Case Stimulus
Bottle Nigeria Plc acquired 80% of Glass Limited‟s equity share since its incorporation about 10 years ago.
The two companies‟ draft financial statements as at December 31, 2019 are as follows:
Statements of profit or loss for the year ended December 31, 2019.
Bottle
Nig. Plc
Glass
Limited
N’000 N’000
Revenue 225,000 45,000
Cost of sales (130,500) (27,000)
Gross profit 94,500 18,000
Other expenses (76,500) (14,400)
Profit before taxation 18,000 3,600
Income tax expense (5,850) (1,125)
Profit for the year 12,150 2,475
Statement of financial position as at December 31, 2019
Bottle
Nig. Plc
Glass
Limited
Assets N‟000 N‟000
Non-Current Assets:
Property, plant and equipment 86,400 9,000
Investment in Glass Limited 3,600 --
90,000 9,000
Current Assets
Inventories 22,500 5,400
Trade receivables 29,250 1,800
Cash and cash equivalents 17,550 1,575
69,300 8,775
Total assets 159,300 17,775
Equity and liabilities
Equity
Ordinary share capital 90,000 4,500
Retained earnings 22,500 10,800
112,500 15,300
Current liabilities
Trade payables 40,950 1,350
Current tax liabilities 5,850 1,125
46,800 2,475
159,300 17,775
Additional Information:
(i) On December 31, 2019 Bottle Nigeria Plc dispatched goods which cost N3,600,000 to Glass Limited at an invoice price of N4,500,000. Glass Limited received the goods on January 2, 2020 and recorded the transaction on that date.
(ii) It is the group‟s policy to value non-controlling interest at acquisition at its proportionate share of the fair value of the subsidiary‟s identifiable net assets.