution cost
(665)
(428)
(380)
Administrative expenses
(695)
(170)
(380)
Finance cost
(65)
(20)
-
Profit before tax
4,085
3,230
2,736
Income tax expense
(1,660)
(1,078)
(848)
Profit for the period
2,425
2,152
1,888
Retained profit brought forward
7,612
1,452
1,250

                   Statement of financial position as at 30 September 2015
A Ltd.
Sh."million"
B Ltd.
Sh."million"
C Ltd.
Sh."million"
Non-current assets:
Property, plant and equipment
6,096
4,855
2,612
Investments
4,350
50
-
10,446
4,905
2,612
Current assets:
Inventory
1,460
853
737
Accounts receivable
1.880
765
573
Cash and bank balances
1,224
187
468
4.564
1,805
1,778
Total assets
15,010
6,710
4,390
Equity and liabilities:
Capital and reserves:
Ordinary share capital
2,600
1,600
400
Share premium
1,500
300
-
Retained profit
8,237
3,604
3,138
12,337
5,504
3,538
Non-current liability:
Loan from bank
650
200
-
Current liabilities:
Trade payables 
1,463
646
382
Current tax
560
360
220
Bank overdraft
-
-
250
2,023
1,006
852
Total equity and liabilities
15,010
6,710
4,390

Additional information: 

1. A Ltd. acquired 40% of C Ltd. on 1 October 2014 for Sh.700 million. 
2. A Ltd. also acquired 80% of the ordinary shares of B Ltd. on 1 January 2015 at a cost of Sh.3,430 million. The fair value of non-controlling interest as at this date amounted to Sh.800 million. 
3. The fair value of B Ltd.'s property, plant and equipment on the date of acquisition was Sh.210 million above the book value with exactly 5 years remaining on the useful life of this property. 
4. During the year ended 30 September 2015, B Ltd. sold goods to A Ltd. for Sh.140 million. B Ltd. marked up the goods at ​\(16\frac{2}{3}\%\)​ on cost. Half of the goods remained in the stock of A Ltd. as at the year end. 
5. As at 30 September 2015, A Ltd. owed B Ltd. Sh.80 million while C Ltd. owed A Ltd. Sh.15 million. 
6. Goodwill was impaired as follows:
    B Ltd. 25%
    C Ltd. 10%. 

Required: 
Prepare the following financial statements in the books of A Ltd. for the year ended 30 September 2015: 
(a) Consolidated statement of comprehensive income. 
(b) Statement of changes in equity. 
(c) Statement of financial position.


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Pilot September 2015

 1 Questions
Question 1
​ ​ ​ ​ On 1 October 2014, P Ltd. acquired 60% of the equity share capital of S Ltd. in a share exchange of two shares of P Ltd. for three shares of S Ltd. On this date, shares of P Ltd. were trading at Sh.8 each. 
Below are the financial statements for the two companies for the year ended 31 March 2015.​

Income statements for the year ended 31 March 2015:
P Ltd.  
Sh."000"
S Ltd.   
Sh."000"
Revenue
170,000
84,000
Cost of sales
(126,000)
(64,000)
Gross profit
44,000
20,000
Distribution costs
(4,000)
(4,000)
Administrative expenses
(12,000)
(6,400)
Finance costs 
(600)
(800)
Profit before tax
27,400
8,800
Income tax expense
9,400
2,800
Profit for year
18,000
6,000

Statements of financial position as at 31 March 2015:
Sh."000"
Sh."000"
Assets
Non-current assets
Property, plant and equipment
60,900
18,900
Investment property
20,300
6,300
81,200
25,200
Current assets
Inventory
12,080
5,000
Receivables
11,920
4,900
Bank
8,000
3,300
32,000
13,200
113,200
38,400
Equity and liabilities
Capital and reserves
Ordinary share capital (Sh.1 each)
20,000
8,000
Retained earnings 
70,800
13,000
98,800
21,000
Non-current liabilities
10% loan notes
6,000
8,000
Current liabilities
Trade payables
12,300
7,050
Accruals
4,100
2,350
16,400
9,400
113,200
38,400

Additional information: 
  1. The issue of shares on acquisition of S Ltd. has not yet been recorded by P Ltd.
  2. As at the acquisition date, fair values of S Ltd.'s assets were equal to their carrying amount except for an item of plant, which had a fair value of Sh.2 million in excess of the carrying amount. The plant had a remaining useful life 5 years as at the acquisition date. S Ltd. has not revalued its assets. 
  3. Sales from S Ltd. to Patterson Ltd. in the post acquisition period amounted to Sh.8 million. S Ltd. made a mark up of 40%. Sh.2.8 million of these goods at cost to P Ltd. were still included in inventory on 31 March 2015. 
  4. S Ltd.'s trade receivables include Sh.800,000 due from P Ltd. which did not agree with the corresponding payables. This was due to cash paid by P Ltd. which was yet to be received by S Ltd. 
  5. P Ltd. has a policy of accounting for any non controlling interest at fair value. Fair value of goodwill attributable to non controlling interest in S Ltd. was Sh.2.4 million. 
  6. Neither of the company declared dividends in the year ended 31 March 2015.
​​​​Required: 
(i) Consolidated statement of comprehensive income for the year ended 31 March 2015. 
(ii) Consolidated statement of financial position as at 31 March 2015.


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