Answer Happy

4. Required in each case a, b, c: 2 Prepare the statements of financial position of Mother Ltd and the consolidated statement of financial position as at 1 January 2020 after each transaction, using for each question the statements of financial position of Mother Ltd and Son Ltd as at 1 January 2020 which were as follows: Items Mother Ltd Son Ltd ($) ($) Cash 30,000 10,000 Other net assets 25,000 2,800 Total assets 55,000 12,800 Ordinary shares of $1 each 45,500 3,000 Retained earnings 9,500 9,800 Total equity 55,000 12,800 a. On 1 January 2020 Mother Ltd acquired all the ordinary share in Son Ltd for $15,000 cash. The fair value of the net assets in Son Ltd was their book value. b. Assume the purchase in case a was satisfied by the issue of 5,000 new ordinary shares in Mother Ltd. The fair value of a $1 ordinary share in Mother Ltd was $3. The fair value of the net assets in Son Ltd was their book value.