Quiz 1(version 3)Q&A

Quiz 1(version 3)Q&A - ACT B407F Advanced Financial...

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ACT B407F Advanced Financial Reporting and Analysis I Quiz 1 Instructions: Time allowed: 50 minutes Answer ALL questions. This quiz carries 50 marks and constitutes 50% of continuous assessment. Show your workings clearly, otherwise NO mark will be given. You are the financial accountant of Lion Limited (Lion), a listed company in Hong Kong, involved in textiles, manufacturing and retailing. At 1 April, 2010, Lion acquired 1.5 million equity shares in Cub Limited (Cub) by exchange of one share in Lion for every two shares in Cub. The market price of each Lion share at date of acquisition was $4, and the market price of each Cub share at the date of acquisition was $3. The statement of income for the year ended 31 March 2011 and the statement of financial position for Lion and Cub at 31 March 2011 were as follows: Statement of financial position as at 31 March 2011: Lion Cub $’000 $000 Non-current assets Buildings 25,200 8,500 Plant and equipment 15,000 2,900 Investment in Cub Limited 4,000 Current assets 1 ACT B407F (2011)V3
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Inventories 2,200 1,200 Accounts receivable 1,700 2,400 Bank 1,500 1,600 Total assets 49,600 16,600 Share capital @$1 each 27,750 2,000 Share premium 2,250 Retained earnings - At 1 April 2010 4,300 1,000 - for the year ended 31 March 2011 700 900 Total equity 35,000 3,900 Non-current liabilities 11,000 7,900 Current liabilities Provision for claims 1,000 - Accounts payable 1,200 3,000 Tax payable 1,400 1,800 2
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Total liabilities 14,600 12,700 Total equity and liabilities 49,600 16,600 Statement of income for the period ended 31 March 2011: Lion Cub $000 $000 Revenue 35,000 18,000 Cost of sales (23,000) ( 8,000) Gross profit 12,000 10,000 Dividend income 600 - Gain on disposal of fixed assets 400 Selling and distribution expenses (3,500) (2,370) Administration expenses (5,200) (4,700) Finance cost (920) (930) Profit before taxation 2,980 2,400 Taxation (1,280) (700) Profit for the year 1,700 1,700 Dividend paid (1,000) (800) 3 ACT B407F (2011)V3
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Quiz 1(version 3)Q&A - ACT B407F Advanced Financial...

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