Metropolis Ltd and Casper Ltd are both crypto currency developers. The companies are situated in South Africa. On 1 January 2019, Metropolis Ltd acquired 80% of the shares in Casper Ltd. The financial year-end of both companies is 31 December. Below is an extract from the trial balances of the companies on 31 December 2020:
Additional information
1. On the date of acquisition, the carrying amount of Casper Ltd’s assets and liabilities were deemed equal to the fair value thereof. Each share of Casper Ltd carries one vote and voting rights alone determine control. On the acquisition date, CasperLtd’s equity consisted of:
Ordinary Share Capital R300 000
Retained earnings R 1 700 000
Other Componenets of equity. R95 200
It is group policy to show goodwill at cost less impairment in the consolidated financial statements. Goodwill was not impaired during the current year.
The issued share capital of both companies remained unchanged since acquisition.
2.Both companies bank at Hope Bank. Metropolis Ltd and Casper Ltd did not guarantee overdraft bank accounts to one another should one of them default.
3.The intragroup loan was included in trade and other receivables and trade and other payables respectively. The loan amounts to R200 000. Casper Ltd granted the loan to Metropolis Ltd. The loan is payable in the next twelve months and therefore classified as trade and other receivables and payables respectively.
4.Assume that the profit after tax for the current financial year amounts to R2 073 600 for Casper Ltd.
Inventory amounts to?
1. 1 000 000
2. 1 680 000
3. 1 544 000
4. 680 000
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