（财会考证）ACCACAT考试P2公司报告主观题练习

1、ACCACAT考试P2公司报告主观题练习1、4 Prochain, a public limited company, operates in the fashion industry and has a financial year end of 31 May 2006.The company sells its products in department stores throughout the world. Prochain insists on creating its own sellingareas within the department stores which are

2、called model areas. Prochain is allocated space in the department storewhere it can display and market its fashion goods. The company feels that this helps to promote its merchandise.Prochain pays for all the costs of the model areas including design, decoration and construction costs. The areas are

3、used for approximately two years after which the company has to dismantle the model areas. The costs ofdismantling the model areas are normally 20% of the original construction cost and the elements of the area areworthless when dismantled. The current accounting practice followed by Prochain is to

4、charge the full cost of themodel areas against profit or loss in the year when the area is dismantled. The accumulated cost of the model areasshown in the balance sheet at 31 May 2006 is $20 million. The company has estimated that the average age of themodel areas is eight months at 31 May 2006. (7

5、marks)Prochain acquired 100% of a sports goods and clothing manufacturer, Badex, a private limited company, on 1 June2005. Prochain intends to develop its own brand of sports clothing which it will sell in the department stores. Theshareholders of Badex valued the company at $125 million based upon

6、profit forecasts which assumed significantgrowth in the demand for the Badex brand name. Prochain had taken a more conservative view of the value of thecompany and estimated the fair value to be in the region of $108 million to $112 million of which$20 million relates to the brand name Badex. Procha

7、in is only prepared to pay the full purchase price if profits fromthe sale of Badex clothing and sports goods reach the forecast levels. The agreed purchase price was $100 millionplus a further payment of $25 million in two years on 31 May 2007. This further payment will comprise a guaranteedpayment

8、 of $10 million with no performance conditions and a further payment of $15 million if the actual profitsduring this two year period from the sale of Badex clothing and goods exceed the forecast profit. The forecast profiton Badex goods and clothing over the two year period is $16 million and the ac

9、tual profits in the year to 31 May2006 were $4 million. Prochain did not feel at any time since acquisition that the actual profits would meet theforecast profit levels. (8 marks)After the acquisition of Badex, Prochain started developing its own sports clothing brand Pro. The expenditure in theperi

10、od to 31 May 2006 was as follows: The costs of the production and launch of the products include the cost of upgrading the existing machinery($3 million), market research costs ($2 million) and staff training costs ($1 million).Currently an intangible asset of $20 million is shown in the financial s

11、tatements for the year ended 31 May 2006.(6 marks)Prochain owns a number of prestigious apartments which it leases to famous persons who are under a contract ofemployment to promote its fashion clothing. The apartments are let at below the market rate. The lease terms areshort and are normally for s

12、ix months. The leases terminate when the contracts for promoting the clothing terminate.Prochain wishes to account for the apartments as investment properties with the difference between the market rateand actual rental charged to be recognised as an employee benefit expense. (4 marks)Assume a disco

13、unt rate of 55% where necessary.Required:Discuss how the above items should be dealt with in the financial statements of Prochain for the year ended31 May 2006 under International Financial Reporting Standards.(25 marks)2、(b) (i) Discusses the principles involved in accounting for claims made under

14、the above warranty provision.(6 marks)(ii) Shows the accounting treatment for the above warranty provision under IAS37 Provisions, ContingentLiabilities and Contingent Assets for the year ended 31 October 2007. (3 marks)Appropriateness of the format and presentation of the report and communication o

15、f advice. (2 marks)3、(b) Prepare the balance sheet of York at 31 October 2006, using International Financial Reporting Standards,discussing the nature of the accounting treatments selected, the adjustments made and the values placedon the items in the balance sheet. (20 marks)4、 The following inform

16、ation is relevant to the preparation of the group financial statements:(i) Tbay was acquired exclusively with a view to sale and at 31 May 2006 meets the criteria of being a disposalgroup. The fair value of Tbay at 31 May 2006 is $300 million and the estimated selling costs of the shareholdingin Tba

17、y are $5 million.(ii) Ejoy entered into a joint venture with another company on 31 May 2006. The joint venture is a limited companyand Ejoy has contributed assets at fair value of $20 million (carrying value $14 million). Each party will holdfive million ordinary shares of $1 in the joint venture. T

18、he gain on the disposal of the assets ($6 million) to thejoint venture has been included in other income.(iii) On acquisition, the financial statements of Tbay included a large cash balance. Immediately after acquisitionTbay paid a dividend of $40 million. The receipt of the dividend is included in

19、other income in the incomestatement of Ejoy. Since the acquisition of Zbay and Tbay, there have been no further dividend payments by thesecompanies.(iv) Zbay has a loan asset which is being carried at $60 million in the draft financial statements for the year ended31 May 2006. The loans effective in

20、terest rate is six per cent. On 1 June 2005 the company felt that becauseof the borrowers financial problems, it would receive $20 million in approximately two years time, on 31 May2007. At 31 May 2006, the company still expects to receive the same amount on the same date. The loan assetis classifie

