Financial Reporting - Block Revision Mock 6.pdf - FINANCIAL REPORTING BLOCK REVISION MOCK 6 QUESTIONS NUMBER ONE The draft Balance Sheets of GTI Limited

Financial Reporting - Block Revision Mock 6.pdf - FINANCIAL...

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QUESTIONS NUMBER ONE The draft Balance Sheets of GTI Limited, KBD Limited and QBY Limited are as follows: UNA Limited and KMN Limited are both listed on the Nairobi Stock Exchange: Balance sheets as at 30 September 1996 GTI Ltd KBD Ltd QBY Ltd Sh. million Sh. million Sh. million PPE (Net book value) 684 430 Investments: At cost:: Shares in KBD Ltd 600 At Valuation: Shares in QBY Ltd 360 Current assets Inventory 484 320 Receivables 180 150 Cash at bank 08040664550400Current liabilities Bank overdraft 60 Payables 170 120 Current Tax 60 50 Proposed dividends 100 100 390270180Net current assets 2742802201,5581,070550Financed by: Sh.10 Ordinary shares 500 500 10% Preference shares 0 80 Revaluation reserve 0 30 Profit and loss account 10584603001,5581,070550,Notes 1. GTI Ltd. purchased 60 % of the ordinary share capital and 30 % of the preference share capital of KBD Ltd. on 1 October 1992, when the balances on the Profit and Loss Accounts of GTI Ltd., KBD Ltd. and QBY Ltd. were Sh.899 million, Sh.360 million and Sh. 150 million respectively. 2. KBD Ltd. had purchased 70% of the ordinary share capital of QBY Ltd. on 1 October 1991 for Sh.330 million when the balance on the Profit and Loss Accounts of GTI Ltd., KBD Ltd. and QBY Ltd. were Sh.856 million, Sh.330 million and Sh. 130 million respectively. The investment was revalued upwards by Sh.30 million on 30 September 1995. The directors of KBD Ltd. had decided to revalue the investment at Sh.378 million at 30 September 1996, but this has not yet been reflected in the books. 3. KBD Ltd. makes sales to both GTI Ltd. and QBY Ltd. at normal selling price (cost plus a mark-up of 33'/3%). At 30 September 1996, items purchased by GTI Ltd. and QBY Ltd. from KBD Ltd. remaining unsold had cost Sh.24 million and Sh. 16 million respectively. Group policy on unrealised intra-group profits is in line with current international practice i.e. unrealised profits are eliminated in full from the book value of assets, and from the interests held by the group and the minority interest in respective proportion to their holdings in the company which had made the profit. 4, GTI Ltd. and KBD Ltd. have not yet accounted for the dividends receivable. 5. Intra-group balances are included in Receivables and payables as follows: 330 270 90 90 40 50 250 0 0 Download more at FINANCIAL REPORTING - BLOCK REVISION MOCK 6
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GTI Ltd.: payables QBY Ltd. Sh. 18 million Receivables KBD Ltd Sh.8 million KBD Ltd.: Payables QBY Ltd. Sh.6 million QBY Ltd.: Receivables GTI Ltd. Sh.18 million . KBD Ltd Sh.6 million 6. KBD Ltd. had made out a cheque for Sh.10.4 million on 30 September 1996; this cheque was received by GTI Ltd. on 30 October 1996 and had not been included in GTI Ltd.'s balance sheet. This Sh.10.4 million includes the preference dividend due to GTI Limited. 7. Goodwill on consolidation is assumed to be impaired at the rate of 20%. Required: Consolidated Balance Sheet of GTI Ltd. and its subsidiaries as at 30 September 1996 complying, so far as the information will allow, with the accounting requirements of the Companies Act and International financial reporting standards. (Total: 25 marks)NUMBER TWO
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