ASSIGNMENT 2

Code: INS 4007

Lecturer’s Signature& full name

Program:
Course Code: INS 4007
Course Title: FINANCIAL REPORT FORMULATION Nguyễn Thị Phương

Level: …………………………………………………….
Date: 17/05/2021
Time allowed: 5 days
Date: …………………………………………………….. Department’s Signature & full
name
Time: …………………………………………………….

Date: ………………………………

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 Section A
1. Brand values are expressed in terms of words such as ‘‘quality’’ and ‘‘integrity.’’ The
Marketing Society rated the brand value of Company A in 20019 at $10,417,000,000.
Required
a. Define an asset.
b. In your opinion, do brands represent a valuable asset? Comment
c. Under generally accepted accounting principles, should an internally generated brand value be
recognized as an asset? Comment
d. If the brand was purchased, should it be recognized as an asset? Comment
(mark: 1)
2. Name and describe the major Income statement elements of two kind of income statement:
single-step income statement and multiple-step income statement; search on the internet and
download 01 example of consolidated financial statement of a company in accordance with
IFRS. (mark: 1)
3. Present your knowledge about IFRS, the adoption of IFRS in Vietnam (mark: 1.5)
Section B
1. Are the following balance sheet items (A) assets, (L) liabilities, or (E) stockholders’
equity?
Unearned Revenue
Tools
Inventory
Marketable securities
Tax payable
Accounts receivable
Good will
Buildings
Account payable
Investments in stock
Land
Capital stock
Copyrights
Bond payables

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 Prepaid expenses
Total mark: 1

2. The following information was obtained from the accounts of Company Y dated
December 31, 2020.

Account payable 97,916

Account receivable 87,551

Salary payable 43,952

Accumulated depreciation 220,541

Allowance for doubtful account 248

Capital in excess of par 72,913

Cash 48,837

Common stock 27,152

Current debt 36,875

Deferred income tax liability (long term) 52,070

Inventory 46,643

Investment and special fund (long term) 11,901

Long-term debt 393,808

Marketable securities 10,042

Other assets 727

Prepaid expenses 3,963

Property, plant and equipment 849,980

Retained earnings 87,361

Unearned transportation revenue 26,808

Required: Prepare a classified balance sheet in report form

Total mark: 1
3. The following information for ABC company covers the year ended 2020:

Advertising expenses 4,100

Commission expenses 7,600

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 Cost of goods sold 100,000

Other selling expenses 13,700

Income tax expenses 9,990

Insurance expense 2,000

Interest expense 8,000

Dividend income 2,000

Rent expenses of admin building 9,000

Salary expenses for office staff 11,000

Sale revenue 195,000

Required: Prepare a multiple-step income statement

Total mark: 1
4. Required in each case a, b, c:
Prepare the statements of financial position of Father Ltd and the consolidated statement
of financial position as at 1 January 2020 after each transaction, using for each question
the statements of financial position of Father Ltd and Son Ltd as at 1 January 2020 which
were as follows:

Items Father Ltd Son Ltd

($) ($)

Cash 30,000 10,000

Other net assets 25,000 2,800

Total assets 55,000 12,800

Ordinary shares of $1 each 45,500 3,000

Retained earnings 9,500 9,800

Total equity 55,000 12,800

a. On 1 January 2020 Father Ltd acquired all the ordinary share in Son Ltd for $15,000
cash. The fair value of the net assets in Son Ltd was their book value. (Mark: 0.5)

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 b. Assume the purchase in case a was satisfied by the issue of 5,000 new ordinary shares
in Father Ltd. The fair value of a $1 ordinary share in Father Ltd was $3. The fair
value of the net assets in Son Ltd was their book value. (Mark: 0.5)
c. On 1 January 2020, Father acquired 70% of the ordinary shares in Son Ltd for 10,000
cash. The fair value of the net asset in Son Ltd was their book value. Assume in this
case that the non-controlling interest is measured using method 1. (Mark: 0.5)

5. Statement of financial position of Anna Ltd and Peter Ltd at 31/12/2020 as

following

ASSET Anna ($) Peter ($)

Non-current assets 200,000 90,000

Depreciation (60,000) (20,000)

Investment in Peter Ltd 100,000

Current assets

Inventories 90,000 25,000

Account receivables 75,000 30,000

Current account – Peter Ltd 9,000

Bank 12,000 8,000

Total asset 426,000 133,000

EQUITY AND LIABILITIES

$1 common shares 171,000 35,000

General reserve 15,000 12,000

Revaluation reserve 20,000

Retained earnings 90,000 50,000

Current liabilities

Account payable 120,000 22,000

Taxation payable 10,000 5,000

Current account – Anna Ltd 9,000

Total equity and liabilities 426,000 133,000

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Statements of comprehensive income for the year ended 31 December 2020:

Anna ($) Peter ($)

Sales 180,000 115,000

Cost of sales 50,000 55,000

Gross profit 130,000 60,000

Expenses 60,000 40,000

Dividends received from 4,000

Peter

Profit before tax 74,000 20,000

Income tax expense 18,500 5,000

Surplus on revaluation 24,000

Total comprehensive 79,500 15,000

income

Anna Ltd acquired 70% of the shares in Peter Ltd on 1 January 2020 when Peter
Ltd’s retained earnings were $28,000 and the balance on Peter’s general reserve was
$7,000. The fair value of the non-controlling interest at the date was £30,000. Non-
controlling interests are to be measured using Method 2.
Common share of Peter at 31/12/2020 was the same as 1/1/2020.
On 31 December 2020 Anna revalued its non-current assets. The revaluation surplus
of £24,000 was credited to the revaluation reserve.
During the year Anna sold Peter goods for $9,000 plus a markup of one-third. Half of
these goods were still in inventory at the end of the year. Goodwill suffered an
impairment loss of 20%.
Required:
Prepare a consolidated statement of comprehensive income for the year ended
31/12/2020 and a statement of financial position as at that date (mark: 2)

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