21、d as loans and receivables.(v) On 1 June 2005, Ejoy purchased a five year bond with a principal amount of $50 million and a fixed interestrate of five per cent which was the current market rate. The bond is classified as an available for sale financialasset. Because of the size of the investment, Ej

22、oy has entered into a floating interest rate swap. Ejoy hasdesignated the swap as a fair value hedge of the bond. At 31 May 2006, market interest rates were six per cent.As a result, the fair value of the bond has decreased to $483 million. Ejoy has received $05 million in netinterest payments on th

23、e swap at 31 May 2006 and the fair value hedge has been 100% effective in the period.No entries have been made in the income statement to account for the bond or the hedge.(vi) No impairment of the goodwill arising on the acquisition of Zbay had occurred at 1 June 2005. The recoverableamount of Zbay

24、 was $630 million and that of Tbay was $290 million at 31 May 2006. Impairment losses ongoodwill are charged to cost of sales.(vii) Assume that profits accrue evenly throughout the year and ignore any taxation effects.Required:Prepare a consolidated income statement for the Ejoy Group for the year e

25、nded 31 May 2006 in accordance withInternational Financial Reporting Standards.(25 marks)5、(a) Minco is a major property developer which buys land for the construction of housing. One aspect of its business is to provide low-cost homes through the establishment of a separate entity, known as a housi

26、ng association. Minco purchases land and transfers ownership to the housing association before construction starts. Minco sells rights to occupy the housing units to members of the public but the housing association is the legal owner of the building. The housing association enters into loan agreeme

27、nts with the bank to cover the costs of building the homes. However, Minco negotiates and acts as guarantor for the loan, and bears the risk of increases in the loans interest rate above a specified rate. Currently, the housing rights are normally all sold out on the completion of a project.Minco en

28、ters into discussions with a housing contractor regarding the construction of the housing units but the agreement is between the housing association and the contractor. Minco is responsible for any construction costs in excess of the amount stated in the contract and is responsible for paying the ma

29、intenance costs for any units not sold. Minco sets up the board of the housing association, which comprises one person representing Minco and two independent board members.Minco recognises income for the entire project when the land is transferred to the housing association. The income recognised is

30、 the difference between the total sales price for the finished housing units and the total estimated costs for construction of the units. Minco argues that the transfer of land represents a sale of goods which fulfils the revenue recognition criteria in IAS 18 Revenue. (7 marks)(b) Minco often spons

31、ors professional tennis players in an attempt to improve its brand image. At the moment, it has a three-year agreement with a tennis player who is currently ranked in the worlds top ten players. The agreement is that the player receives a signing bonus of $20,000 and earns an annual amount of $50,00

32、0, paid at the end of each year for three years, provided that the player has competed in all the specified tournaments for each year. If the player wins a major tournament, she receives a bonus of 20% of the prize money won at the tournament. In return, the player is required to wear advertising lo

33、gos on tennis apparel, play a specified number of tournaments and attend photo/film sessions for advertising purposes. The different payments are not interrelated. (5 marks)(c) Minco leased its head office during the current accounting period and the agreement terminates in six years time. There is

34、a clause in the operating lease relating to the internal condition of the property at the termination of the lease. The clause states that the internal condition of the property should be identical to that at the outset of the lease. Minco has improved the building by adding another floor to part of

35、 the building during the current accounting period. There is also a clause which enables the landlord to recharge Minco for costs relating to the general disrepair of the building at the end of the lease. In addition, the landlord can recharge any costs of repairing the roof immediately. The landlor

36、d intends to replace part of the roof of the building during the current period. (5 marks)(d) Minco acquired a property for $4 million and annual depreciation of $300,000 is charged on the straight line basis. At the end of the previous financial year of 31 May 2013, when accumulated depreciation wa

37、s $1 million, a further amount relating to an impairment loss of $350,000 was recognised, which resulted in the property being valued at its estimated value in use. On 1 October 2013, as a consequence of a proposed move to new premises, the property was classified as held for sale. At the time of cl

38、assification as held for sale, the fair value less costs to sell was $24 million. At the date of the published interim financial statements, 1 December 2013, the property market had improved and the fair value less costs to sell was reassessed at $252 million and at the year end on 31 May 2014 it ha

39、d improved even further, so that the fair value less costs to sell was $295 million. The property was sold on 5 June 2014 for $3 million. (6 marks)Required:Discuss how the above items should be dealt with in the financial statements of Minco.Note: The mark allocation is shown against each of the fou

40、r issues above.Professional marks will be awarded in question 3 for clarity and quality of presentation. (2 marks)6、 Required:Discuss the accounting treatment of the above transactions and the impact that the resulting adjustments to thefinancial statements would have on ROCE.Note: your answer shoul

41、d include appropriate calculations where necessary and a discussion of the accountingprinciples involved.7、Section A THIS ONE question is compulsory and MUST be attempted The following draft statements of financial position relate to Robby, Hail and Zinc, all public limited companies, as at 31 May 2

