l 404 Total equity 463 656 Non current liabilities Long term

L 404 total equity 463 656 non current liabilities

This preview shows page 16 - 19 out of 57 pages.

l ) 404 764 58 892 Total equity 463 656 Non-current liabilities Long-term borrowings (17 750 + 40 600 + 4 000(intragroup loan) – 4 000(intragroup loan)) 58 350 Total non-current liabilities 58 350 Total liabilities 58 350 Total equity and liabilities 522 006
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FAC3704/102 17 QUESTION 2 (SUGGESTED SOLUTION)(continued) C2 Adjustments to inventories and trade receivables at the acquisition date It is very important to realise that the write down of inventories and trade receivables to fair value were done for consolidation purposes only (i.e. in the Bonn Ltd Groups accounting records only ). York Ltd did not write down the inventories and trade receivables to fair value its separate accounting records. As inventories and trade receivables are both current assets, they are expected to realise within 12 months. This means that the inventory will either be sold or written off and the trade receivables will either be received (recovered) or written off. The carrying amount of the inventories in the Bonn Ltd Group (R20 000) are lower than in the separate financials of York Ltd (R25 000). This means that when these inventories realise, the profit will need to be R5 000 more in the Bonn Ltd Group than in the separate financials of York Ltd (hence cost of sales will be credited with R5 000 in order to increase the profit of the Bonn Ltd Group with R5 000). The same applies to the trade receivables. The other expenses will be credited (reduced) with R10 000 in order to increase the profit of the Bonn Ltd Group with R10 000. C3 Analysis of the owners’ equity of York Ltd HINT: When preparing the analyses of entities in a vertical group, always start with the analysis of the bottom entity (York Ltd). You will need to use these amounts when preparing the analysis of the middle entity (Sydney Ltd). 100% Sydney Ltd 70% 30% Total R At R Since R NCI R At acquisition Share capital Retained earnings (40 800 – 10 800(C2)) 24 000 30 000 16 800 21 000 7 200 9 000 Equity represented by gain on bargain purchase 54 000 (2 800) 37 800 (2 800) a 16 200 b - Consideration and NCI 51 200 35 000 16 200 Current year Profit for the year (148 000 – 70 000 – 5 000 – 22 000 – 14 280 = 36 720 + 3 600(5 000(C2) x 72%) + 7 200(10 000(C2) x 72%)) Dividend paid 47 520 (9 000) 33 264 (6 300) 14 256 c (2 700) d 89 720 26 964 27 756 e CALCULATIONS C1 Intragroup profit on sale of machinery Selling price R 45 000 Intragroup profit (45 000 x 20 / 120 ) 7 500 Tax effect @ 28% 2 100 Depreciation: 7 500/5 years x 6 / 12 750 Tax effect x 28% 210
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18 QUESTION 2 (SUGGESTED SOLUTION)(continued) C4 Proof of gain on bargain purchase of York Ltd (IFRS 3.32) R Consideration transferred at acquisition date Non-controlling interests at their proportionate share of the identifiable net assets ((24 000 + 40 800 – 5 000 – 10 000 + 1 400 + 2 800) x 30%) 35 000 16 200 Net amount of identifiable assets acquired and liabilities assumed at acquisition date (24 000 + 40 800 – 5 000 – 10 000 + 1 400 + 2 800) 51 200 (54 000) Gain on bargain purchase (2 800) C5 Analysis of the owners’ equity of Sydney Ltd 100% Bonn Ltd 80% 20% Total R At R Since R NCI R At acquisition Share capital Retained earnings 48 000 11 000 38 400 8 800 9 600 2 200 Equity represented by goodwill 59 000 17 800 47 200 17 800 f 11 800 - Consideration and NCI 76 800 65 000 11 800 Since acquisition Retained earnings (68 300 – 11 000) 57 300 45 840 h 11 460
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  • Spring '16
  • Balance Sheet, NCI, Generally Accepted Accounting Principles, Sydney Ltd, York Ltd, Crow Ltd

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