AYB340_Final_Exam_S1204_Paper

Question 5 Tinto Ltd obtained control of Suda ltd by acquiring 80% of the issued share capital of Suda ltd at 1 January 2015. The consideration is to be settled as follows: ·         A cash payment of R1 000 000 ·         The fair value of machine is R500 000 is recorded in Tinto ltd ·         Tinto ltd will issue new shares to the seller, to the value of R600 000 Journalize the above transaction in the books of Tinto ltd.

Question 1 Ewig Berhad acquired 800, 000 out of the 1, 000, 000 RM1 ordinary shares of Leben Berhad on 1 January 2020 for RM900, 000 cash. The general reserves and retained earnings of Leben Berhad at the date of acquisition were RM400, 000 and RM250, 000 respectively.   Required: (a) What is the percentage of acquisition by Ewig Berhad? (b) What is the corporate relationship in this situation? (c) Based on MFRS 10, briefly explain whether Ewig Berhad exercises control over Leben Berhad. (d) Assuming the proportional net asset method is used, what is the fair value of the NCI? (e) What is the goodwill or bargain purchase?

Question 2 Nick Ltd acquired 100% of the issued capital of Wing Ltd on 1 July 2011 for $270000. The statements of financial position of the companies immediately after the acquisition are provided below. All assets have been reported following fair value. Statement of Financial Position For the year ended 1 July 2011 Nick Ltd Wing Ltd $ S Shareholders' equity Share capital 450,000 180,000 General reserve 45,000 25,000 Retained earnings 140,000 20,000 Total shareholders' equity 635,000 225,000 Assets Current assets Cash at Bank 50,000 30,000 Accounts Receivable 20,000 10,000 Inventory 100,000 25.000 170,000 65,000 Non-current assets Investment in Wing Ltd 270,000 Land 250,000 200,000 Plant & Equipment 100,000 80.000 620,000 280,000 Total assets 790,000 345,000 Liabilities Current liabilities Accounts Payable 40,000 10,000 Interest Payable 55,000 18,000 Non-current liabilities Bank loan 100,000 102,000 Total liabilities 155,000 120,000 Net assets 635,000 225,000 Required 1. Calculate…

Q2 Petro Ltd acquired 60% of Carlos Ltd’s 500,000 R1 equity shares on 1st January 2019 for a consideration of R5 cash per share. At the date of acquisition, net assets and liabilities in Carlos Ltd were valued at R1,600,000 and the fair value of the non-controlling interest was R800,000. Required: 1. Determine the acquisition date. 2. Calculate goodwill or gain on bargain purchase if any using Proportionate of Net Assets Method 3. Calculate goodwill or gain on bargain purchase if any using Fair Value Method

Question 1 On January 2020, RITZ Ltd acquired 80% of the ordinary shares of AUGE Ltd. The group accountant has calculated that the goodwill arising on acquisition was GH₵8,000,000. However, the financial controller has uncovered a number of errors and requires advice about how to resolve them. No entries have been posted in respect of contingent cash consideration that work be paid in 2025 if AUGE meets targets. The contingent consideration had a fair value of GH₵800,000 at acquisition and was calculated using a discount rate of 10% No fair value adjustment has been recorded in respect of AUGE’s non-depreciable land. This land had a carry amount of GH400,000 at acquisition and a fair value of GH₵600,000. AUGE’s brand is internally generated and has not been recognized in the consolidated financial statement. At acquisition it had a fair value of GH₵1,000,000 and a remaining estimated useful life of 5 years. Acquisition cost of GH₵100,000 incurred towards the acquisition process has…

Q2 Maenetja Limited acquired 1000 shares in Manana Limited on 1 December 2014 at the fair value of R15 per share. Transaction costs amounted to R200. At the date of acquisition the company elected to recognize subsequent changes in the fair value of this investment in other comprehensive income (OCI).  The company’s policy is to release any gains or losses resulting from these fair value adjustments to retained earnings when the shares are sold.  On 31 December 2014 the market value of Manana Limited’s shares was R18. On 30 June 2015, 200 shares were sold for R19.50. The market value of the shares at 31 December 2015 was R14. What are the correct journal entries that should be recorded initially when the shares purchased on 1 December 2014? Select one: a. DR     Investment                                 R15 000DR     Transaction costs                        R200 CR      Bank/Liability                            R15 200   b. DR          Investment                           R15 000…

