Question

Task 1 Below are the financial statements for Kennedy and Fortress for the year ended 31/12/20X0. Kennedy acquired an 80% share in Fortress on 31/12/20X0. All values stated in the statements below are considered to be the fair values at the date of acquisition. Non-controlling interests are to be accounted for using the proportionate approach. Immediately following the acquisition on 31/12/20X0 Kennedy decided to write off as an impairment charge 25% of the goodwill on the acquisition of Fortress and this has not yet been accounted for in the financial statements below. You are required to construct the Group Consolidated Statement of Financial Position and Group Consolidated Statement of Comprehensive Income for the Kennedy Group following the acquisition on the date 31/12/X0, taking into account the information provided above. Balance sheet is attached separately. Task 2: 1,500 words Kennedy has decided to write off 25% of the goodwill upon the acquisition of Fortress in task 1 above. The process of asset impairment involves several key decisions in relation to measurement and valuation within financial reporting. You are required to critically evaluate the concept of asset impairment in terms of whether you consider this process to provide information that is useful to shareholders and the wider stakeholder community in the context of published financial information. Balance Sheets at 31/12/202X £000's Kennedy Fortress Non-current assets Property, plant, equipment 6,250 845 Investment in subsidiary 1,350 7,600 845 Current assets Inventories 700 250 Trade receivables 500 143 Bank 1,625 425 2,825 818 Total assets 10,425 1,663 Equity and reserves Share capital 5,000 1,000 General Reserve 1,500 125 Retained earnings 325 211 Shareholders funds 6,825 1,336 Non-current liabilities Loan 3,000 195 Current liabilities Trade payables 600 132 600 132 Total equity and liabilities 10,425 1,663 Income statements for year ended 31/12/202X £000's Kennedy Fortress Sales 7,500 4,250 Cost of sales -6,000 -2,975 Gross profit 1,500 1,275 Expenses -1,200 -1,020 Profit before tax 300 255 Income tax expense -60 -51 Profit after tax 240 204

          Task 1

Below are the financial statements for Kennedy and Fortress for the year ended 31/12/20X0. Kennedy acquired an 80% share in Fortress on 31/12/20X0. All values stated in the statements below are considered to be the fair values at the date of acquisition. Non-controlling interests are to be accounted for using the proportionate approach.

Immediately following the acquisition on 31/12/20X0 Kennedy decided to write off as an impairment charge 25% of the goodwill on the acquisition of Fortress and this has not yet been accounted for in the financial statements below.

You are required to construct the Group Consolidated Statement of Financial Position and Group Consolidated Statement of Comprehensive Income for the Kennedy Group following the acquisition on the date 31/12/X0, taking into account the information provided above. Balance sheet is attached separately.

Task 2: 1,500 words

Kennedy has decided to write off 25% of the goodwill upon the acquisition of Fortress in task 1 above. The process of asset impairment involves several key decisions in relation to measurement and valuation within financial reporting. You are required to critically evaluate the concept of asset impairment in terms of whether you consider this process to provide information that is useful to shareholders and the wider stakeholder community in the context of published financial information.

Balance Sheets at 31/12/202X
£000's
Kennedy Fortress
Non-current assets
Property, plant, equipment 6,250 845
Investment in subsidiary 1,350
7,600 845
Current assets
Inventories 700 250
Trade receivables 500 143
Bank 1,625 425
2,825 818
Total assets 10,425 1,663
Equity and reserves
Share capital 5,000 1,000
General Reserve 1,500 125
Retained earnings 325 211
Shareholders funds 6,825 1,336
Non-current liabilities
Loan 3,000 195
Current liabilities
Trade payables 600 132
600 132
Total equity and liabilities 10,425 1,663

Income statements for year ended 31/12/202X
£000's
Kennedy Fortress
Sales 7,500 4,250
Cost of sales -6,000 -2,975
Gross profit 1,500 1,275
Expenses -1,200 -1,020
Profit before tax 300 255
Income tax expense -60 -51
Profit after tax 240 204

Task 1

Below are the financial statements for Kennedy and Fortress for the year ended 31/12/20X0. Kennedy acquired an 80% share in Fortress on 31/12/20X0. All values stated in the statements below are considered to be the fair values at the date of acquisition. Non-controlling interests are to be accounted for using the proportionate approach.

Immediately following the acquisition on 31/12/20X0 Kennedy decided to write off as an impairment charge 25% of the goodwill on the acquisition of Fortress and this has not yet been accounted for in the financial statements below.

You are required to construct the Group Consolidated Statement of Financial Position and Group Consolidated Statement of Comprehensive Income for the Kennedy Group following the acquisition on the date 31/12/X0, taking into account the information provided above. Balance sheet is attached separately.

Task 2: 1,500 words

Kennedy has decided to write off 25% of the goodwill upon the acquisition of Fortress in task 1 above. The process of asset impairment involves several key decisions in relation to measurement and valuation within financial reporting. You are required to critically evaluate the concept of asset impairment in terms of whether you consider this process to provide information that is useful to shareholders and the wider stakeholder community in the context of published financial information.

Balance Sheets at 31/12/202X
£000's
Kennedy Fortress
Non-current assets
Property, plant, equipment 6,250 845
Investment in subsidiary 1,350
7,600 845
Current assets
Inventories 700 250
Trade receivables 500 143
Bank 1,625 425
2,825 818
Total assets 10,425 1,663
Equity and reserves
Share capital 5,000 1,000
General Reserve 1,500 125
Retained earnings 325 211
Shareholders funds 6,825 1,336
Non-current liabilities
Loan 3,000 195
Current liabilities
Trade payables 600 132
600 132
Total equity and liabilities 10,425 1,663

Income statements for year ended 31/12/202X
£000's
Kennedy Fortress
Sales 7,500 4,250
Cost of sales -6,000 -2,975
Gross profit 1,500 1,275
Expenses -1,200 -1,020
Profit before tax 300 255
Income tax expense -60 -51
Profit after tax 240 204

Added by Daniel A.

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