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You work for a large accounting firm KMPG as a Senior Accountant. Your client Bear plc acquired shares in Wolf plc several years back and you are responsible for the preparation of the year end work.

The following are the Statements of financial position for Bear plc and Wolf plc as at 31 March 2020, together with the additional information provided below.

		Bear plc	Wolf plc
Non-Current Assets
Land and buildings		975,000	220,000
Plant and equipment		245,000	75,000
Fixtures and fittings		375,000	54,500
Intangibles: Development costs		30,000
Investment in Wolf plc		350,000
Total Non-Current Assets		1,975,000	349,500
Current Assets
Inventory		625,000	165,000
Trade and other receivables		105,000	76,450
Cash and cash equivalents		65,200	24,500
Total Current Assets		795,200	265,950
Total Assets		2,770,200	615,450

Equity
Ordinary shares (1)		700,000	120,000
Preference shares (1)		300,000	30,000
Retained earnings		1,427,750	335,000
Total Equity		2,427,750	485,000
Current Liabilities
Trade payables		105,000	42,500
Taxation		82,450	33,450
Dividends		95,000	32,000
Total Current Liabilities		282,450	107,950
Non-Current Liabilities
Bank Loan		60,000	22,500
Total Non-Current Liabilities		60,000	22,500
Total Equity and Liabilities		2,770,200	615,450

Notes to the above financial statements:

1. Bear acquired 84,000 ordinary shares in Wolf on 31 March 2017. They also acquired 15% of the preference shares.

2. At the date of acquisition, the retained earnings of Wolf plc were 205,000.

3. During the year, Bear sold goods to Wolf for 10,400 which included a mark-up on cost of 30%. At the end of the year, 50% of this stock was still held by Wolf plc.

4. At the date of acquisition, the land and buildings of Wolf plc had a fair value of 50,000 more than their book value. This fair value increase has not been incorporated into the statement of financial position for Wolf plc. Land accounts for 20% of this amount. Wolf acquired the building on 1 April 2012. The group policy is to depreciate buildings over a period of 50 years.

5. Wolf spent 42,000 on developing a new and innovative product. Wolfs policy is to expense development costs, however, it is Bears policy to capitalise development costs (i.e. treat it as an asset). The following provides a breakdown of expenditure by Wolf:

Development costs up to 31 March 2017 32,000

Development costs after 31 March 2017 10,000

6. On the 31March 2020, an impairment test was carried out on the goodwill arising from the acquisition of Wolf plc. The report indicated that the goodwill needs to be written down by 10,000.

7. Wolf declared a dividend to its ordinary shareholders on 15 March 2020 which remained unpaid by 31 March 2020. Bear has not accounted for this income in their financial statements.

YOU ARE REQUIRED TO:

1. Prepare the consolidation schedule for Wolf plc at 31 March 2020.

Show workings + Use the following headings: Total - Pre - Post - NCI

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