Appendix 7.0 Acquisition of BELL CorporationOn 1 January 2017, FIBERBOATS acquired 100% of BELL Corporation. FIBERBOATS issued 50,000 shares of its BD0.600 par ordinary shares, with a market price of BD0.400 on the date the acquisition was announced and BD0.800 on the date the acquisition was completed, for all of BELL Corporation ordinary shares. The book value of net assets of BELL Corporation at the date of acquisition was BD10,000. On that date, the fair value of BELL Corporation assets and liabilities equalled their respective carrying amounts with the exception of property, plant and equipment (PPE) that exceeded its book value by BD120,000. The fair value of BELL’s identifiable intangibles (in-process research and development) is BD70,000. The in-process research and development will be amortized over 5 years. Advise the management of FIBERBOATS on the accounting treatment in relation to the acquisition event that occurred on 1 January 2017 (see appendix 7). Your advice should…

Question                                                                                                    On 1st July, 2018 Murray Ltd acquired 70% of the share capital of Darling Ltd for $100,000,000.   Equity of Darling Ltd at acquisition date was:                           Share Capital                          $ 60,000,000                         General Reserve                     $ 20,000,000                         Retained Earnings                   $ 10,000,000   All assets and liabilities of Darling Ltd were recorded at fair value on acquisition. Ignore Tax effects.   Required:   Complete the worksheet below using the partial goodwill method with the NCI measured at the proportionate share of the acquiree’s identifiable net assets.    Elimination of Investment in Darling  Ltd Darling Ltd (S) $,000 Murray Ltd (70% of Darling) (P) $,000 30% NCI $,000 Fair Value of consideration transferred       Less: FV of identifiable assets acquired &…

Question 6 Week 12 On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is:Share capital $450 000Retained earnings $300 000Total shareholders’ equity 750 000Additional information• On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and amarket value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014.• For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays adividend of $30 000.• For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays adividend of $150 000.• Assume a tax rate of 30% is assumedRequiredApply equity method of accounting to:(a) Calculate the amount of goodwill at the date of acquisition (b) Prepare the journal entries for the year ending 30 June 2015 (c) Prepare…

Tmee QUESTION 8 Grandview Ltd acquired 100% of the issued capital of Electro Ltd on 1 July 2021 for $110,000 At that date the shareholders' equity of Electro Ltd was: Share Capital General Reserves Retained Earnings 16,000 $60,000 15,000 During the year ended 30 June 2021: Electro Ltd sold goods to Grandview Ltd for 70,000 and unrealised profit in closing inventory of Grandview Ltd was $6,000. During the year Electro Ltd paid an interim dividend of $4,000 and at 30June 2021 they provided for a final dividend of $6.000. No impairment of goodwill occurred. Required: (a) Journal entries to eliminate the investment in Electro Ltd by Grandview Ltd. (b) Journal entries to eliminate any other inter-company transactions.

Question-4 H Ltd acquired 80% of S Ltd several years ago for Rs. 30 million. The balance on S Ltd's retained earnings was Rs. 5,000,000 at the date of acquisition. H Ltd's policy is to measure non-controlling interest at the date of acquisition as a proportionate share of net assets. The draft statements of financial position of the two companies at 31 December 20X1 are: H (Rs. 000) 45,000 30,000 28,000 103,000 Non-current assets: Property, plant and equipment Investment in S Current assets Total assets Equity Share capital Retained earnings Non-current liabilities Current liabilities Total equity and liabilities 5,000 76,000 81,000 2,000 20,000 103,000 Required: Prepare a consolidated statement of financial position as at 31 December 20X1. S (Rs. 000) 15,000 12,000 27,000 1,000 10,000 11,000 6,000 10,000 27,000

Question 1 On 2 July 2005, H Ltd. purchased the entire issued ordinary share capital of S Ltd. On this date, S Ltd. had a retained income balance of R4 000 and no general reserve. Any purchase difference is to be attributed to the fixed assets of S Ltd. On 30 June 2007, the trial balances of the two companies were as follows: Share capital (R1 ordinary shares) General reserve Retained income Accumulated depreciation Fixed assets at cost Investments in S Ltd. Net current assets uestion 2 H Ltd. R 40 000 10 000 34 000 6 000 R90 000 30 000 36 000 24 000 R90 000 buildings at cost at cost in S Ltd. S Ltd. R 20 000 5 000 10 000 Note: Included in the net current assets of both companies is a dividend due by S Ltd. to H Ltd. of R2 000. Required Draw up a consolidated balance sheet of H Ltd. and subsidiary S Ltd. on 30 June 2007. ordinary R1 shares) R35 000 14 000 H Ltd. R - 21 000 R35 000 td. bought all the shares in S Ltd. on 30 June 2004 when the retained me of S Ltd. was R8 000 and the…

sub parts to be solved a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities:  On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.  During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%.   b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying value in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs…

