Question no.

396 WN1 Owned plant dep WN2 Leasehold property

Cost 46800 Opening bal
(-) Acc dep -12800 less: Dep
34000 CA
Dep for the year 8500 Revaluation sulprus (bal fig.)
Closing bal

WN5 Revenue WN6 Revenue

Progress through output method 44 Total sale
Statement of P&L Comission owned
Revenue 22000 Revenue remitted
Less: COS -14000
Profit 8000

Balance sheet
Contract asset 16300

WN8 Lease liability

2008-09 15600 1248 -6000
2008-09 10848 867.84 -6000
CL 5132.16
NCL 5715.84
Finance cost 1248

Statement of P/L
Revenue 325600
COS -255900
Gross profit 69700

Distribution cost -19500

Administrative expense -27500
Finance cost -1248
PBT 21452
Income tax expense -2400
Profit for the year 19052
397 WN1 Plant for own use WN2 Plant as per T/B
Cost 10000 CA
Less: Dep@ 20% 1000 Less: acc. Dep
CA 11000
Dep. For CY

WN5 Divident WN6 Deferred tax

Divident paid 24000 CY tax provision
Admin cost 22400 Deferred tax cloing bal
Opening bal
Charge to P&L
Closing deferred tax in B/S
WN7 Tax expense
CY tax provision 24300
Deferred tax 1800
26100

Statement of P&L
Revenue 377600
COS -258100
Gross profit 119500
Distribution cost -14200
Adm. Cost -22400
Operating profit 82900
Finace cost -350
Investment income 800
PBT 83350
Tax expense -26100
57250
Gain on Rev. 5600
TCI 62850

398 WN1 Right issue WN2 Lease property

 No. of shares isuued 18000 CA of lease property
Equity share 9000 Revalued amount
SPR 4500 Gain on revaluation
13500 Dep.
In books

WN 5 Investment WN 6 Lease agreement

CA 6000 Payment in advance
Fair value 7200 year
1
Finance cost

WN 7 Plant lease dep WN8 Deferred tax liability

CA 25000 Provision required
Dep -5000 Provision on 1 April
20000 Reduction in provision

Statement of P&L
Revenue 350000
COS -311000
Gross profit 39000
Distribution cost -16100
Administrative exp -26900
Finance cost -2600
Gain on investment 1200
Fraud to CY -3000
Loss befor tax -8400
tax 1800
Loss for the year -6600
OCI
Rev. on leased property 4000
TCI -2600

399 WN1 Plant and equipment WN2 PO

CA 83700 Current year PO 600
Less: acc. Dep -33700 NCL 800
50000 CL 800
Dep. 7500
FV 42500

WN4 Investment
CA 17000
 FV 15700
Imparement loss -1300

Statement of P&L
Revenue 211900
COS -144300
Gross proft 67600
Distribution cost -12500
Administrative exp. -18000
Finance cost -1920
Imparement loss -1300
Investment income 400
PBT 34280
Less: tax exp -8300
25980

400 WN1 Repurchased inventory WN2 Plant and equipment

Revenue 540000 CA 9000
Secured loan 10000 Less: Acc. Dep -5000
Asset 10000 4000
6m dep @20% 400
FV 3600
WN 6 COS
COS 411500 Remaining
Loan -7000 CA 85500
Plant and equ. 400 Less: Acc. Dep -19500
Plant and equ. 13200 66000
land and building 2500 Dep. 13200
420600 FV 52800

Statement of P&L
Revenue 540000
 COS -420600
Gross profit 119400
Distribution cost -21500
Administrative exp. -36300
Bank interest -1200
PBT 60400
Tax exp. -29200
PAT 31200
OCI
Revaluation gain 7000
Total Income 38200

402 WN1 Plant and equipment WN2 Compound instrument

CA 155500 Year Amount PV
Less: Acc dep. -43500 1 2500 0.93
112000 2 2500 0.86
Less: CA dep @12.5% 14000 3 52500 0.79
FV 98000

WN3 Deffered tax WN4 EPS

Provision 8300 TERP 2.35
Bal -4600
Changes in statement of P&L 3700

Statement of P&L
 Revenue 490000
COS -304600
Gross profit 185400
Operating cost -70300
Finance cost -4576
PBT 110524
Less: Tax -34900
PAT 75624

403 WN1 Loan notes WN2 Plant and equipment

year amt 10% paid 5% CA
1 19500 1950 1000 22450 less: acc. Dep
Finance cost 1950
Dep
FV

WN4 Investment WN 5 COS

Investment at FV 26500 COS
FV 28000 Dep on plant
Gain shown as Finance income in P&L 1500 Dep on lease
imparement

