13.2 The balance sheets of Left plc and Right plc at 31 December 1999, the accounting date for both companies, were as follows. Left plc Right plc £000 £000 Tangible fixed assets XXXXXXXXXXStocks...

13.2 The balance sheets of Left plc and Right plc at 31 December 1999, the accounting date for both companies, were as follows. Left plc Right plc £000 £000 Tangible fixed assets 60000 40000 Stocks 10000 9000 Other current assets 12000 10000 Current liabilities (9000) (8000) Quoted debentures (15000) (12000) ––––––– ––––––– 58000 39000 ––––––– ––––––– ––––––– ––––––– Equity share capital (£1 shares) 30000 20000 Share premium account 10000 5000 Profit and loss account 18000 14000 ––––––– ––––––– 58000 39000 ––––––– ––––––– ––––––– ––––––– On 31 December 1999, Left plc purchased all the equity shares of Right plc. The purchase consideration was satisfied by the issue of 6 new equity shares in Left plc for every 5 equity shares purchased in Right plc. At 31 December 1999 the market value of a Left plc share was £2.25 and the market value of a Right plc share was £2.40. Relevant details concerning the values of the net assets of Right plc at 31 December 1999 were as follows: ? The fixed assets had a fair value of £43.5 million. ? The stocks had a fair value of £9.5 million. ? The debentures had a market value of £11 million. ? Other net assets had a fair value that was the same as their book value. The effect of the purchase of shares in Right plc is NOT reflected in the balance sheet of Left plc that appears above. Requirements (a) Prepare the consolidated balance sheet of the Left plc group at 31 December 1999 assuming the business combination is accounted for ? as an acquisition; and ? as a merger. (14 marks) (b) Discuss the extent to which the business combination satisfies the requirements of FRS 6 – Acquisitions and mergers for classification as a merger. You should indicate the other information you would need to enable you to form a definite conclusion