1. On January 1, 2019, Entity A has granted 600 share options to each of its 100 employees.

The
options vest in 3 years’ time. Each share option has a fair value of 100 on grant date.
Information on employee departure is as follows:

January 1, 2019: estimate of employees leaving the entity during the vesting period -4%
December 31, 2019 revision of estimate of employees leaving to 5% before vesting date
December 31, 2020 revision of estimate of employees leaving to 6% before vesting date
December 31, 2021 actual employees leaving 5%

Compute the salaries expense in A) 2019, B) 2020, & C) 2021.

2. On January 1, 2020, ABC Co. acquired 75% interest in XYZ, Inc for 2.5M. ABC Co. incurred
transaction costs of 250,000 for legal, accounting, and consultancy fees in negotiating the
business combination. ABC Co. elected to measure NCI at the NCI's proportionate share in XYZ,
Inc's identifiable net assets. The carrying amounts (CA) and fair value (FV) of XYZ's assets and
liabilities at the acquisition date were:

Cash in bank CA-25,000, FV-25,000

Accounts receivable CA-425,000, FV-300,000
Inventory CA-1.3M, FV-875,000
Equipment-net: CA-2.5M 2.75M
Goodwill CA-250,000, FV-50,000
Payables, CA-1M, FV-1M

Compute ABC Co's:

A) fair value of identifiable net assets acquired,
B) NCT's proportionate share in identifiable net assets and
C) goodwill or gain on a bargain purchase on this business combination

3. Identify which is(are) reportable segment(s) based on A) revenue test; B) profit test, C) assets
test, and D) PFRS 8 referring to these;
Operating segment A Total revenue-1M Profit-200,000, Identifiable assets – 4M
Operating segment B Total revenue - 500,000, Profit-120,000, Identifiable assets - 1M
Operating segment C Total revenue-300,000, Profit-30,000; Identifiable assets- 800,000
Operating segment D: Total revenue-500,000. Profit-50,000, Identifiable assets-1.7M
Operating segment E Total revenue- 200,000, Profit-60,000, Identifiable assets-800,000
Operating segment F. Total revenue 900 000, Profit-400,000, Identifiable assets-1M

4. On January 1, 2021, Entity A acquires Entity B in a business combination. The financial

statements of the combining entities are:

Cash in bank: Entity A-12 000; Entity B-6,000

Accounts receivable: Entity A-36,000; Entity B-14,400
Inventory Entity A-48,000; Entity B-27,600
Investment in subsidiary Entity A-90,000
Building, net Entity A-216,000; Entity B-48,000
Accounts payable Entity A-60,000; Entity B-7.200
Share capital: Entity A-204,000; Entity B-60,000
Share premium Entity A-78,000
Retained earnings Entity A-60,000; Entity B-28,800

Entity B's assets and liabilities are stated at their acquisition-date fair values, except for
Inventory at 37,200; and Building, net at 57,600. Under PFRS 3, goodwill is 3,600; and the NCI in
the net assets of the subsidiary is 21,600.
On January 1, 2021, compute the consolidated total
A) assets, and
B) liabilities & equity
5. Tech Co. and Robotics Co. are joint operators in the development of Super OS, a mobile
phone operating system. Each join operator retains control over the assets it has contributed to
the joint operation and shares equally in the profits and losses of the joint operation. During
the year, Tech Co earns revenue of 1M from its own operations Sales of Super OS amount to
400,000. Compute the total revenue that should be reported in Tech Co's statement of profit or
loss for the year
1,200,000

6. Entity A acquires 50% interest in a joint venture for 1M & and records the transaction under
an investment account. At the end of the period, the joint venture reports profit of 1M and
distributes 600,000 to the owners. Compute the carrying amount of the investment account in
Entity A's current year financial statements.

7. Entity A's biological assets have a carrying amount of 100,000 before year-end adjustments.
The PFRSS requires these assets to be measured at fair value at each reporting date. Location is
a characteristic of the assets Information at year-end;

Active Market #1
Quoted price-130,000
Transport costs-10,000
Costs to sell -2,000
Active Market #2
Quoted price-135,000
Transport costs 12,000
Costs to sell -3,000

Compute the fair value if A) active market #1 is the principal market for Entity A's biological
assets and B) neither active market #1 nor active market #2 is the principal market

8. On January 1, 2021, Entity C (Customer) enters into a 4-year lease of equipment with Entity S
(Supplier). The annual rent is 220,000, payable at the end of each year. The equipment has a
remaining useful life of 10 years. The interest rate implicit in the lease is 10% while the lessee's
incremental borrowing rate is 12%. Entity C uses the straight-line method of depreciation. The
relevant present value factors are;

PV of an ordinary annuity of 1 @ 10%, n=4……… 3.16987

PV of an ordinary annuity of 1@ 12%, n=4……… 3.03735

Compute the A) lease liability to be recognized by Entity C on initial general recognition, 8)

annual depreciation on the right-of-use asset, C) lease liability to be recognized by Entity C on
initial general recognition if the lease qualifies for accounting as a lease of low-value asset; D)
lease (rent) expense in 2021 if the lease qualifies for accounting as a lease of low-value asset. E)
net investment in the lease to be recognized by Entity S on initial recognition if the lease is a
finance lease, and F) lease (rent) income in 2021 if the lease is an operating lease