(a) On 1 January 2023, the LW Group purchased 90% of the 3.75m £1 equity share capital of JL Ltd. The costs incurred by LW Group at the date of acquisition were as follows: Cash paid on 1 January 2023 Professional fees Bank fees and charges associated with the acquisition £'000 124,800 850 1,000 In addition to the costs shown above, LW issued 15,000,000 25p ordinary shares to the shareholders of JL Ltd as part of the consideration. As at 1 January 2023 the market value of LW shares were £1.50 each and JL Ltd shares were valued at £1.20 each. LW will also pay a further £5,000,000 in cash on 1 January 2024. An appropriate discount rate is 7%. A further 2,000,000 shares will be issued by LW to the shareholders of JL Ltd on 1 January 2024 if profits increase by 5% over the next 12 months. The directors believe there is a 60% likelihood of the contingent consideration being achieved and that the market value of LW shares are expected to rise to £1.80 each. A due diligence report indicates…

Quest 2 Petro Ltd acquired 60% of Carlos Ltd’s 500,000 R1 equity shares on 1st January 2019 for a consideration of R5 cash per share. At the date of acquisition, net assets and liabilities in Carlos Ltd were valued at R1,600,000 and the fair value of the non-controlling interest was R800,000. Required: 1. Determine the acquisition date. 2. Calculate goodwill or gain on bargain purchase if any using Proportionate of Net Assets Method 3. Calculate goodwill or gain on bargain purchase if any using Fair Value Method

Q1 Mcgregor Plc acquired 75% of the issued share capital and voting rights of Tavernier Ltd on 1 January 2020. The consolidated cost of sales of Mcgregor Pic and its subsidiary undertaking for the year ended 31 December 2021, before taking into account any adjustments required in respect of the information below, is £395,000. During the year Mcgregor Plc sold goods to Tavernier Ltd for £130,000. 70% of these goods still remain in inventories at the end of the year. The goods were sold at a mark-up of 25% on cost. What is the consolidated cost of sales for the year ending 31 December 2021? A £283,200 B £278,650 C £287,750 D £246,800

PROBLEM VII On July 1, 2019, Eya Company acquired 700,000 shares of Agas Company at a price of P13 per share. Eya estimated that the price paid include P1.50 premium in order to gain control over Agas. On this date, the fair values of Agas' identifiable assets and liabilities and their carrying values are given below: Book Value P2,000,000 9,000,000 P3,000,000 5,000,000 3,000,000 Fair Value P2,000,000 11,000,000 Current assets Property, plant and equipment Liabilities Ordinary shares, P5 par Retained earnings 1. Determine the amount of goodwill.

Question 3 a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: • On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. • During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (1) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala Itd sold an item of plant to Jordan…

Question 1 Bedsam Ltd has investment in a company, Raddo Ltd. The separate financial statements of the two entities for 2017 are as below: Statement of Financial Position as at 31 December 2017 Bedsam Ltd Raddo Ltd GHC GHC ASSETS Non-current assets Property, plant and equipment Investments in shares 610,000 41,000 32,000 651,000 32,000 Current assets Inventories Trade and other receivables Cash and cash equivalents 188,000 130,000 6,000 16,000 10,000 1,500 324,000 975,000 27.500 59,500 Total Assets EQUITY AND LIABILITIES Equity Ordinary shares [issued at GHC 1.00] Retained Earnings 356,000 417,830 25,000 9,900 773.830 34,900 Current liabilities

Question 3 a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: • On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala Itd sold an item of plant to Jordan…

Question1 a) On 31 December 2018 Pee Plc purchased 80% of the share capital of Cee Ltd for £60,000 when its accumulated profits were £30,000. The individual Statement of Financial Positions of PeePlc and CeeLtdat 31December2020were as follows: Рее Cee Cee Ltd £ £ Non-current assets: Property, plant and equipment 160,000 50,000 Cost of investment 60,000 00000 220,000 50,000 Current assets 30.000 10,000 Total assets 250,000 60,000 Equity and liabilities Ordinarysharesof£leach 100,000 20,000 Retained profits 150,000 40,000 250,000 60,000 Consolidated goodwill is subject to an annual impairment review. No impairment has been detected to date. Required: Prepared the consolidated statement of financial position for the Pee group at 31 December 2020. Pee plc has a policy of valuing Non-Controlling interest at their share of net assets at acquisition.

