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1、Dec 2012 Q1QuestionOn 1 January 2012, Viagem acquired 90% of the equity share capital of Greca in a share exchange in which Viagem issued two new shares for every three shares it acquired in Greca. Additionally, on 31 December 2012, Viagem will pay the shareholders of Greca$176 per share acquired. V

2、iagems cost of capital is 10% per annum.At the date of acquisition, shares in Viagem and Greca had a stock market value of $650 and $250 each,respectively.Income statements for the year ended 30 September 2012Viagem$000Greca$000Revenue64,60038,000Cost of sales(51,200)(26,000)Gross profit13,40012,000

3、Distribution costs(1,600)(1,800)Administrative expenses(3,800)(2,400)Investment income500nilFinance costs(420)nilProfit before tax8,0807,800Income tax expense(2,800)(1,600)Profit for the year5,2806,200Equity as at 1 October 2011Equity shares of $1 each30,00010,000Retained earnings54,00035,000The fol

4、lowing information is relevant:I. At the date of acquisition, the fair values of Grecas assets were equal to their carrying amounts with the exception of two items: An item of plant had a fair value of $18 million above its carrying amount. The remaining life of the plant at the date of acquisition

5、was three years. Depreciation is charged to cost of sales. Greca had a contingent liability which Viagem estimated to have a fair value of $450,000. This has not changed as at 30 September 2012.Greca has not incorporated these fair value changes into its financial statements.II. Viagems policy is to

6、 value the non-controlling interest at fair value at the date of acquisition. For this purpose,Grecas share price at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest.III. Sales from Viagem to Greca throughout the year ended 30 Septembe

7、r 2012 had consistently been $800,000 per month. Viagem made a mark-up on cost of 25% on these sales. Greca had $15 million of these goods in inventory as at 30 September 2012.IV. Viagems investment income is a dividend received from its investment in a 40% owned associate which it has held for seve

8、ral years. The underlying earnings for the associate for the year ended 30 September 2012 were $2 million.V. Although Greca has been profitable since its acquisition by Viagem, the market for Grecas products has been badly hit in recent months and Viagem has calculated that the goodwill has been imp

9、aired by $2 million as at 30 September 2012.Required:a) Calculate the consolidated goodwill at the date of acquisition of Greca.b) Prepare the consolidated income statement for Viagem for the year ended 30 September 2012The following mark allocation is provided as guidance for these requirements:a)

10、7 marksb) 14 marks(21 marks)Answers$000Revenue64,60028,500(7,200)85,900Cost of sales51,20019,500(7,200)300450(64,250)Gross profit21,650Distribution costs1,6001,350(2,950)Administrative expenses3,8001,8002,000(7,600)Share of profit of A800Finance costs4201,080(1,500)Profit before tax10,400Income tax

11、expense2,8001,200(4,000)Profit for the year6,400Profit attributible to:P6,180NCI2206,400W1 GoodwillConsideration$000$000- Share exchange90%*10,000*2/3*6.539,000- Deferred cons.90%*10,000*1.76/1.114,400NCI10%*10,000*2.52,500Less: FV of net asset of SShare capital10,000RE- 2012/1/1FV adj.35,000+6200*3

12、/1236,550- Plant1,800-Contingent liability(450)(47,900)Goodwill- Acq. date8,000W2 Fair value adjustmentAcq. DateMovementYear end2012/01/012012/09/30$000$000$000Plant1,800(450)1,350Contingent liability(450)0(450)W3 Intra-group sale ($000)DrCrRevenue800*97,200Cost7,200URP= 1,500*25/(100+25) =300DrCrIn

13、ventory300Cost - P300W4 NCI$000Per Question6200*9/124,650Additional Dep.URP - S(450)Goodwill impairment(2,000)2,20010%220June 2013 Q1Questiona)On 1 October 2012, Paradigm acquired 75% of Stratas equity shares by means of a share exchange of two new shares in Paradigm for every five acquired shares i

14、n Strata. In addition, Paradigm issued to the shareholders of Strata a$100 10% loan note for every 1,000 shares it acquired in Strata. Paradigm has not recorded any of the purchase consideration, although it does have other 10% loan notes already in issue.The market value of Paradigms shares at 1 Oc

15、tober 2012 was $2 each.The summarised statements of financial position of the two companies as at 31 March 2013 are:ParadigmStrataAssets$000$000Non-current assetsProperty, plant and equipment47,40025,500Financial asset:equity investments (notes (i) and (iv)7,5003,20054,90028,700Current assetsInvento

16、ry (note (ii)20,4008,400Trade receivables (note (iii)14,8009,000Bank2,100nilTotal assets92,20046,100Equity and liabilitiesEquityEquity shares of $1 each40,00020,000Retained earnings/(losses) at 1 April 201219,200(4,000) for year ended 31 March 20137,4008,00066,60024,000Non-current liabilities10% loa

