About TMA:

The TMA covers the advanced accounting concepts and practices in the businesses. It is marked
out of 100 and is worth 20% of the overall assessment component. This TMA requires you to apply the
course concepts. The TMA is intended to:
 Assess students’ understanding of key learning points within chapter 1, 3, 4 and 5.
 Increase the students’ knowledge about the reality of the advanced accounting issues.
 Develop students’ communication skills, such as memo writing, essay writing, analysis and
presentation of material.
 Develop the students’ ability to understand and analyze different issues that corporations might
face in real world.
 Develop basic ICT skills such as using the internet.

The TMA requires you to:

1- Review various study chapters in addition to supplementary materials.
2- Conduct a deep information search using the internet and your E-Library. You are expected
to use E-library sources to support your answers. A minimum of 3 sources is required.
3- It’s imperative that you write your answer using your own words. Plagiarism will be
penalized depending on its severity and according to AOU plagiarism policy.
4- You should use a Microsoft Office Word and Times New Roman Font of 12 points.
5- You should use Harvard referencing style for in-text citation and list of references.

For Cut-off date: Check LMS

Criteria for Grade Distribution:

Content Structure
Criteri Referencing and Total
Part C
a Part A Part B & E-library Presentation marks
of ideas
Marks 50 30 20 (5) (5) 100

The TMA Questions:

PART A

Access the Nestlé home web page and download: Corporate Governance & Compensation
Reports, Financial Statements for 2021

Note: this file is available at:

https://www.nestle.com/sites/default/files/2022-03/2021-corp-governance-compensation-
financial-statements-en.pdf
Answer the following questions:

1) Explain in details how does Nestlé Company account for goodwill and other
intangible assets? Support your answer by writing the page number (s) in annual
report.
(10 Marks)
2) State the amounts of goodwill and intangible assets as it appears in the annual report
for 2020 and 2021. Support your answer by writing the page number in the annual
report. (5 Marks)
3) Does Nestlé Company make any acquisitions during 2021? How do these
acquisitions affect the goodwill? Support your answer by writing the page number
in annual report. (5
Marks)
4) From 2021 annual report:
1. Determine the total amount of non-controlling interest in 2020 and 2021
2. State in which statement it is disclosed and in which section.
3. State the amount of controlling interest share and non-controlling interest share
in Nestlé Company’s profit and dividends for 2020 and 2021
4. Nestlé Company prepared its consolidated financial statements in accordance
with the International Financial Reporting Standards (“IFRS”), as mentioned in
its annual report. Assuming that it was not mentioned in the annual report that
the company is following IFRS; provide evidence from annual report (related to
course subjects studied) that indicate that the company is following IFRS and
not following GAAP?
5. State the amounts of impairment losses of goodwill and intangible assets in
2021.
6. Which cash generating unit suffered an impairment loss related to goodwill in
2021?
7. What were the underlying business reasons that required Nestlé to record a
goodwill impairment in 2021 and what are the implications of that on Nestlé
Company?
8. How did Nestlé reflect the goodwill impairment in its income statement and
cash flow statement?
9. Which method did Nestlé use in preparing its cash flow statement? Provide a
proof for your answer from the annual report.
Write your answer in the space provided in the following table:
Answer Page(s) in
Annual report
1- Total non-controlling
interest 2020 and 2021
2- In which statement it is
disclosed and in which
section?
3- - Controlling interest share
 - Non-controlling interest
share in Nestlé Company’s
profit and dividends for 2020
and 2021
4- Evidence from annual
report (related to course
subjects studied) that indicate
that the company is following
IFRS not GAAP
5- Amounts of goodwill and
other intangible assets
impairment losses 2020 and
2021
6- cash generating
unit/division/segment suffered
an impairment loss of
goodwill in 2021
7- What were the underlying
business reasons that required
Nestlé to record a goodwill
impairment in 2021 and what
are the implications of that on
Nestlé Company?
8- How did Nestlé reflect the
goodwill impairment in its
income statement and cash
flow statement?
9- Which method did Nestlé
use in preparing its cash flow
statement? Prove your answer.
*** Answers not provided in a tabular format will be disregarded
(30 Marks)
PART B
1) Provide examples from the real world for successful and unsuccessful mergers and
acquisitions cases in recent years and state the specific reasons behind their success or
failure.
Notes:
 Do not provide general reasons behind success or failure [as it will not be considered]
Provide only one example for each case.
 Examples dated before 2003 will not be considered.
 Write your answer in the space provided in the following table:
* Names of the companies
And Reasons for
Detailed information about Success/Failure
this business combination
Successful
Merger/Consolidation/
Acquisition
Unsuccessful
Merger/Consolidation/
Acquisition
Answers not provided in a tabular format will be disregarded.
** Examples dated before 2003 will not be considered. (13 Marks)
2) There are differences between the IFRS and GAAP (after FASB issued ASU 2020-04 to
simplify the accounting for goodwill impairment) regarding the following:

- Assignment/allocation of goodwill. (i.e., The levels at which goodwill is assigned

/allocated)
- Impairment of goodwill and test(s) applied and its steps (i.e., Methods of determining
impairment of goodwill)
- How impairment loss is recognized and allocated. (i.e., impairment loss[charge] calculation
and allocation)
- Amortization and impairment of intangible assets other than goodwill

Discuss the accounting treatment of the preceding points under IFRS only. (Comparison
is not required)

 Write your answer in the space provided in the following table:

IFRS
Assignment/allocation of goodwill
Impairment of goodwill
How impairment loss is recognized
and allocated
Amortization and impairment of
intangible assets other than goodwill

(You must support your answer in this question with quality and up to date references.)
(12 Marks)

3) What is the difference between upstream sale of inventory and a downstream sale? Why is it
important to know the direction of sale (Upstream/Downstream) when preparing the
consolidated financial statements? (5
Marks)
PART C
1) On January 2, 2021, Paro Corporation acquired 70 percent interest in Saro Corporation for
$2,800,000. Paro's capital stock and retained earnings were $7,200,000 and $3,200,000
respectively, while Saro's capital stock and retained earnings were $2,000,000 and $400,000
respectively.
Net income and dividends for 2021 for the affiliated companies were as follows: (in thousands):
Paro Saro
Net income $1,200 $360
Dividends declared 720 200
Dividends payable December 31, 2021 360 100
Required: Calculate the amounts that should appear in the consolidated balance sheet on
December 31, 2021 for the following items (Provide explanation as needed):
a. Capital stock c. Noncontrolling interest
b. Goodwill d. Dividends payable. (10 Marks)
2) At December 31, 2021, The Comparative income statements of Polo Corporation and Solo
Corporation show the following (in thousands):
Polo Solo
Sales $3,200 $1,300
Income from Solo 384
Cost of goods sold 1,800 400
Operating expenses 800 400
Additional information
1. Polo Corporation acquired 80 percent of Solo for $1,600,000 on January 1, 2019, when
Solo’s
stockholders’ equity at book value was $1,400,000.
2. The excess of the cost Polo’s investment in Solo over book value acquired was allocated
$60,000 to undervalued inventories that were sold in 2019, $80,000 to undervalued
equipment
with a four-year remaining useful life, and the remainder to goodwill.
Required:
Prepare a consolidated income statement for Polo Corporation and Subsidiary for the year
ended December 31, 2021. Show all your calculations. (Working paper is not required).

(10 Marks)

[END OF QUESTIONS]

GOOD LUCK