Q5 Tinto Ltd obtained control of Suda ltd by acquiring 80% of the issued share capital of Suda ltd at 1 January 2015. The consideration is to be settled as follows: ·         A cash payment of R1 000 000 ·         The fair value of machine is R500 000 is recorded in Tinto ltd ·         Tinto ltd will issue new shares to the seller, to the value of R600 000 Journalize the above transaction in the books of Tinto ltd.

Problem 17-2 (TAA) At the beginning of current year, Cynosure Company purchased 30% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000 At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required: 1. Prepare journal entries for the current year. 2. Compute the investment income for the current year.

Question: Trifles Ltd acquired 280,000 shares in Bamburg Ltd on 01 July (1 bookmark) Trifles Ltd acquired 280,000 shares in Bamburg Ltd on 01 July 2019 and as a result Trifles Ltd has a control of 80% in Bamburg. The purchased consideration transferred by Trifles Ltd in exchange of the shares in Bamburg Ltd was as follows: (1) Cash paid of $ 565,000 (m) Cash to be paid in four year time is $ 500,000 () Share exchange of two shares in Trifles Ltd for every seven shares in Bamburg Ltd. The market price of Trifles Ltd at the date of acquisition was $ 3. The par value of Trifles Ltd' ordinary shares is $ 0.5 each. Legal fees associated with the acquisition were $ 75,000. The cost of capital of Trifles Ltd is 15%   b) Assume that Trifles Ltd has only recorded the cash transaction of $ 565,000. Prepare the consolidated Statement of Financial Position (Equity and Liabilities section only) to show how the deferred consideration and the share exchange should be accounted for the year ended 30…

Please assist that if on 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital $450 000 Retained earnings $300 000 Total shareholders’ equity 750 000 Additional information • On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014. • For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000. • For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000. • Assume a tax rate of 30% is assumed Required Apply equity method of accounting to: (a) Calculate the amount of goodwill at the date of acquisition (b) Prepare the journal entries for the year ending 30 June…

Q9 Molokomme Limited acquired all the assets and liabilities of Mashiane Limited at 1 January 2016 for R195 000. The statement of financial position for Mashiane Limited was presented as follows at acquisition date:   Mashiane Limited Statement of financial position as at 1 January 2016    R'000  Assets    Property, plant and equipment                 70  Inventory                 60  Accounts receivable                 40  Total assets              170      Capital and reserves    Share capital                 80  Retained earnings                 70  Shareholders’ equity              150  Accounts payables                 20  Total equity and liabilities              170   Molokomme Limited considered the fair values of the assets and liabilities of Mashiane Limited to be equal to their carrying amounts in the statement of financial position of Mashiane Limited at that date except for property, plant…

Q11 On 3 May 2016, Mashego Limited acquired 75% (and control) of Mahlangu Limited’s outstanding ordinary shares for R112 000. The fair value of the non-controlling interest was equal to a proportionate share of the book value of Mahlangu Limited’s net assets at the date of acquisition. The selected balance sheet data for the two companies as at 30 April 2016 are as follows:     Mashego Mahlangu   Limited Limited   R R  Total assets 504 000 216 000  Liabilities 144 000 72 000  Ordinary shares 120 000 60 000  Retained earnings 240 000 84 000  Equity & liabilities 504 000 216 000   What amount should be recorded as non-controlling interest in the net assets of Mahlangu Limited in the consolidated statement of financial position of Mashego Limited at 30 April 2016? Select one: a. R90 000 b. R54 000 c. R36 000 d. R108 000

Financial Accounting II / © ICCG / Page 46 Question 1 The following figures were extracted from head office books of the HPD Co., and submitted by the branches as at 31 December 2006. Head Office Durban Branch Prieska Branch Cash at bank (Dr) Branch account Durban (Dr) Branch account Prieska (Dr) Creditors Debtors Furniture and fittings at cost Head office account (Cr) Land and buildings at cost Vehicles at cost 10 000 3 000 2 000 4 800 4 800 4 600 2 000 1 000 7 000 6 000 4 000 1 500 1 500 2 000 4 600 4 900 12 000 4 000 1 000 Depreciation provision Furniture and fittings 1 000 400 300 Vehicles 2 000 400 Owner's capital 50 000 Stock at 31 December Administration expenses Gross profit 4 000 3 000 5 800 10 000 2 000 3 000 7 600 30 000 31 000 Durban Branch sent goods valued at R200 to Prieska Branch. The entries were made in the branch books, but not in the head office books. Prieska sent Head Office R100, which was only received on 3 January 2002. Required Pass all journal entries…