Statement of P&L
Revenue 400000
COS -306100
Gross profit 93900
Distribution cost -26400
Admin. Cost -33700
 Investment income 1200
Finace cost -2150
Gain on investment 1500
PBT 34350
Less: tax -8800
Profit 25550

404 WN1 Loan notes

Year Amount Effective rate Piad
1 29000 2610 -1800
Finance cost 2610
Transaction cost of 1000 to be capitalised rather than being shown in P&L

WN4 Plant and equipment

CA 58500
Less: Dep -34500 WN 5 Deferred tax
24000 Provision for the year
Dep CA -3000 Less: over provision
FV 21000 Deferred tax

Statement of Financial position

ASSET
NCA
Land and building 44400
Plant and equipment 21000
 Investment 2600
68000
CA 68700
136700
EQUITY AND LIABILITY
EQUITY
Equity shares 40000
R/E 12090
R/S 9600
NCL
Proceeds from loan 29810
Deferred tax 4400
34210
CL 38500
Current tax payable 2400
40900

406 WN1 Research and development WN2 Property

Expenditure 3000 CA 28500
Develpoment 3200 Less: Dep -1900
26600
FV 29000
Gain 2400

WN5 Loan note

year amt Effective rate paid
1 19500 1560 -1000
finance cost 1560

Statement of changes in equity

Share capital Share premium R/E
Bal 20000 2300 6200
Share issue 10000 7000 0
TCI 0 0 3440
Divident 0 0 -4000

Bal 30000 9300 5640

407 WN1 Loan notes

Amount PVF OV Amount
2400 0.93 2232 37792
2400 0.86 2064 Finace cost
42400 0.79 33496
 Debt 37792
Equity 2208

WN2 Property WN3 Plant and equipment

CA 75000 CA
Less: acc. Dep -15000 Less: acc. Dep
60000
Dep Less: Dep
FV

Scheduled adjustment to P&L Statement of Financia

Profit before interest and tax 30000 ASSET
Adjustments NCA
WN1 Finace cost -3023 PPE
WN2 Dep. On P&E -6600 CA
WN3 Dep. On leased property -3200 Trade receivables
WN4 Current year loss -250 OCA
WN5 Income tax -2600
14327
EQUITY& LIABILITY
Equity
Share capital
OCE
Rev. sulprus
R/E
NCL
Deferred tax
6% loan note
CL
T/B
Tax payable

409 WN1 Revenue from contract

Contract price 90000 REVENUE
Total Expeceted cost 50000 CY 7200
Completetion 80% Less: PY 4500
Revenue 43200 2700

WN3 Convertible shares

 300 0.926 277.8
5300 0.857 4542.1
Liability 4820
Equity 180
Interest 385.6
Provided fo 300
Required 85.6

410 WN1 Revenue WN2 Foreign income

PV 7407.2 Book value 1875
Deferred payment 3407.2 PV 2000
Unwound interest 296.288 Increase 125

WN4 Head office

Gain 12000

Statement of P&l EPS

Revenue 80632 TERP
COS -46410 5 ES
Gross profit 34222 2 ES
operating exp. -20115
14107 TERP
Finance cost -4050 Right fraction
Investment income 6118 Weighted average
16175 1-Jan
Tax expemse -3300 1-Apr
12875 1-Jul
OCI
Gain 9000 EPS
TCI 21875

411 WN1 Loan notes

Amt Effective rate Interest paid Amt
4875 390 -250 5015
Finance cost 390
Direct charge 125

WN4 Environmental provision

Environmental provision at PV 1228
Finance cost 61.4
 Retained earnings
Bal 4122
Direct charge 125
Finance cost -390
Imparement loss -3600
Dep on building -900
Dep on factories -3885
Gain on disposal 500
Environmental provision -61
Deferred tax -203
Adjusted R/E -4292
 WN3 Right to use asset WN4 Specialised plant
25200 Cost 20000 Cost 8000
-1800 Less: Dep -5000 Dep for the year -2000
23400 Less: CA dep -5000 CA 6000
1500 10000
24900

WN7 Deferred tax

8000 Provision required 5600
1600 Bal b/f -8400
6400 Tax expense -2800

WN9 COS
COS 234500
Rev. sulprus -1500
Plant 8500
Leasehold property 1800
Right to use asset 5000
10848 Contract COS 14000
5715.84 Agency COS -6400
255900

Statement of Financial position

ASSET
NCA
PPE 66400
CA
Inventory 28200
T/R 33100
Bank 5500
Contract asset 16300
149500

EQUITY & LIABILITY

EQUITY
Equity shares 40000
R/E 55152
95152
LIABILTIY
NCL
Contract 5716
 Deferred tax 5600
CL
T/P 33400
Lease liabiltiy 5132
Current tax payable 4500
149500

nt as per T/B WN3 Revaluation WN4 COS

44500 CA 40000 ATQ
-14500 Revalued amt 48000 Material 61000
30000 Gain 8000 Labour 120000
6000 Dep. 3000 Factory overheads 77000
Bal 45000 Dep on plant 7000
Dep on property 3000
Opening stock 46700
24300 less: closing stock -56600
tax cloing bal 4500 258100
-2700
1800
eferred tax in B/S 6900

Statement of Financial position

Plant 33000
Property 45000

Inventory 56600
T/R 31150
165750

Equity 50000
R/E 48850
Trevaluation slprus 5600
Deferred tax 6900
T/P 27800
Bank overdraft 2300
Tax provision 24300
165750

WN3 Plant and equipment WN4 COS

 32000 CA 47500 COS 298700
36000 LESS: Acc. Dep -33500 Dep on lease propert 4500
4000 14000 Dep. On P&E 2800
4500 Dep 2800 Dep. On plant lease 5000
31500 In books 11200 311000

se agreement

bal b/f interest payment bal c/f

23000 2300 -6000 19300
2300

erred tax liability

3000
-3200
n in provision -200

Statement of changes in equity

Share Cap. Share pre. R/S R/E
Bal b/f 45000 5000 0 5100
Right issue 9000 4500 0 0
Prior period fraud 0 0 0 -1000
R/S 0 0 4000 0
Loss 0 0 0 -6600
Transfer to R/E -500 500
54000 9500 3500 -2000

WN3 Loan notes

24000 1920 -1500 24420
24420 1953.6 -1500 24873.6
Finance cost 1920
NCL 24420

Statement of Financial position

ASSET
NCA
Plant and equipment 42500
Investment 15700
58200
CA
Inventory 24800
T/R 28500
Bank 2900
56200
114400

EQUITY AND LIABILTIY

Equity
Equity shares 60000
R/E 13280
73280 73280

NCL
Deferred tax 1000
Deferred revuene 800
6% loan notes 24420
26220 26220

CL
T/P 6700
Deferred rev. 800
Current payables 7400
14900 14900
114400

WN 3 Land and building WN 4 Provision

CA 60000 Provision 5400
Less: Acc dep. -20000
40000 WN5 Tax liabiltiiy
Revaluation 47000
Gain on rev. 7000
Dep -2500
FV 44500

Statement of Financial Position

ASSET
NCA
Land and building 44500
Plant and equ 52800
NCA held for sale 3600
100900
CA
Inventory 50700
T/R 42200
92900
193800

EQUITY AND LIABILITY

Equity
Share capital 50000
R/E 42400
R/S 7000
99400
NCL
Secured loan 10500
Deferred tax 9400
19900
CL
T/P 35100
Income tax 27200
Provision for directors 5400
Bank overdraft 6800
74500
193800

Year amount eff. Rate paid

2325 1 45950 3676 -2500 47126
2150 Finace cost 3676
41475
Debt 45950
Equity 4050

WN 5 COS
COS 290600
Dep on plant 14000
304600

Statement of Financial position

 ASSET
NCA
Plant and equipment 98000
CA
Inventory 96000
T/R 103000
297000

EQUITY AND LIABILITY

Equity
Equity shares 66000
Share premium 15000
Equity option 4050
R/E 90824
175874
NCL
Loan 47126
Deferred tax 8300
55426
CA
T/P 32200
Bank overdraft 5500
Current tax payable 28000 65700
297000

nt and equipment WN3 Leasehold property

67500 CA 39000 CA 37500
-23500 Less: 6m dep -1500 RA 33500
44000 FV 37500 Imparement loss 4000
6600
37400

294000
6600
1500
4000
306100

Statement of Financial position

ASSET
NCA
Plant and equipment 37400
Investment 28000
CA
 Inventory 48000
T/R 40700
Bank 15500
NCA held for sale 33500
203100

EQUITY AND LIABILITY

Equity
ES 40000
Other componemt 20000
R/E 53950
113950
NCL
Deferred tax 4200
5% loan notes 20450
24650
CL
T/P 52000
Loan interest 500
tax payable 12000
64500
203100

WN2 Land and building WN3 Investment

c/f CA 55000 CA 2000
29810 Less: Acc. Dep -20000 Gain 600
35000 FV 2600
RA 47000
less: Dep -2600
FV 44400
Gain on rev. 12000

Provision req. 4400

for the year 2400 Opening bal -2500
-1100 1900
-500 Charge to rev. -2400
800 credit to p&l -500

Revaluation sulprus
Bal b/d 19500
Transaction cost 1000
Dep on L&B -2600
Dep. On P&E -3000
 Finance cost -2610
Gain on inv. 600
Income tax exp. -800
12090

