bài tập dckttd clc 2020 group accounts

GROUP ACCOUNTS EXERCISE 1: The parent acquired 60% of company X’s $100m ordinary share capital on 1/1/N for a cash payment of $150m and a further payment of $50m on 31/12/N of the subsid

GROUP ACCOUNTS

EXERCISE 1:

The parent acquired 60% of company X’s $100m ordinary share capital on 1/1/N for a cash payment of $150m and a further payment of $50m on 31/12/N of the subsidiary’s post acquisition profits have exceeded an agreed figure by that date

In the financial statements for the year to 31/12/N $50m will be added to the cost of the combination discounted as appreciate

Required: Cost of combination?

EXERCISE 2:

P co bought a 25% shareholding on 31/12/N in A co at a cost of $38.000 During the year 31/12/N+1, A co made a profit after tax of $50.000 A dividend of $20.000 was paid on 31.12 out of this profit

Required: How A co will be accounted for in the individual and consolidated account of P co for the year end 31/12/N+1

EXERCISE 3:

On 31 December 20X1 P Co acquired 80% of S Co for $10,000,000 At this date the fair of S Co's net assets are $7,500,000 Calculate goodwill

EXERCISE 4:

Sing Co acquired the ordinary shares of Wing Co on 31 March 20X1 when the draft

statements of financial position of each company were as follow:

SING CO

STATEMENT OF FINANCIAL POSITION AT 31 MARCH 20X1

$’000 Assets

Prepare the consolidated statement of financial position at 31 March 20X1

EXERCISE 5:

On 1 January 20X1, P acquired 80% of the share capital of subsidiary S The net assets of S were valued at $200,000 at the date of acquisition and P paid $200,000 to acquire the shares in S The summary statements of financial position of both entities at 1 January 20X1 are as follow:

Summary statement of financial position 1 January 20X1

Summary statement of financial position

770,000 240,000 Equity:

Fair value (S co)

Differences

Assets

- Cash 600.000.000 50,000,000 50,000,000 - Receivables from

customers

1.000.000.000 50,000,000 50,000,000

- Inventories 400.000.000 60,000,000 75,000,000 15,000,000 - Intangible fixed assets

(Land use right)

900.000.000 40,000,000 100,000,000 60,000,000

- Tangible fixed assets

(Building and equipment)

2.000.000.000 600,000,000 590,000,000 (10,000,000)

- Accumulated (600.000.000) (300,000,000) (300,000,000)

Liabilities 1.800.000.000 200,000,000 235,000,000 (35,000,000)

- Payables to suppliers 1.000.000.000 100,000,000 100,000,000

- Non-current liabilities (Issued bonds)

800.000.000 100,000,000 135,000,000 (35,000,000)

Equity 2.500.000.000 300,000,000

- Equity shares

(par value 10,000 d/shares)

1/Make journal entries in P company at 1 January 20X1

2/ Prepare the consolidated statement of financial position as at 1 January 20X1

EXERCISE 8:

Cloud obtained a 60% holding in the 100,000 $1 shares of Mist on 1 January 20X8, when the retained earnings of Mist were $850,000 Consideration comprised $250,000 cash, $400,000 payable on 1 January 20X9 and one share in Cloud for each two shares acquired Cloud has a cost of capital of 8% and the market value of its shares on 1 January 20X8 was $2.30

Cloud measures non controlling interest at fair value- The fair value of the controlling interest at 1 January 20X8 was estimated to be $400,000

non-What was the goodwill arising on acquisition? $139,370

$169,000 $119,370 $130,370

On 1 August 20X7 Patronic purchased 18 million of the 24 million $1 equity shares of Sardonic The acquisition was through a share exchange of two shares in Patronic for every three shares in Sardonic The market price of a share in Patronic at 1 August 20X7 was $5.75 Patronic will also pay in cash on 31 July 20X9 (two years after acquisition) $2.42 per acquired share of Sardonic Patronic's cost of capital is 10% per annum

What is the amount of the consideration attributable to Patronic for the acquisition of Sardonic?

$105 million $139.5 million $108.2 million $103.8 million !

EXERCISE 10:

Crash acquired 70% of Bang's 100,000 $1 ordinary shares for $800,000 when the retained earnings of Bang were $570,000 and the balance in its revaluation surplus was $150,000 Bang also has an internally-developed customer list which has been independently valued at $90,000 The non-controlling interest in Bang was judged to have a fair value of $220,000 at the date of acquisition What was the goodwill arising on acquisition?

