5 Bonn Ltd and Sydney Ltd measure their investments in subsidiaries in their

5 bonn ltd and sydney ltd measure their investments

This preview shows page 13 - 15 out of 57 pages.

5. Bonn Ltd and Sydney Ltd measure their investments in subsidiaries in their separate accounting records at cost price in accordance with IAS 27, Separate Financial Statements . 6. The SA normal tax rate is 28% and capital gains tax is calculated at 80% thereof. You may assume that both the tax rates have remained unchanged since 1 July 20.16. 7. Each share carries one vote and the issued share capital of all the entities in the group remained unchanged since 1 July 20.16. REQUIRED: PART A: The Bonn Ltd Group measures non-controlling interests in an acquiree at their proportionate share of the acquiree’s net assets at acquisition date. a) Prepare the pro-forma consolidation journal entries of the Bonn Ltd Group for the year ended 31 December 20.17. (59) b) Prepare the consolidated statement of profit or loss and other comprehensive income of the Bonn Ltd Group for the year ended 31 December 20.17. (16) c) Prepare the consolidated statement of changes in equity of the Bonn Ltd Group for the year ended 31 December 20.17. (10) d) Prepare the consolidated statement of financial position of the Bonn Ltd Group as at 31 December 20.17. (14) PART B: The Bonn Ltd Group measures non-controlling interests in an acquiree at their fair value at acquisition date. On 1 July 20.16 the fair value of the non-controlling interests amounted to R15 200. a) Prepare the at acquisition pro-forma consolidation journal entry of the Bonn Ltd Group for the year ended 31 December 20.17. (5) b) Prepare only the asset section of the consolidated statement of financial position of the Bonn Ltd Group as at 31 December 20.17. (9) All answers must comply with the requirements of International Financial Reporting Standards (IFRS). All amounts should be rounded to the nearest Rand. Comparative figures and notes to the consolidated financial statements are not required.
Image of page 13
14 QUESTION 2 (SUGGESTED SOLUTION) PART A BONN LTD GROUP J1 Retained earnings – at acquisition (5 000 – 1 400) 3 600 Deferred tax (5 000 x 28%) 1 400 Inventories (25 000 – 20 000) 5 000 Write down of inventories to fair value at acquisition J2 Retained earnings – at acquisition (10 000 – 2 800) 7 200 Deferred tax (10 000 x 28%) 2 800 Trade receivables (18 000 – 8 000) 10 000 Write down of trade receivables to fair value at acquisition J3 Share capital Retained earnings (40 800(given) – 3 600(J1) – 7 200(J2)) Non-controlling interests (SFP) ((24 000 + 30 000) x 30%) Gain from bargain purchase Investment in York Ltd Elimination of owners’ equity at acquisition 24 000 30 000 16 200 2 800 a 35 000 16 200 b J4 Share capital Retained earnings(given) Goodwill Non-controlling interests (SFP) ((48 000 + 11 000) x 20%) Investment in Sydney Ltd Elimination of owners’ equity at acquisition 48 000 11 000 17 800 f 11 800 65 000 11 800 J5 Inventories Cost of sales Income tax Deferred tax Adjustment due to inventories written down at acquisition 5 000 1 400 5 000 1 400 J6 Trade receivables Other expenses Income tax Deferred tax Adjustment due to trade receivables written down at acquisition 10 000 2 800 10 000 2 800 J7 Retained earnings Non-controlling interests (SFP) Non-controlling interests in retained earnings since acquisition ((68 300 – 11 000) x 20%) 11 460 11 460 11 460 J8
Image of page 14
Image of page 15

You've reached the end of your free preview.

Want to read all 57 pages?

  • Spring '16
  • Balance Sheet, NCI, Generally Accepted Accounting Principles, Sydney Ltd, York Ltd, Crow Ltd

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors