All answers must comply with the requirements of International Financial

All answers must comply with the requirements of

This preview shows page 50 - 53 out of 57 pages.

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.
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FAC3704/102 51 QUESTION 8 (SUGGESTED SOLUTION) PART A a) Pro-forma consolidation journals Dr R Cr R NCI R J1 Equipment Revaluation surplus (9 000 x 72%) Deferred tax (9 000 x 28%) Revaluation of equipment at acquisition 9 000 6 480 2 520 J2 Share capital Retained earnings Revaluation surplus (J1) Goodwill Non-controlling interests (SFP) ((100 000 + 120 000 + 6 480) x 30%) Investment in Cox Ltd Elimination of owners’ equity at acquisition of Cox Ltd 100 000 120 000 6 480 1 464 67 944 160 000 67 944 J3 Retained earnings (depreciation) Accumulated depreciation Additional depreciation due to revaluation of equipment (9 000 x 10% x 2 years) 1 800 1 800 J4 Deferred tax (SFP) Retained earnings (income tax) Tax effect of additional depreciation (1 800 x 28%) 504 504 J5 Retained earnings ((245 000 – 120 000 – 1 800(J4) + 504(J5)) x 30%) Non-controlling interests (SFP) Non-controlling interests in retained earnings since acquisition 37 111 37 111 37 111 J6 Other income (profit on sale of equipment) (P/L) (73 000 – 65 000) Property, plant and equipment Elimination of unrealised profit on the sale of equipment 8 000 8 000 J7 Deferred tax (SFP) (8 000 x 28%) Income tax expense Tax effect of elimination of unrealised profit on sale of equipment 2 240 2 240 J8 Accumulated depreciation (SFP) (8 000 x 10%) Other expenses (depreciation) Realisation of unrealised profit through use of equipment 800 800 J9 Income tax expense (800 x 28%) Deferred tax (SFP) Tax effect on realisation of unrealised profit through the use of equipment 224 224 J10 Depreciation Accumulated depreciation Additional depreciation due to revaluation of equipment (9 000 x 10%) 900 900 J11 Deferred tax (SFP) Income tax expense Tax effect on additional depreciation (900 x 28%) 252 252
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52 J12 QUESTION 8 (SUGGESTED SOLUTION)(continued) Interest income Finance charges To eliminate intragroup interest on the loan from Bodie Ltd to Cox Ltd 10 000 10 000 J13 Loan from Bodie Ltd Loan to Cox Ltd To eliminate intragroup interest on the loan from Bodie Ltd to Cox Ltd 100 000 100 000 J14 Other expenses (impairment of goodwill)(given) Goodwill To account for the impairment loss on goodwill 527 527 J15 Non-controlling interests (P/L) Non-controlling interests (SFP) Non-controlling interests in profit for the year ((81 450 – 21 966 – 10 000 + 7 000 – 900(J7) + 252(J8)) x 30%) 16 751 16 751 16 751 J16 Dividends received Non-controlling interests (SFP) Dividends paid Elimination of intragroup dividends and recording of non- controlling interests therein 17 500 7 500 25 000 (7 500) Non-controlling interests 114 306 Investment in associate R J17 Investment in associate Retained earnings Accounting for the share of retained earnings of associate for the period 1 March 20.12 to 28 February 20.16 15 000 15 000 15 000 J18 Investment in associate Share of profit of associate Accounting for the share of profit of associate for the current year 53 280 53 280 53 280 J19 Dividend paid Investment in associate Elimination of dividend paid by associate 4 000 4 000 (4 000) Cost of investment (given) 32 000 Carrying amount of investment in associate 96 280
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  • Spring '16
  • Balance Sheet, NCI, Generally Accepted Accounting Principles, Sydney Ltd, York Ltd, Crow Ltd

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