17、n notes8,000nilCurrent liabilitiesTrade payables (note (iii)17,60013,000Bank overdraftnil9,100Total equity and liabilities92,20046,100The following information is relevant:I. At the date of acquisition, Strata produced a draft statement of profit or loss which showed it had made a net loss after tax

18、 of$2 million at that date. Paradigm accepted this figure as the basis for calculating the pre- and post-acquisition split of Stratas profit for the year ended 31 March 2013.Also at the date of acquisition, Paradigm conducted a fair value exercise on Stratas net assets which were equal to their carr

19、ying amounts (including Stratas financial asset equity investments) with the exception of an item of plant which had a fair value of $3 million below its carrying amount. The plant had a remaining economic life of three years at 1 October 2012.Paradigms policy is to value the non-controlling interes

20、t at fair value at the date of acquisition. For this purpose, a share price for Strata of $120 each is representative of the fair value of the shares held by the non-controlling interest.II. Each month since acquisition, Paradigms sales to Strata were consistently $46 million. Paradigm had marked th

21、ese up by 15% on cost. Strata had one months supply ($46 million) of these goods in inventory at 31 March 2013. Paradigms normalmark-up (to third party customers) is 40%.III. Stratas current account balance with Paradigm at 31 March 2013 was $28 million, which did not agree with Paradigms equivalent

22、 receivable due to a payment of $900,000 made by Strata on 28 March 2013, which was not received by Paradigm until 3 April 2013.IV. The financial asset equity investments of Paradigm and Strata are carried at their fair values as at 1 April 2012. As at 31 March 2013, these had fair values of $71 mil

23、lion and $39 million respectively.V. There were no impairment losses within the group during the year ended 31 March 2013.Required:Prepare the consolidated statement of financial position for Paradigm as at 31 March 2013. (20 marks)AnswersNon-current assets$000Property, plant and equipment47,40025,5

24、00(2,500)70,400equity investments7,1003,90011,000Goodwill8,500Current assetsInventory20,4008,400(600)28,200Trade receivables14,8009,000(900)(2,800)20,100Bank2,1009003,000Total asset141,200Share capital46,000Share premium6,000Retained earning34,000NCI8,800Non-current liabilities10% loan notes8,0001,5

25、009,500Trade payables17,60013,000(2,800)27,800Bank overdraft9,1009,100141,200W1 GoodwillConsideration$000$000- Share exchange20000*75%*2/5*212,000- Loan20000*75%/1000*1001,500NCI20000*25%*1.26,000Less: FV of netasset of SShare capital20,000RE- 2012/10/1-4000-2000(6,000)FV adj.- Plant(3,000)(11,000)G

26、oodwill- Acq. date8,500DrCrInvestment in S13,500Share capital6,000Share premium6,000Loan1,500W2 Fair value adjustmentAcq. DateMovementYear end2012/10/012013/3/31$000$000$000Plant(3,000)500(2,500)W3 Intra-group sale ($000)URP= 4600*15/(100+15) =InventoryDr600Cr 600Cost - P600W4 Intra-group balance ($

27、000)DrCrBank900Trade receivalbe900DrCrTrade receivalbe Trade payalbe2,8002,800W4 Consolidated Retained earningPS$000$000Per question26,600Post-acq.10,000Over depreciation500URP(600)IEI(400)70011,200Group Share8,40034,000W5 NCI$000At Acquistion6,000Share of post-acq. RE of S2,8008,800Pilot Q8On 1 Jan

28、uary 2014, Viagem acquired 80% of the equity share capital of Greca. Extracts of their statements of profit or loss for the year ended 30 September 2014 are:ViagemGreca$000$000Revenue64,60038,000Cost of sales(51,200)(26,000)Sales from Viagem to Greca throughout the year ended 30 September 2014 had c

29、onsistently been $800,000 per month. Viagem made a mark-up on cost of 25% on these sales. Greca had $15 million of these goods in inventory as at 30 September 2014.What would be the cost of sales in Viagems consolidated statement of profit or loss for the year ended 30 September 2014?A. $599 million

30、B. $614 millionC. $638 millionD. $679 millionPilot Q13An associate is an entity in which an investor has significant influence over the investee.Which of the following indicate(s) the presence of significant influence?I. The investor owns 330,000 of the 1,500,000 equity voting shares of the investee

31、II. The investor has representation on the board of directors of the investeeIII. The investor is able to insist that all of the sales of the investee are made to a subsidiary of the investorIV. The investor controls the votes of a majority of the board membersA.(i) and (ii) only B.(i), (ii) and (ii

32、i) C.(ii) and (iii) only D.All fourConsolidated financial statements are presented on the basis that the companies within the group are treated as if they are a single (economic) entity.Which of the following are requirements of preparing group accounts? I.All subsidiaries must adopt the accounting