A $200,000B $163,000C $226,000D $110,000

EXERCISE 11:

Highveldt, a public listed company, acquired 75% of Samson's ordinary shares on 1 April 20X4 Highveldt paid an immediate $3.50 per share in cash and agreed to pay a further amount of $108 million on 1 April 20X5 Highveldt's cost of capital is 8% per annum Highveldt has only recorded the cash consideration of $3.50 per shahe summarised statements of financial position of the two companies at 31 March 20X5 are shown below:

Highveldt Samson

Property, plant and equipment (note (i)) 420 320

Equity and liabilities

Reserves:

Retained earnings – 1 April 20X4 160 134

The following information is relevant:

Ø Highveldt has a policy of revaluing land and buildings to fair value At the date of acquisition Samson's land and buildings had a fair value $20 million higher than their carrying amount and at 31 March 20X5 this had increased by a further $4 million (ignore any additional depreciation)

Ø Samson had established a line of products under the brand name of Titanware Acting on behalf of Highveldt, a firm of specialists, had valued the brand name at a value of $40 million with an estimated life of ten years as at 1 April 20X4 The brand is not included in Samson's statement of financial position

Ø It is the group policy to measure non-controlling interest fair value The fair value of the non controlling interest in Samson at the acquisition date was -$83 million

Required: Calculate Goodwill as it would appear in the consolidated statement of financial position of Highveldt at Acquisition date

EXERCISE 12:

On 1 October 20X8 Pacemaker acquired 30 million of Vardine's 100 million

shares in exchange for 75 million of its own shares The stock market value of Pacemaker's shares at the date of this share exchange was $1.60 each

Vardine's profit is subject to seasonal variation Its profit for the year ended 31 March 20X9 was $100 million

$20 million of this profit was made from 1 April 20X8 to 30 September 20X8 Pacemaker has one subsidiary and no other investments apart from Vardine What amount will be shown as 'investment in associate' in the consolidated statement of financial position of Pacemaker as at 31 March 20X9?

A $144 millionB $150 millionC $78 millionD $126 million

EXERCISE 13:

Ulysses owns 25% of Grant, which it purchased on 1 May 20X8 for $5 million At that date Grant had retained earnings of $7.4 million At the year end date of 31 October 20X8 Grant had retained earnings of

$8.5 million after paying out a dividend of $1 million On 30 September 20X8 Ulysses sold $600,000 of goods to Grant, on which it made 30% profit Grant had resold none of these goods by 31 October

At what amount will Ulysses record its investment in Grant in its consolidated statement of financial position at 31 October 20X8?

EXERCISE 14:

Ruby owns 30% of Emerald and exercises significant influence over it Emerald sold goods to Ruby for $160,000 Emerald applies a one third mark up on cost Ruby still had 25% of these goods in inventory at the year end

What amount should be deducted from consolidated retained earnings in respect of this transaction?

EXERCISE 15:

The following information relates to questions 1- 4.

On 1 October 20X6 Plateau acquired the following non-current investments:

3 million equity shares in Savannah by an exchange of one share in Plateau for every two shares in Savannah plus $1.25 per acquired Savannah share in cash The market price of each Plateau share at the date of acquisition was $6 and the market price of each Savannah share at the date of acquisition was $3.25 30% of the equity shares of Axle at a cost of $7.50 per share in cash

Only the cash consideration of the above investments has been recorded by Plateau

Extracts from the summarised draft statements of financial position of the three companies at 30 September 20X7 are:

Plateau Savannah Axle $'000 $'000 $'000 Equity shares of $1 each 10,000 4,000 4,000 Retained earnings

– at 30 September 20X6 16,000 6,000 11,000 – for year ended 30 September 20X7 9,250 2,900 5,000 The following information is relevant 35,250 12,900 20,000 Ø It is the group policy to value non-controlling interest at acquisition at fair value For this purpose the share price of Savannah at the acquisition date should be used

1/What is the total of the consideration paid by Plateau for Savannah? A $3,750,000

B $9,750,000C $12,750,000D $21,750,000

2/ What amount will be shown as non-controlling interest in the consolidated statement of financial position at 30 September 20X7?

A $3,900,000B $3,250,000C $3,225,000D $3,975,000

3/ What amount will be shown in the consolidated statement of financial position at 30 September 20X7 in respect of the investment in Axle?

A $9,000,000B $10,500,000C $14,000,000D $30,000,000

4/ Plateau is negotiating a contract to supply goods to Axle in the coming year (ended 30 September 20X8) at 20% profit How will the unrealised profit on the sale of these goods be adjusted in the consolidated financial statements for the year ended 30 September 20X8?

