Consolidated statement of financial position for the Marlin group

The following are the statutory individual Statements of Financial Position for three companies at 30 June 2022:

 Marlin  Snapper Mackerel
 £000    £000    £000    £000    £000    £000

Non-current assets
Property, plant and equipment 15,000 8,000 7,000
Cost of investment in Snapper 11,000
Cost of investment in Mackerel 4,150
30,150 8,000 7,000
Current assets
Inventory 5,100 3,200 2,500
Trade receivables 2,200 1,100 1,450
Cash and cash equivalents 2,500 950 500
9,800 5,250 4,450
Total assets 39,950 13,250 11,450

Equity and liabilities
Equity
Ordinary share capital (£1 shares) 12,800 3,000 2,000
Retained earnings 20,900 7,500 5,500
Total equity 33,700 10,500 7,500

Current liabilities
Trade payables 5,510 2,120 3,550
Taxation payable 740 630 400
6,250 2,750 3,950
Total equity and liabilities 39,950 13,250 11,450

The following additional information is relevant:

1. On 1 July 2021 Marlin acquired 2,100,000 ordinary £1 shares in Snapper for £11,000,000 when the retained earnings in Snapper were £3,300,000.
2. On 1 July 2021 Marlin acquired 800,000 ordinary £1 shares in Mackerel for £4,150,000 when the retained earnings in Mackerel were £5,000,000.
3. In the year ended 30 June 2022 Marlin sold goods on credit to Snapper for £1,000,000. No goods remain in inventory at the year-end, but the full amount is still outstanding at the year-end. This is included in Marlin’s trade receivables and Snapper’s trade payables balances in the above statements of financial position.
4. During the year ended 30 June 2022 Marlin sold goods on credit to Mackerel for £90,000. Two-thirds of these goods remain in Mackerel's inventory at year-end. Marlin makes a 20% mark-up on all goods sold.
5. At 30 June 2022 an impairment test was conducted and it was found that the goodwill on acquisition of Snapper is impaired by £150,000 and the investment in Mackerel is impaired by £80,000.
   YOU ARE REQUIRED TO:
   a) Prepare a consolidated statement of financial position for the Marlin group as at 30 June 2022.
   b) Explain how fair values are incorporated into the consolidated financial statements and briefly discuss the conceptual basis for using fair value when measuring the values of assets acquired and liabilities assumed on the acquisition of a subsidiary.