Association – exam like Question with Answer

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    gutsychyk
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    Summarised Financial Statements for the year to 31 December 2011
    Statements of Financial Position
    Tom
    Dick
    Harry
    $m
    $m
    $m
    Non Current Assets
    Tangibles
    50
    40
    44
    Investment (NOTE 1)
    56
    Current Assets
    Inventory
    22
    18
    14
    Receivables
    10
    26
    22
    Bank
    14
    18
    24
    152
    102
    104
    Share Capital ($1)
    60
    20
    50
    Reserves
    42
    26
    34
    Current liabilities
    50
    56
    20
    152
    102
    104
    Income Statements
    Tom
    Dick
    Harry
    $m
    $m
    $m
    Revenue
    266
    320
    250
    Cost of Sales
    (162)
    (184)
    (132)
    Gross Profit
    104
    136
    118
    Operating Expenses
    (70)
    (72)
    (51)
    Operating Profit
    34
    64
    58
    Investment Income
    24
    -
    -
    Profit Before Tax
    58
    64
    58
    Taxation
    (26)
    (34)
    (34)
    Profit After Tax
    32
    30
    24

    1) Tom purchased 80% of Dick for $30m on 1 January 2011. Goodwill has been impaired during the year by $1,000,000. Reserves at acquisition were $6m.
    2) Tom also purchased 30% of Harry for $26m two years ago when reserves were $5m. Goodwill was impaired by $500,000 of which $150,000 relates to this year. The other 70% of Harry?s shares are owned by a number of small investors who hold no more than 2% each.
    3) During the year Dick sold goods to Tom to the value of $8m at a mark-up of 25% on cost. All of the goods sold to Tom were still in inventory at the year end. There was an outstanding balance between the two companies at the end of the year of $3m as a result of this transaction.
    4) The fair value of the non-controlling interest at acquisition was $7.5m
    5) The investment income of Tom was received from Dick.
    Required:
    Prepare both the Consolidated Statement of Financial Position and Income Statement for the year to 31 December 2011.
    Answer can be found here.
    ANSWER

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