WN3 Plant & equipment WN4 COS

CA 27100 COS 88500
Less: Acc. Dep -9100 Expense 4600
18000 Dep on plant 2700
Dep. 2700 Dep. On pro 1900
FV 15300 97700

WN6 Deferred tax

c/d
20060

equity
R/S Total
3000
0
2400
0

5400

Effective rate Paid Amt

3023.36 -2400 38415.36
Finace cost 3023.36
WN3 Plant and equipment WN4 Provision
72100 Provision 350000
Less: acc. Dep -28100 This will be ignored as contingent liabililty
44000
6600
37400

Statement of Financial position

102000

Trade receivables 27300

9300
138600

EQUITY& LIABILITY

Share capital 50000

2208
Rev. sulprus 6240
17337

Deferred tax 3960

6% loan note 38415

17700
Tax payable 2700
138560

WN2 Provision
COS Provision 1012
CY 4000 PV 920
PY 2500 Provision allowed 800
1500 Required 120
Finance cost 46
 WN3 Bonds
9400 752 -450 9702
To be shown in books Investment income 752
P&l increase

EPS

3.1 15.5
2.4 4.8
20.3
2.9
Right fraction 3.1/2.9
Weighted average
30000 3.1/2.9 3m 8014241
35000 3.1/2.9 3m 9353448
49000 6m 24500000
41867689
30.75164

WN2 Imparement loss WN3 Factories

CA of office building 15600 CA 40000
RA 12000 Dep -11100
Imparement loss 3600 28900
Dep 500 Disposal -3000
CA 11500 25900
Dep on remaining 3885
CA 22015
Gain on disposal 500
 Statement of Finanical position
ASSET
NCA
Office bulding 11500
Factories 22015
CA 14700 48215

EQUITY & LIABILITY

Equity
ES 10000
R/E -4292
NCL
5% loan notes 5015
Provision 1289
Tax 1703
CL 34500 48215
Total

65000
Adjustement 1 Year Loan note Effective rate Paid
1 29000 2610 -1800
2 29810 2682.9 -1800
Finance cost 2610
Retained earning add 1000
NCL of 29810

Adjustment 2 Property 2 Land

Fair value 6000 CA 5000
Less: Dep -225 Fair value 8000
CA 5775 Less: Dep 0
In books 8000
Gain on revluation 32000

Plant and equipment

CA 58500
Less: acc. Dep -34500
24000
Less: Dep @12.5% -3000
In books 21000

Adjustment 3 Provision for the year ended 2400 Deferred tax

Over provision -1100 Provision required
Deferred tax -500 Provision
800
Change in rev.
Bal

Part A Retained earning without adj. 15500

Add: Cost of issue 1000
Finance cost -2610
Dep on property 2 -225
Dep. On land and building -2600
Dep. On plant and equipment -3000
Gain on sale of property 1 2000
Gain on revaluations 1000
Income tax expense -800
10265

Part B ASSET
NCA
Property 2 5775
Land and building 44400
Plant and equipment 21000
CA 68700
Total 139875

EQUITY AND LIABILITY

Equity
Equity shares 20000
Retained earnings 10265
R/S 25600
Liability
NCL
Loan notes 29810
CL 43400
Deferred tax 8400
Current tax 2400
Total 139875
 Amt
29810
30692.9

Building Total
10000 15000
39000 47000
-2600 2600
36400 44400

Deferred tax
Provision required 8400
-2500
5900
Change in rev. -6400
-500
TYU 1
Adjustment 1
S 75%
A 30%

Adjustment 2 (Net assets of S)

DOA DOR Post acq.
Share capital 1000 1000 0
R/E 3000 5500 2500
4000 6500 2500

Adjustment 3 (Goodwill of S)
Consideration paid 5000
NCI at DOA 1600 Consolidated statemen
Less: Net assets at DOA -4000
Goodwill 2600 ASSET
NCA
Adjutsment 4 (NCI in S) PPE
NCI at DOA 1600 Investment
Post acq. At 25% 625 Goodwill
2225 Investment in associate
CA
Adjustment 5 (Group R/E)
Parents R/E 7500
Post acq. At 75% 1875 EQUITY AND LIABILITY
Less: Imparement in A's Goodwill -35 Equity
less: PUP -15 Share capital
Post acq. Profit 300 R/E
9625 NCI
NCL
Addjustment 6 (Investment in associate) CL
Consideration paid 750
Post acq. Profit 300
Less: Imparement -15
Less: Imparement -35
1000
WN1 PUP
PUP 15

TYU2
Adjustment 1
S 80%
A 30% Mid-acq. Pre Post
3 9
Adjustment 2 (Net assets of S)
DOA DOR Post acq.
Share capital 500 500 0
Premium 80 80 0
R/E 870 400 -470
Fair value adjustment 50 50 0
Dep. -30 -30
PUP (WN1) -20 -20
1500 980 -520

Adjustment 3 (Goodwill of S)
Consideration paid 1700
NCI at ACQ. 368
Less: Net assets at DOA -1500
568
Less: Imparement -150
Goodwill 418

Adjustment 4 (NCI cal of S)

NCI at DOA 368
Post acq. -104
Less: Imparement -30
234

Adjustment 5 (Group Retained earning)

Parents's R/E 1145
Post acq. -416
Less: Imparement -120
Post acq. Profit 135
Less: imparement in associate -15
PUP (WN2) -9
720

Adjustment 6 (Investment in associate)

Consideration paid 500
Post acq. Profit 135
Less: imparement -15
620
WN1 (PUP on S)
Inventory sold 400
Still in inventory 100
PUP 20
Inventory reduce by 20
WN2 (PUP on A)
Profit on sale 50
Profit on invenotey 30
Group share 9

TYU3
Adjustment 1
S 80%
A 40% Mid year acq. Pre post
6 6

Adjustment 2 (Net assets of S)

DOA DOR Post acq.
Share capital 500 500 0
SP 125 125 0
R/E 380 780 400
PUP (WN1) 0 -40 -40
Development cost -80 -200 -120
925 1165 240

Adjustment 3 (Goodwill of S)
Considertaion paid 1200
NCI at DOA 95
Less: Net assets at DOA -925
Goodwill 370

Adjustment 4 (NCI)
NCI at DOA 95
Post acq. 48
143

Adjustment 5 (Group retained earning)

P's R/E 4060
Post acq. 192
PUP (from Associate) (WN2) -10
Parent's share in post acq and retained earning 30
4272

Adjustment 6 (Cost on investent in associate)

Considertaion 400
Less: PUP -10
Post acq. 30
420

416
Adjustment 1
S 75%
A 40% Mid year acq.

Adjustment 2 (Net assets of S)

DOA DOR Post acq.
Share capital 8000 8000 0
R/E 16500 17500 1000
Fair value adjustment 2000 2000 0
Less: Dep 0 -100 -100
Intangible asset -500 0 500
26000 27400 1400

Adjustment 3 (Goodwill)
Conisderation
Equity shares 28800
Contingent loan 4200
NCI at DOA 9000
Less: Net assets at DOA -26000
16000
Less: Imparement -3800
Goodwill 12200

Adjustment 4 (NCI)
NCI at DOA 9000
Post ac 350
Less: Imparement -950
8400

Adjustment 5 (Group retained earnings)

Parent's R/E 27200
Post acq. 1050
Less: Imparement -2850
Post acq. In associate 1200
Less: PUP from sub -600
Gain from contingent asset 1500
 27500

Adjustment 6 (investment in associate)

Post acq. In associate 1200
Cost of investment
Cash 8000
Share exchange 4000 12000
13200

TYU 4 WN1 NCI Calculation

Revenue 485 PAT
COS -245 Imparement
Gross profit 240
Investment in associate 3.4 NCI @10%
operating expense -68
Profit before ntax 175.4
Tax -62
Profit for the year 113.4
Profit attributbale to
Parent 112.4
NCI (WN1) 1

TYU 5
Adjustment 1
S 100% 3 years
A 30%

Adjustment 2 (Net assets of S)

DOA DOR Post acq.
Share capital 75000 75000 0
R/E 15000 51000 36000
Fair value adjustment 10000 10000 0
Dep 0 -3000 -3000
PUP 0 -1000 -1000
100000 132000 32000

Adustment 3 (Goodwill od S)
Consideration 115000
Less: Net assets at DOA -100000
15000
Less: Imparement -4500
Goodwill 10500
Adjustment 4 (Group retained earning)
P's R/E 89000
S's post acq. 32000
A's post acq. 7200
Imparement in s -4500
Imparement in A -450
123250

Adjustment 5 (Cost of investment)

Consideration 15000
Share of net asset 7200
Less: Imparement -450
21750

415 PART A (Investment in asso

Adjustment 1 Cost of investment
Salva 80% 6:06 PUP
Ambra 40% 6:06 Less: Imparement
Parent share of ass. Post ac
Adjustment 2 (FV adjustment in Salva)
Fair value of net asset 5000
Dep. For 6 months 500

