中级会计辅导课5

1、intermediate accounting by vivian 周卉tutorial class 5review for final examfinal examkey points 1.condolidated accounts -consolidated income statement and balance sheet 2.accounting for fixed assets: - purpose and methods of depreciation, advantage and disadvantage of different methods. -

2、caculation of new depn expense after the change in useful life or revaluation of fixed assetfinal examkey points 3.eps calculation, -advantage and disadvantage of eps. -weighted average no. of shares calculation 4.impairment of fixed assets or goodwill: -definition of impairment loss; -in what situa

3、tion will a company carry out an impairment review and how -allocation of impairment loss1. consolidated accountsexample 1 beijing plc owns 80% of the shares of zhuhai plc. the purchase consideration was 450,000. the retained earnings of zhuhai plc at the date of acquisition were 350,000. the summar

4、ised financial statements of the two companies for the year ended 31 december 2008 were as follows:income statements as at 31 dec. 2008beijingzhuhai000000revenue33002100cost of sales16001200gross profit1700900admin expense8050selling expense820250profit before tax800600income tax400300profit after t

5、ax for the year400300retained earnings b/fwd710450retained earnings c/fwd1110750 beijing zhuhainon-current assets13601200investment in zhuhai450inventory200100receivables250100amounts receivable from beijing-30cash at bank 10020total assets23601450share capital (1 ordinary) 550100reserves1110750equi

6、ty1610850debenture loans300300current liabilities:payables173200amounts payable to zhuhai27-payables20010023601450balance sheet as at 31 dec. 2008additional information: during the year, zhuhai had sold goods which it had bought for 200,000, to beijing with a markup of 30%. at the end of the year 20

7、% of these were unsold by beijing by the year end. a review of group current accounts showed a receivables balance of 30,000 in zhuhais accounts and a payables balance of 27,000 in beijings accounts. this is due to cash in transit: beijing had dispatched a cheque of 3,000 on 31 december 2008. the gr

8、oup policy is to capitalise goodwill without amortisation. there has been no impairment of goodwill, since the acquisition.example 1consolidated b/s1. goodwill calculationinvestment 450less parents share of share capital and reserve at the date of acquisition 80%*(350+100) (360)goodwill 902. cash in

9、 transit:beijing sent cheque to zhuhai: 3kzhuhais cash: + 3 zhuhais receivable: -3cancel 27k payable-receivable from both companies on rmationb/sp/l2.unrealized profitcost 200,mark-up 30%,inter-company sales 200*(1+30%) = 26020% in stock: unrealized profit=20%*(260-200)=12treatment

10、: -reduce inventories of arthur in b/s(12) -reduce parents share of groups reserve in b/s(12*80% = 9.6) -reduce minority interest in b/s(12*20% = 2.4) -reduce profit by adding cost of sales in income statement(12) -reduce minority interest in income statment(12*20% = 2.4)consolidated balance sheet t

11、reatmentb/sp/linformationinformationb/sp/l3.minority interest in b/s minority share of net assets at the balance sheet date (100+750)*20%= 170 reduce share of urp 12*20% = (2.4) minority interest in b/s 167.6 4.groups reserve parents reserve 1110 parents share of post-acquisition profit 80%*(750-350

12、)= 320 less parents share of unrealized profit 80%*12= (9.6) groups reserve 1420.4consolidated balance sheet treatmentinformationb/sp/l550 (parent only)100550share capital (1 ordinary) 90-goodwill 1450100-200300850-75014502030100100-1200zhuhai34112360300 (200+100)200payables0 (cancel out after adjus

13、ting)27amounts payable to zhuhai373 (173+200)173payables600 (300+300)300debenture loans21381610equity167.6-minority interest1420.41110reserves34112360total assets123 (100+20+3)100cash at bank 0 (cancel out after adjusting)-amounts receivable from beijing350 (250+100)250receivables288 (200+100 -12)20

14、0inventory-450investment in zhuhai2560 (1360+1200)1360non-current assetsgroupbeijing consolidated income statement treatment1. eliminate inter-company sales -reduce sales of zhuhai by 260 -reduce cost of sales of beijing by 2602.minority interest in p/l minoritys share of subsidiarys profit after ta

15、x minus unrealized profit 300*20%- 12*20% =57.6informationb/sp/lconsolidated income statement3.retained earning b/wd for the group retained earning b/wd for parent 710 parents share of post acquisition profit b/wd (450-350)*80%= 80retained earning b/wd for the group 790 4.adding sales and cost of sa

16、les sales: 3300+(2100 -260) =5140 cost of sales: (1600 -260)+1200+ 12urp=2552informationb/sp/l688300400profit after tax57.6 (300*20%- 12*20% )-minority interest7504503003006002505090012002100zhuha1420.41110retained earnings c/fwd790710retained earnings b/fwd630.4400profit for the year700 (400+300)40

17、0income tax1388800profit before tax1070 (820+250)820selling expense130 (80+50)80admin expense25881700gross profit2552 (1600 -260 +1200+ 12)1600cost of sales5140 (3300+2100 -260)3300revenuebeijingincome statementsfixed assetspractical example 2simple plc has purchased a car.the details are as follows