33、policies of the parent II.Subsidiaries with activities which are substantially different to the activities of other members of the group should not be consolidatedIII.All entity financial statements within a group should (normally) be prepared to the same accounting year end prior to consolidation I

34、V.Unrealised profits within the group must be eliminated from the consolidated financial statementsA.All fourB.(i) and (ii) only C.(i), (iii) and (iv) D.(iii) and (iv)The Caddy group acquired 240,000 of Augusts 800,000 equity shares for $6 per share on 1 April 2014. Augusts profit after tax for the

35、year ended 30 September 2014 was $400,000 and it paid an equity dividend on 20 September 2014 of $150,000.On the assumption that August is an associate of Caddy, what would be the carrying amount of the investment in August in the consolidated statement of financial position of Caddy as at 30 Septem

36、ber 2014?A.$1,455,000 B.$1,500,000 C.$1,515,000 D.$1,395,000201412 Q10Petre owns 100% of the share capital of the following companies. The directors are unsure of whether the investments should be consolidated.In which of the following circumstances would the investment NOT be consolidated?A. Petre

37、has decided to sell its investment in Alpha as it is loss-making; the directors believe its exclusion from consolidation would assist users in predicting the groups future profitsB. Beta is a bank and its activity is so different from the engineering activities of the rest of the group that it would

38、 be meaningless to consolidate itC. Delta is located in a country where local accounting standards are compulsory and these are not compatible with IFRS used by the rest of the groupD. Gamma is located in a country where a military coup has taken place and Petre has lost control of the investment fo

39、r the foreseeable future201412 Q16Tazer, a parent company, acquired Lowdown, an unincorporated entity, for $28 million. A fair value exercise performed on Lowdowns net assets at the date of purchase showed:$000Property, plant and equipment3,000Identifiable intangible asset500Inventory300Trade receiv

40、ables less payables2004,000How should the purchase of Lowdown be reflected in Tazers consolidated statement of financial position?A. Record the net assets at their values shown above and credit profit or losswith$12 millionB. Record the net assets at their values shown above and credit Tazers consol

41、idated goodwill with $12 millionC. Write off the intangible asset ($500,000), record the remaining net assets at their values shown above and credit profit or loss with $700,000D. Record the purchase as a financial asset investment at $28 million201506 Q5Pact acquired 80% of the equity shares of Sac

42、t on 1 July 2014, paying$300 for each share acquired. This represented a premium of 20% over the market price of Sacts shares at that date.Sacts shareholders funds (equity) as at 31 March 2015 were:$Equity shares of $1 each100,000Retained earnings at 1 April 201480,000Profit for the year ended 31 Ma

43、rch 201540,000 120,000220,000The only fair value adjustment required to Sacts net assets on consolidation was a $20,000 increase in the value of its land.Pacts policy is to value non-controlling interests at fair value at the date of acquisition. For this purpose the market price of Sacts shares at

44、that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest.Q5What would be the carrying amount of the non-controlling interest of Sact in the consolidated statement of financial position of Pact as at 31 March 2015?A.$54,000 B.$50,000 C.$56,000

45、D.$58,000201506 Q8Germane has a number of relationships with other companies.In which of the following relationships is Germane necessarily the parent company?I. Foll has 50,000 non-voting and 100,000 voting equity shares in issue with each share receiving the same dividend. Germane owns all of Foll

46、s non-voting shares and 40,000 of its voting sharesII. Kipp has 1 million equity shares in issue of which Germane owns 40%. Germane also owns $800,000 out of $1 million 8% convertible loan notes issued by Kipp. These loan notes may be converted on the basis of 40 equity shares for each $100 of loan

47、note, or they may be redeemed in cash at the option of the holderIII. Germane owns 49% of the equity shares in Polly and 52% of its non-redeemable preference shares. As a result of these investments, Germane receives variable returns from Polly and has the ability to affect these returns through its

48、 power over Polly A.(i) onlyB.(i) and (ii) only C.(ii) and (iii) only D.All three201506 Q12Wilmslow acquired 80% of the equity shares of Zeta on 1 April 2014 when Zetas retained earnings were $200,000.During the year ended 31 March 2015, Zeta purchased goods from Wilmslow totalling $320,000. At 31 M

49、arch 2015, one quarter of these goods were still in the inventory of Zeta. Wilmslow applies a mark-up on cost of 25% to all of its sales.At 31 March 2015, the retained earnings of Wilmslow and Zeta were$450,000 and $340,000 respectively.What would be the amount of retained earnings in Wilmslows cons

50、olidated statement of financial position as at 31 March 2015? A.$706,000B.$542,000 C.$498,000 D.$546,000IFRS requires extensive use of fair values when recording the acquisition of a subsidiary.Which of the following comments, regarding the use of fair values on the acquisition of a subsidiary, is correct?A. The use of fair value to record a subsidiarys acquired assets does not comply with the historical cost principleB. The use of fair values to record the acquisition of plant always increases consolidated post-acquisiti