Adjustment 3 (Loan notes in Salva) PART B

Loan note 50000
Interest 2000 Consolidat

Revenue
Adjustment 4 (Divident from Salva) COS
Divident 6400 Gross profit
Distribution cost
Adjustment 5 (Good from Pandar to Salva) Administrative cost
Intra group 15000 Investment income
PUP 1000 Finance cost
PUP will not be taken to NCI calculation) Investment in associate
PBT
Adjustment 6 (Good from Pandar to Ambra) Tax
PUP 240 PAT
Will be taken to investment in associate calculation. Profit attributable to
Parent
Adjustment 7 (NCI/) NCI
PAT 9500
Less: Dep -500
Less: Imparement -2000
7000
NCI 1400

420
Adjustment 1 PART A
Greca 90% 3:09 Consideration paid
Share issue
Adjustment 2 (FV adjustment) Deferred consideration
FV of plant 1800 NCI at DOA
Dep 450 COS Less: Net assets at DOA
Goodwill
Contingent liability 450
Consolidat
Adjustment 3 (NCI)
NCI 2500 Revenue
COS
Adjustment 4 (Intragroup transaction) Gross profit
Intragroup 7200 Distribution cost
PUP 300 Administrative exp.
Finace ocst
Adjustment 5 (Divident) Investment from associate
Divident from associate 800 PBT
Tax exp.
Adjustment 6 (Goodwill imparement) PAT
Goodwill imparement 2000 Profit attributable to
Parent
Adjustment 7 (NCI) NCI
PAT 4650
LESS: Dep -450
Less: Goodwill -2000
2200
NCI 220

426
Adjustment 1 PART A
Rakewood 60% 3:09 Consideration paid
Share exchange
Adjustment 2 (FV adjustment) Deferred income
FV of plant 4000 NCI
Dep. 1500 Less: Net asset at DOA
Share capital
Inventory 200 R/E
FV
Adjustment 3 (NCI) Inventory
NCI 12000 Goodwill

Adjustment 4 (Intragroup trade)

Intragroup 10800 Consolidat
PUP 300
Will go to NCI Revenue
COS
Adjustment 4 (Investment income) Gross profit
Divident from Rake wood 300 Distribution cost
Divident from Artic 50 Administrative exp
Finance cost
Income from associate
Adjustment 5 Investment income
PAT 7800 PBT
Less: Dep -1500 Tax exp
less: PUP -300 PAT
Less: investment -200 Profit attributable tp
5800 Parent
NCI 2320 NCI

430
Adjustment 1 Consolidat
Strip co. 85% 3:09
Arch co. 35% 5:07 Revenue
COS
Adjustment 2 (FV adjustment on Strip) Gross profit
FV 8000 Distribution cost
Extra dep 2000 COS Administrative exp
Investment in associate
Adjustment 3 (Intra group) Finance cost
From parent to subsidary Investment income
Intra grp 39000 PBT
PUP 2250 Tax expense
Not be taken to NCI calculation PAT
Gain on rev.
From parent to associate Total OCI
Intra grp 26000 Profit attributable to (WN1
PUP 2100 Parent
NCI
Adjustment 4 (Interest and Divident)
Divident by strip 15300 Total OCI attributable yo
Divident by arch 12250 Parent
NCI
Adjustment 5 (Consideration in Assoicate)
Consideration in Arch 145000 Cost of inv
Consideration paid
WN1 Less: Divident received
PAT 66000 Iincome from assoiate
Add: interest 5000 Less: PUP
71000
post acq. 53250
less: post acq. Reserve -5000
48250
Less: DEP -2000
46250
OCI 3000
49250

432
Adjustment 1
Sing co. 80% 3:09

Adjustment 2 (FV adjustment)

FV 1800
Dep. 450 COS

Contingent liability 400

Adjustment 3 (NCI)
Net asset at DOA
Share capital 8000
R/E 29240
FV 1800
Contingent -400
38640
NCI 7728

Adjustment 4 (Intra group)

Intra group 2700
PUP 120
Will go to NCI

Adjustment 5 (Investment income and divivdent)

Income from associate 300

Adjustment 6 (Convertible loan notes)

Total convertible loan notes 5000
Loan note PVF PV
 300 3.993 1198 1197.9
5000 0.681 3405
4603
Interest charged 368 368.24
Already charged -300
To be charged 68

431
Adjustment 1
Silver 90% 3:09

Adjustment 2 (FV Adjustment)

FV of plant 2600
Dep 650 COS

Contingent liaility 850

Adjustment 3
NCI 5600

Adjustment 4
Intragroup 5400
PUP 240
PUP will not be taken to NCI

Adjustment 5
Investment income 1200

Adjustment 6
Loan notes 10000
Amt PVF PV
600 3.993 2396 2395.8
10000 0.681 6810
Liability 9206
Equity 794

Additional charge 136

WN1
PAT 7440
Less: dep -650
6790
NCI 679
 Consolidated statement of Financial position