18、:cost of machine $800,000residual value $104000estimated life 4 years1.) calculate:the annual depreciation charge using the a) straight-line method, b) diminishing balance and b) sum of digits method2.) comment on which depreciation method is the most appropriate in this case and why.3.) explain the

19、 purpose of recording depreciation on fixed assetspractical example 2 straight line $,000cost 800depreciation for year 1 174net book value 626depreciation for year 2 174net book value 452depreciation for year 3 174net book value 278depreciation for year 4 174residual value 104 cost - estimated resid

20、ual value = depn. charge per year estimated economic life (800-104) /4 = 174practical example 2 diminishing balance depn rate = 1 - n (residual value)/cost = 1 4 (104)/800=40%cost 800depreciation for year 1 320 (800 * 40%) net book value 480 (800 320)depreciation for year 2 192 (480 * 40%) net book

21、value 288 (480 192)depreciation for year 3 115net book value 173depreciation for year 4 69residual value 104practical example 2 sum of digits年数总和法 cost 800depreciation for year 1 278 696*4/10 (depn rate)net book value 522depreciation for year 2 209 696*3/10net book value 313depreciation for year 3 1

22、39 696*2/10net book value 174depreciation for year 4 70 696*1/10residual value 104step1: total depreciable cost= cost - estimated residual value = 800-104 =696 step2: total digits: 1+2+3+4=10 step3: calculate the depn. rate (4/10, 3/10, 2/10, 1/10)step 4: total depreciable cost * depn. rate for each

23、 yearpractical example 3a fixed asset costs 15,000 six year ago. it was depreciated using straight line method with no residual value. the company has now adopted the current value approach for its building and this building has been valued to 16,000. the fixed asset has an estimated useful life of

24、30 years which still holds true.calculate :- the nbv - the old annual depreciation charge - the new annual depreciation chargepractical example 3nbv at the date of revaluation :15,000 (15,000/30 x 6)= 12000revaluation surplus:= 16,000 - 12000= 4000 this will be credited to revaluation reserve (surpl

25、us).old dep. 15,000/30 = 500new dep. 16000/(30-6) = 667eps calculationexample 4 1 january: 10000 ordinary shares in issue 1 march: 2000 ordinary shares issued for cash 31 april: bonus issue (发行红利股发行红利股), 1 for 4. 31 july: rights issue(配股配股) at 1 per share on the basis of 2 for 5 held (market price o

26、f the share before rights issue was 1.5). profit after tax is 20000 required: calculate the eps for this yearexample 4 1.bonus fraction as at 31 april: 12000+(12000*1/4) = 5 12000 4 2.calculation of theoretical ex-rights price 理论除权价格理论除权价格 1*2 shares= 2 1.5 *5shares = 7.5 2+ 7.5= 9.5 9.5/7shares= 1.

27、36 (this is the theoretical ex-rights price) bonus fraction as at 31 july for rights issue: 1.5/1.36 = 1.1=11/10 date actual time bonus bonus shares factor fraction rights 1 january: 10000 2/12 * 5/4 * 11/10 = 2292 cash issue 2000 1 march: 12000 2/12 * 5/4 * 11/10 = 2750 bonus 3000 31 april: 15000 3

28、/12 * 11/10 = 4125 rights issue 6000 31 july: 21000 5/12 = 8750 weighted average no. of shares for the year =17917 eps=profit/weighted no. of shares = 20000/17917 =110 p practical example 5jay plcs profit after tax and minority interest was 1,095,000 for the year ended 31 december 2007.notes:1)on 1

29、january 2007, there were 4,000,000 ordinary shares of 25p each, in issue.2)on 31 march 2007, there was a bonus issue (红利股发行红利股发行)of 1 new ordinary share for every 4 held.3)on 1st september 2007, there was an issue of one million 25p ordinary shares for cash at full market price.4)a rights issue(供股供股

30、 ,配股）配股） was made to the ordinary shareholders on the 31st october 2007, at 50 pence per share, on the basis of one share for every four held. the market price immediately before the rights issue was listed as 1.5)the eps figure for last year was 20 pence.required a)calculate the earnings per share

31、figure for 2007. b)recalculate the earnings per share figure for the year 2006.impairment reviewimpairment of intangible assets loss减值损失减值损失 is to be recorded when carrying amount账面价值账面价值is more than recoverable amount可回收金额可回收金额, which is higher of net realizable value and value in usenet realizable

32、 value可收现价值可收现价值 -estimated selling price in the ordinary course of business minus any cost to complete and to sell the goods. value in use现值现值 -pv of future cash flows -discounted at required rate of returnif impaired-(i.e. carrying amountrecoverable amount) written down asset value to the revised

33、carrying amountimpairment of intangible assets revised carrying amount= the lower ofcarrying amount or recoverable amount (higher of) net realizable value value in useimpairment of intangible assetsallocating impairment losses: 1.specific fixed assets. 2.goodwill 3.other capitalised intangibles 4.ot

34、her tangible fixed assets on a pro rata basis (or other more appropriate basis)indicators of impairment current period trading losses or net cash outflow from operating activities, combined with either: past operating losses/net cash outflows or expectation of continuing operating losses/net cash outflowssignificant decline in a fixed assets market value.evidence of obsolescence or physical damage to a fixed assetsignificant adverse changes in: business or markets statutory or regulatory environmentcommitment by management to undertake significant reorganisationmajor los