A DR Share of profit of associates CR Group inventory B DR Share of profit of associates CR Investment in associate C DR Group inventory CR Share of profit of associate D DR Investment in associate CR Share of profit of associate

EXERCISE 16: Merge with goodwill

P Plc has the following transactions: (Unit: $1,000)

1 P Plc acquired S Plc at 31/12/N and had settled as follows: - By cash at bank: 2,450 at 31/12/N

- By a tangible fixed asset with fair value of 180 (VAT 10% was excluded) The asset had the initial cost of 300 and accumulated depreciation of 140

- By issuing 1,000 bonds with par value of 1/bond, the maturity term of 3 years and interest rate of 10% per annum The market price of those bonds was 1.05 per bond

Simultaneously, P Plc had hired consultants, asset valuation experts and auditors with an amount of 100 and the cost of bond issuance of 6, all of which were paid by cash at bank

After the acquisition, only P Plc existed and S Plc dissolved

2 The pre-acquisition Statement of Financial Position for the year ended 31/12/N of the two companies were as follows:

Item P Plc S Plc ASSETS

- Cash- Inventories

- Tangible fixed assets + Cost

+ Accumulated depreciation - Intangible fixed assets

15,000 200 50,000 100,000 (50,000) 500

3,000 100 15,000 18,000 (3,000) 100

LIABILITIES Trade payables Borrowings

Equity Share capital Share premium Undistributed profit

30,000 10,000 20,000

35,700 20,000 10,700 5,000

15,000 5,000 10,000

3,200 1,600 600 1,000

3, At the date of acquisition, the book value of assets and liabilities items of S Plc were equal to their fair value with the following exceptions:

- Inventories that had fair value of 90;

- Tangible fixed assets that had fair value of 15,500

Requirements:

1 Calculate the cost of combination and goodwill?

2 Prepare relevant journal entries for the transaction at 31/12/N?

EXERCISE 17: Business combination forming parent company and subsidiary with goodwill The parent company owns less than 100% of the subsidiary

P Plc has the following transactions: (Unit: $1,000)

1 At 31/12/N, P Plc acquired 70% ordinary shares of S Plc and had made the payment by the following forms:

- By issuing 2 million 0.01 shares which had market price of 0.014

- The cost of shares issuance was 1,000 and the fees for consultants (included in cost of combination) was 2,000 All were paid by cash at bank

2 The pre-acquisition Statement of Financial Position for the year ended 31/12/N of the two companies were as follows:

(Book value)

S (Fair value) Cash 40,000 30,000 30,000 Trade receivables 70,000 20,000 18,000 Inventories 90,000 60,000 55,000 Fixed assets 130,000 50,000 45,000 Total 330,000 160,000 148,000 Trade payables 40,000 30,000 30,000 Long-term borrowings 30,000 10,000 12,000 Other payables 30,000 20,000 20,000 Share capital 170,000 70,000

Share premium 30,000 10,000 Undistributed profit after tax 30,000 20,000

Total 330,000 160,000

Requirements:

1 Calculate the cost of combination and goodwill?

2 Make relevant journal entries for the transaction at 31/12/N in P Plc ledgers? 3 Make journal entries for preparing consolidated financial statements acquisition date?

EXERCISE 18: Investment in associates with goodwill, upstream (sales by associate to investor) transactions

1 At 1/1/N, P Plc owned some subsidiaries and acquired 300,000 out of 1,200,000 issued shares of A Plc with the payment by the following forms: - Share exchange: 125,000 ordinary shares with par value of 10 and fair value of 15 per share

- Bond exchange: 1,000 bonds with total par value of 1,000 and total fair value of 1,000,000

- The fees for consultants and revaluation experts 500,000 were paid by cash at bank

P Plc had a significant influence on the financial and operating policy of A Plc 2 At the acquisition date, the SOFP of A Plc was as follow:

Assets 24,400,000 Liabilities and Equity 24,400,000 Cash 2,000,000 Short-term borrowings 13,000,000 Receivables 3,000,000 Share capital 11,000,000 Inventories 3,400,000 Undistributed PAT 400,000 Fixed assets 16,000,000

3 At acquisition date, the book value of A’s assets and liabilities was equal to their fair value with the following exceptions:

- Inventories that had fair value of 3,600,000; - Fixed assets that had fair value of 16,600,000 4 In year N:

- At 30/3/N: A Plc had distributed all the dividends from the retained earnings

at 31/12/N-1

- A Plc had sold all inventories that were in stocks at 1/1/N

- At 30/11/N, A Plc sold to P a consignment with cost of 1,000,000 and selling price of 1,300,000 Until 31/12/N, P had not sold this consignment yet - A’s net profit for the year N was 5,000,000 The company had temporarily distributed 2,000,000 as the dividends at 30/9/N by cash at bank

5 In year N+1, P Plc had sold all of the goods that was purchased from A Plc and the profit for year N+1 of A was 4,500,000