21500
Investment 4250
2600
Investment in associate 1000
9000
38350

EQUITY AND LIABILITY

Share capital 10000

9625
2225
9250
7250
38350
 Consolidated statement of Financial position

ASSET
NCA
Property 2150
Plant 680
Investment in associate 620
Investment 125
CA
Inventory 751
Receivables 590
Cash 170
Goodwill 418
5504
EQUITY AND LIABILITY
EQUITY
Share capital 1800
Premium 250
R/E 720
NCI 234
NCL
Loan notes 800
CL
Payab;es 850
Taxation 400
5054
WN1 (PUP)
Inventory 200
PUP 40

WN2 (PUP from associate)

Inventory 125000
PUP 10000

WN3 (Intra group)

CIT 50
Intragroup 250

Consolidated statement of financial poition

ASSET
NCA
PPE 8245
CA
Inventory 3980
Receivables 2690
Cash 1310
Investment in associate 420
Goodwill 370
17015

EQUITY AND LIABILITY

EQUITY
Share capital 4000
SP 800
 R/E 4272
NCI 143
CL
T/P 4990
Bank overdraft 2260
Taxation 550
17015

WN1
Common intra group transatcionn 3400
GIT 1800
PUP 600

Consolidated statement of Financial position

ASSET
NCA
PPE 63900
Goodwill 12200
Investment in associate 13200
CA
Invenory 20200
T/R 4600
114100

EQUITY AND LIABILITY

EQUITY
Share capital 25000
SP 19800
R/E 27500
NCL
Loan 16500
CL
Contingwnt 2700
OCL 14200
NCI 8400
114100
Calculation
13
-3
10
1

Consolidated statement of Financial position

ASSET
NCA
PPE 182000
CA 113000
Goodwill 10500
Investment in associate 21750
327250

EQUITY AND LIABILITY

EQUITY
Share capital 200000
R/E 123250
CA 4000
327250
 Consolidted statement of P&L

Revenue 690000
COS -533200
Gross profit 156800
Investment in associate 7650
PBT 164450
Income tax expense -44000
PAT 120450
Profit attributable to
Parent 120450
NCI NA

PART A (Investment in associate)

Cost of investment 32000
-240
Less: Imparement -3000
Parent share of ass. Post acq. -1000
27760

Consolidated statement of P&L

270000
-162500
Gross profit 107500
Distribution cost -14700
Administrative cost -24800
Investment income 1100
Finance cost -2300
Investment in associate -4240
62560
-20000
42560
Profit attributable to
41160
1400
Consideration paid
Share issue 39000
Deferred consideration 14400
NCI at DOA 2500
Less: Net assets at DOA -47900
8000

Consolidated statement of P&L

85900
-64250
Gross profit 21650
Distribution cost -2950
Administrative exp. -7600
Finace ocst -1500
Investment from associate 800
10400
-4000
6400
Profit attributable to
6180
220

Consideration paid
Share exchange 37800
Deferred income 13500
12000
Less: Net asset at DOA
Share capital 15000
27600
4000
 200 -46800
16500

Consolidated statement of P&L

112700
-74900
Gross profit 37800
Distribution cost -3200
Administrative exp -6200
Finance cost -1110
Income from associate 600
Investment income 300
28190
-7500
20690
Profit attributable tp
18370
2320

Consolidated statement on P&L

829500
-348100
Gross profit 481400
Distribution cost -70000
Administrative exp -113000
Investment in associate 32400
Finance cost -18750
Investment income 14950
327000
Tax expense -62750
264250
Gain on rev. 5800
270050
Profit attributable to (WN1)
257312.5
6937.5

Total OCI attributable yo

262662.5
7387.5
 Cost of investment in Associate
Consideration paid 145000
Less: Divident received -12250
Iincome from assoiate 32399.5 32400
-2100
163050
 Calculation of Goodwill
Consideration paid
Share exchnage 69120
Deferred payment 31680 31680.32
NCI at DAO 5600
106400
Less: Net assets at DOA
SC 16000
R/E 58480
FV 2600
Contingent liability -850 76230
Goodwill 30170

Consolidated statement of P&L

Revenue 143560
COS -108610
Gross Profit 34950
Distribution cost -4795
Administrative cost -8885
Income from associate 1200
Finance cost -3184
PBT 19286
Tax -6400
PAT 12886
Profit attributable to
Parent 12207
NCI (WN1) 679
SECTION A SECTION B
1A 16 A
2B 17 A
3B 18 B
4B 19 C
5C 20 B
6D 21
7D 22
8D 23 B
9A 24 D
10 C 25 B
11 A 26 B
12 C 27 C
13 C 28 C
14 B 29 B
15 D 30 C

