1104_actb407f_sepcimenexamanswer

1104_actb407f_sepcimenexamanswer - ACT B407F Specimen...

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ACT B407F (1104) Specimen Suggested Answer Page 1 of 9 ACT B407F Specimen Examination Paper Suggested Solution Section A (50 marks) Question 1 (40 marks) Consolidated Income Statement for the year ended 31 December 2010 $000 Sales 4,500 1 Cost of sales (1,200 + 800 – 100 + 10 + 60) (1,970) 2 Gross profit 2,530 Expenses (300) 1 Impairment of goodwill (30) 1 Share of A Ltd’s profit 105 1 Profit for the year 2,305 Profits tax (656) 1 Profit for the period 1,649 Attributable to: Owners of the parent (1,164 + 105 + (380 x 60%)) 1,497 2 Non-controlling interest (480-60-10 -30)= 380 x 40% 152 1 1,649 10 Consolidated Statement of Financial Position as at 31 December 2010 $000 Property, plant and equipment (2,000 + 2,500 + 300 – 60) 4,740 3 Loan to A Ltd 400 1 Investment in A Ltd (1,100+105) 1,205 1 Goodwill 378 1
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ACT B407F (1104) Specimen Suggested Answer Page 2 of 9 6,723 Current assets (2,000 + 1,200 – 10) 3,190 3 9,913 Share capital 5,000 1 Retained earnings 1,833 1 6,821 Non-controlling interest 1,280 1 8,113 Other current liabilities 1,800 1 9,913 13 (c) Workings: (i) Goodwill arising on consolidation: $000 Cost of investment 2,100 1 Share capital 2,000 1 Fair value adjustment 300 1 Retained earnings at acquisition (1,000 – 480) 520 1 2,820 x 60% 1,692 Goodwill 408 1 Less: impairment (30) 1 378 6 (ii) Investment in associate – A Ltd $000 Cost 1,100 1 Add: share of post acquisition profits (350 x 30%) 105 1 1,205 2 (iii) Non-controlling interest in S Ltd $000 NCI at acquisition (2,820 x 40%) 1,128 1 Profit for the year 480 1 Less: Additional depreciation (60) 1 Unrealized profit in opening inventory (10) 1 Goodwill impairment (30) 1 380 (40%) 152 1 1,280 6
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ACT B407F (1104) Specimen Suggested Answer Page 3 of 9 (iv) Retained earnings for the year $000 $000 P Ltd 1,500 1 Add: S Ltd’s profit for the year (380 x 60%) 228 1 A Ltd’s profit for the year (350 x 30%) 105 333 1 1,833 3 Consolidation adjustments for the year ended at 31 December 2010: (for reference only) Debit Credit $000 $000 Share Capital 2,000 Retained earnings (1,000-480) 520 Plant and Equipment 300 Goodwill 408 Cost of investment in S Ltd 2,100 NCI 1,128 Sales (Revenue) 100 Cost of sales (Purchases) 100 Profit for the year – cost of sales 10 Inventory (50 x 25/125) 10 Profit for the year (300/5) 60 Plant and Equipment (Depreciation) 60 Impairment Loss – profit for the year 30 Goodwill 30 Profit for the year 152 NCI 152 (480 – 60 – 10 - 30) = 380 x 40% Investment in A Limited 105 Profit for the year 105 (350 x 30%)
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ACT B407F (1104) Specimen Suggested Answer Page 4 of 9 Question 2 (10 marks) Control referring to investor has Power over the investee. “Power” over an investee
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This note was uploaded on 02/24/2012 for the course ACT 407 taught by Professor Mshui during the Fall '11 term at The Open University.

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1104_actb407f_sepcimenexamanswer - ACT B407F Specimen...

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