Acca f7 questions

Hi Sir, I am having some difficulties regards to acca december 2010 questions

On 1 June 2010, Premier acquired 80% of the equity share capital of Sanford. The consideration consisted of two
elements: a share exchange of three shares in Premier for every fi ve acquired shares in Sanford and the issue of a
$100 6% loan note for every 500 shares acquired in Sanford. The share issue has not yet been recorded by Premier,
but the issue of the loan notes has been recorded. At the date of acquisition shares in Premier had a market value of
$5 each and the shares of Sanford had a stock market price of $3·50 each. Below are the summarised draft fi nancial
statements of both companies.
Statements of comprehensive income for the year ended 30 September 2010
Premier Sanford
$’000 $’000
Revenue 92,500 45,000
Cost of sales (70,500 ) (36,000 ) ––––––– –––––––
Gross profi t 22,000 9,000
Distribution costs (2,500 ) (1,200 )
Administrative expenses (5,500 ) (2,400 )
Finance costs (100 ) nil ––––––– –––––––
Profi t before tax 13,900 5,400
Income tax expense (3,900 ) (1,500 ) ––––––– –––––––
Profi t for the year 10,000 3,900
Other comprehensive income:
Gain on revaluation of land (note (i)) 500 nil
––––––– –––––––
Total comprehensive income 10,500 3,900
––––––– –––––––
Statements of fi nancial position as at 30 September 2010
Assets
Non-current assets
Property, plant and equipment 25,500 13,900
Investments 1,800 nil
––––––– –––––––
27,300 13,900
Current assets 12,500 2,400
––––––– –––––––
Total assets 39,800 16,300
––––––– –––––––
Equity and liabilities
Equity
Equity shares of $1 each 12,000 5,000
Land revaluation reserve – 30 September 2010 (note (i)) 2,000 nil
Other equity reserve – 30 September 2009 (note (iv)) 500 nil
Retained earnings 12,300 4,500
––––––– –––––––
26,800 9,500
Non-current liabilities
6% loan notes 3,000 nil
Current liabilities 10,000 6,800
––––––– –––––––
Total equity and liabilities 39,800 16,300
––––––– –––––––
The following information is relevant:
(i) At the date of acquisition, the fair values of Sanford’s assets were equal to their carrying amounts with the
exception of its property. This had a fair value of $1·2 million below its carrying amount. This would lead to a
reduction of the depreciation charge (in cost of sales) of $50,000 in the post-acquisition period. Sanford has not
incorporated this value change into its entity financial statements.

Premier’s group policy is to revalue all properties to current value at each year end. On 30 September 2010, the
value of Sanford’s property was unchanged from its value at acquisition, but the land element of Premier’s property had increased in value by $500,000 as shown in other comprehensive income.

I am curious about why for the increase in value by 500,000 we does not have to add it to revaluation of land account? is that means they mentioned that already shown in other comprehensive income so that means they already recognized it so we does not have to do any adjustment?or because of the sofp given for the land revaluation is at 30 september 2010 already?