42、012:The following information needs to be taken into account in the preparation of the group financial statements of Robby:(i) On 1 June 2010, Robby acquired 80% of the equity interests of Hail. The purchase consideration comprised cash of $50 million. Robby has treated the investment in Hail at fai

43、r value through other comprehensive income (OCI).A dividend received from Hail on 1 January 2012 of $2 million has similarly been credited to OCI.It is Robbys policy to measure the non-controlling interest at fair value and this was $15 million on 1 June 2010.On 1 June 2010, the fair value of the id

44、entifiable net assets of Hail were $60 million and the retained earnings of Hail were $16 million. The excess of the fair value of the net assets is due to an increase in the value of non-depreciable land.(ii) On 1 June 2009, Robby acquired 5% of the ordinary shares of Zinc. Robby had treated this i

45、nvestment at fair value through profit or loss in the financial statements to 31 May 2011.On 1 December 2011, Robby acquired a further 55% of the ordinary shares of Zinc and gained control of the company.The consideration for the acquisitions was as follows:At 1 December 2011, the fair value of the

46、equity interest in Zinc held by Robby before the business combination was $5 million.It is Robbys policy to measure the non-controlling interest at fair value and this was $9 million on 1 December 2011.The fair value of the identifiable net assets at 1 December 2011 of Zinc was $26 million, and the

47、retained earnings were $15 million. The excess of the fair value of the net assets is due to an increase in the value of property, plant and equipment (PPE), which was provisional pending receipt of the final valuations. These valuations were received on 1 March 2012 and resulted in an additional in

48、crease of $3 million in the fair value of PPE at the date of acquisition. This increase does not affect the fair value of the non-controlling interest at acquisition. PPE is to be depreciated on the straight-line basis over a remaining period of five years.(iii) Robby has a 40% share of a joint oper

49、ation, a natural gas station. Assets, liabilities, revenue and costs are apportioned on the basis of shareholding.The following information relates to the joint arrangement activities: The natural gas station cost $15 million to construct and was completed on 1 June 2011 and is to be dismantled at t

50、he end of its life of 10 years. The present value of this dismantling cost to the joint arrangement at 1 June 2011, using a discount rate of 5%, was $2 million. In the year, gas with a direct cost of $16 million was sold for $20 million. Additionally, the joint arrangement incurred operating costs o

51、f $05 million during the year.Robby has only contributed and accounted for its share of the construction cost, paying $6 million. The revenue and costs are receivable and payable by the other joint operator who settles amounts outstanding with Robby after the year end.(iv) Robby purchased PPE for $1

52、0 million on 1 June 2009. It has an expected useful life of 20 years and is depreciated on the straight-line method. On 31 May 2011, the PPE was revalued to $11 million. At 31 May 2012, impairment indicators triggered an impairment review of the PPE. The recoverable amount of the PPE was $78 million

53、. The only accounting entry posted for the year to 31 May 2012 was to account for the depreciation based on the revalued amount as at 31 May 2011. Robbys accounting policy is to make a transfer of the excess depreciation arising on the revaluation of PPE.(v) Robby held a portfolio of trade receivabl

54、es with a carrying amount of $4 million at 31 May 2012. At that date, the entity entered into a factoring agreement with a bank, whereby it transfers the receivables in exchange for $36 million in cash. Robby has agreed to reimburse the factor for any shortfall between the amount collected and $36 m

55、illion. Once the receivables have been collected, any amounts above $36 million, less interest on this amount, will be repaid to Robby. Robby has derecognised the receivables and charged $04 million as a loss to profit or loss.(vi) Immediately prior to the year end, Robby sold land to a third party

56、at a price of $16 million with an option to purchase the land back on 1 July 2012 for $16 million plus a premium of 3%. The market value of the land is $25 million on 31 May 2012 and the carrying amount was $12 million. Robby accounted for the sale, consequently eliminating the bank overdraft at 31

57、May 2012.Required:(a) Prepare a consolidated statement of financial position of the Robby Group at 31 May 2012 in accordance with International Financial Reporting Standards. (35 marks)(b) (i) In the above scenario (information point (v), Robby holds a portfolio of trade receivables and enters into

58、a factoring agreement with a bank, whereby it transfers the receivables in exchange for cash. Robby additionally agreed to other terms with the bank as regards any collection shortfall and repayment of any monies to Robby. Robby derecognised the receivables. This is an example of the type of complex

59、 transaction that can arise out of normal terms of trade. The rules regarding derecognition are quite complex and are often not understood by entities.Describe the rules of IFRS 9 Financial Instruments relating to the derecognition of a financial asset and how these rules affect the treatment of the

60、 portfolio of trade receivables in Robbys financial statements. (9 marks)(ii) Discuss the legitimacy of Robby selling land just prior to the year end in order to show a better liquidity position for the group and whether this transaction is consistent with an accountants responsibilities to users of