SECTION C
31 2007 2006
a ROCE 2.985075 27.40%
Gross profit margin 10 25%
operating profit margin 0.666667 16.70%
Asset turnover ratio 4.477612 1.6
Current ratio 0.936508 1.8:1
Gearing 65.67164 39.70%

b PERFORMANCE
Let's start with the revenue first. As it can be seen the revenue increases from 120 to 300 (more than do
So in a way the strategy of the company to increase the sales to increase profits worked for the company
The short-comings of the same can be seen via, the reduced percentage of ROCE, Gross profit margin, an
made by the company. The aggressive marketing campaign through trade journals inccreased the cost fo
into Plant and equipments of the company, probably in order to match the demand for the contract mad
There is also an increase in the NL lease lability of the company. Last but not the least, the "price promis
it's cost price and hence the margin.
The company made a thread of bad decisions leading to poor performce in the current year.

POSITION
The company was in a neat place in the year 2006 but in the CY, in order to increase profits, it made cert
The Current ratio of the coapny is way below the normal ratio of 1.5:1. It is basically because of the the e
Also the question does not provide any information related to the payables, but it can be seen from the
was not in a good position to pay back the payables leading to a poor position of the company. As the co
and hence the bank bal in the B/S shows NIL as it probably would have used the cash for advertising or in
 was out of bank it had to take overdraft from the bank, exceeding the limits to meet the expenses.
All these depicts the poor postion of the company.

GEARING
The gearing ratio depicts the risk in a company. The gearing ratio of the company has incraesed to 65%.
If the company does not make right decisions, it might go into a bad situation, posibbly a case where the

CONCLUSION
From the above analysis it can easily be seen that the co. is in a very bad position.
If the company wants to recover from this, it will first need to stop with the advertisment campaign, follw
in the plant and equipment and leasing would need to be cut down to a health limit. The receivables per
it backfired them.

32 Adjustment 1
Property 60000 Plant and equipment
Less: Dep -3000 Less: Acc. Dep
CA 57000
Revalued 62000 Less: Dep 25%
Revluation sulprus 5000 Carrying value

Dep in COS 3000 Dep in COS

Value of plant 62000 Plant held for sale (B/S)
Rev. sulprus 5000

Adjustment 3
Amt PVF Amt Year
400 0.93 372 1
400 0.86 344
400 0.79 316 Finance cost
10400 0.74 7696
Debt 8728
Equity 1272

Adjustment 4
Closing deferred tax 7000 Provision for CY
Opening deferred tax 10500 Add: Under pro.
-3500 Less: Deferred tax

Consolidated statement of P&L

Revenue 387500
COS -305630
Gross profit 81870
Administrative expense -34370
Distribution cost -24375
Finance cost -5898
Investment income 4500
Profit before tax 21727
Less: Tax -3075
Profit after tax 18652
OCI
Rev. gain 5000
23652
 om 120 to 300 (more than double).
rofits worked for the company, but it had some short-comings related to it too.
ROCE, Gross profit margin, and operting profit margin. All these have suffered hugely due to the poor decisions
journals inccreased the cost for the company. Moverover it can be seen, that the company invested hugely
demand for the contract made with the koola drinks.
ot the least, the "price promise" made by thr company, was also a bad decision as it forced the company to reduce

n the current year.

o increase profits, it made certain decisions that it shouldn't have.

basically because of the the extension of the no. of days for the receivables.
s, but it can be seen from the balance sheet that it has rised extensively. This depicts that the company
tion of the company. As the company increased the the receivables, it isn't able to receive cash
d the cash for advertising or investing in plant and equipment or for leasing. And since the compny
s to meet the expenses.

mpany has incraesed to 65%. This shows that the company is in a risky place, due to the decisions it made.
on, posibbly a case where the business would need to be shut down.

e advertisment campaign, follwed up by the promises that it made. Also the unncessary increase
alth limit. The receivables period needs to be increased again ever though it was done to attract customers but

Adjustment 2
60000 PS FC Piad Amt
-22000 52000 5200 -3000 54200
38000
-9500 PS in B/S 54200
28500 Finance cost P&L 5200
Paid -3000
9500
28500

Amt Finance cost Paid Amt

8728 698.24 -400 9026.24

Finance cost 698

5700 In P&L 3075

875 In B/S 5700
-3500 In B/S deferred tax 700
3075

Statement of Financial position

ASSET
NCA
Property 62000
CA
Inventory 35250
T/R 41375
Bank 34350
Asset held for sale 28500
201475

EQUITY AND LIABILITY

EQUITY
Share capital 50000
Convertibles loan note 1272
R/S 14000
R/E 18277
83549
NCL
Convertibles 9026
PS 54200
Deferred tax 7000
CL
Income tax payables 5700
T/P 42000
201475