QUESTION 1 (25 Marks)

River Ltd acquired 60 000 of the Ordinary shares in Stream Ltd on 1 March 2018. On this date Stream
Ltd had Retained earnings of N$15 000 and the carrying amounts of the assets and liabilities were equal
to the fair values thereon.

The following represents the Trial balances of River Ltd and Stream Ltd at 28 February 2020

River Ltd Stream Ltd

N$ N$

DEBITS

Land and Buildings 31 500 90 000

Machinery and equipment - 10 000

Investment in Stream Ltd at fair value(cost price 160 000 -

N$160 000)

Bank 153 500 -

Trade and other receivables - 65 000

Inventory 500 112 000

Taxation 10 500 10 000

Dividends paid 9 000 8 000/

365 000 295 000

CREDITS

Ordinary share capital (N$2 Shares) 150 000 160 000

Retained earnings 31 500 34 000

Revaluation surplus 21 200 -

Trade and other payables 125 600 23 700

Bank overdraft - 48 250

Profit before tax and without dividend income 30 700 29 000

Dividends received 6 000 -

365 000 295 000

Required:

1.1 Prepare the Consolidated financial statements of River Ltd Group at 28 February
2020. Notes to the financial statements are not required.
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