Q. During the year ended 31 March 20X9.

Luczie sold inventory costing

$20m to Mirog for $24m. Mirog had resold all these items by 31 March
20X9 but still owes $9m to Luczie in respect of this purchase.
Complete the consolidated statement of financial position for Luczie.
Luczie
Consolidated statements of financial position as at 31 March 20X9

Assets
Non- current assets $m
Intangible assets
Tangible assets

Current assets
Inventories
Trade receivables
Other current assets

Total assets

Equity and liabilities

Equity attributable to owners of the parent company

Current assets
Inventories 25 11
Trade receivables 33 15
Other current assets 12 4
70 30

Total assets 150 63

Equity and liabilities
Equity
Ordinary share capital ( $1 shares) 60 15
Retained earnings 50 17
110 32
Current liabilities
Trade payables 24 14
Other current liabilities 16 7
40 21

Total equity and liabilities 150 53

Background:
Lucize and Mirog are limited liability companies. On 1 June 20X8 Luczie
purchased 60% of the equity shares in Mirog for $20m. On 1 June 20X8
the retained earnings of Mirog were $7m and the fair value of the non-
controlling interests in Mirog was $11m. The goodwill arising on the
acquisition was $9m.
The following are the summarized statements of financial position of
the two companies at 31 March 20X9.
Statements of financial position as at 31 March 20X9
Assets Luczie Mirog
Non – current assets $m $m
Intangible assets 11 3
Tangible assets 49 20
Investments 20
80 23

Current assets
Inventories 25 11
Trade receivables 33 15
Other current assets 12 4
70 30

Total assets 150 53

Non – Controlling interest 15

Total equity
Current liabilities
Trade payables 29
Other current liabilities 23
Total equity and liabilities

Task-2:
On 30 April 20x9 Luczie purchased 25% of the voting shares in Gremble.
One of Lucize's directors will sit on the board of Gremble.
What is the relationship between Luczie and Gremble?
a) Gremble is a subsidiary of Luczie
b) Gremble is a trade investment of Lucize
c) Gremble is an associate of Lucize
d) There is no relationship between Luczie and Gremble
Task-3:
The basic principle of equity accounting is that: the investment in an
associate is initially recognized at the the investor's share of the
associate's net assets and afterwards the carrying amount is increased
is including the investor's share of the associate's post acquisition
retained profits

Q1
Background
The following extract is from the trail balance of Bali Co for the year
ended 30 September 20X8.
Dr Cr
$*000 $*000
Land and buildings at cost at October 20X7 1,250
Buildings accumulated depreciation at 420
1 October 20x7
Plant and machinery at cost at 1 October 2oX7 842
Plant and machinery accumulated depreciation 248
at 1 October 20X7
Motor vehicles at cost at 1 October 20X7 120
Motor vehicles accumulated depreciation 32
at 1 October 20X7
Trade receivables 412
Allowance for receivables at 1 October 20X7 25

The trail balance includes land and buildings at cost on 1 October 20X7
at $1,250,000. This balance includes $500,000 relating to the cost of the
land. The building were revalued on 2 October 2909X7 to $800,000 and
the land was revalued to $650,000Task – 1
What amount should be recognized as the surplus on revaluation for
land and building on2 October 20X7?

$.................................

Task 2
Which TWO places within the financial statements will the gain on
revaluation for the year is reported?
a) Statements of profit or loss and other comprehensive income – as
other comprehensive income
b) Statements of financial position – in retained earnings
c) Statements of profit or loss – as other income
d) Statements of financial position – revaluation surplus
Task 3
Buildings are depreciated on the straight-line basis over the remaining
life of 20 years
Which of the following is the correct depreciation expenses for building
for the year ended 30 September20X8
a) $37,500
b) $72,500
c) $40,000
d) $62,500

Task 4
The plant and machinery is depreciated at 25% reducing balance with a
full year's charge in the year of acquisition and non in the year of
disposal.
During the year, plant and machinery with a cost of $50,000 and
accumulated depreciation of $36,000 was disposed of foe cash
proceeds of $12,000. This has not been recorded in the financial
statements.
Calculate the following using the above information.
 $*000 Profit or loss
Profit or loss on disposal of the
plant and machinery
Depreciation charge for plant and
machinery for the year ended 30
September 20X8

Task 5
The motor vehicles are depreciated at 20 % on a reducing balance basis
with a full year's charge in the year of acquisition and non in the year of
disposal.
During the year, vehicles with a carrying amount of $15,000 were
disposed of part exchange for a new one. A part exchange allowance of
$16,000 was given and Bali Co paid a further $24,000 towards the cost
of the new vehicle.
Calculate the following using the above information.
$*000 Profit or loss
Profit or loss on disposal of the motor
vehicles
Cost of the new vehicle addition
Depreciation charge foe motor vehicles
for the year ended 30 September 20X8

Task 6
Included in trade receivables are debts amounting to $12,000 that Bali
Co do not believe are recoverable. Additionally, Bali Co wish to adjust
the allowance for receivables to 5% of remaining trade receivables.
What amount should be charged to profit or loss as receivables
expenses for the year ended 30 September 20X8?
$..................

Q. Prite Co acquired 90% of Sero Co on 1 October 20X3 when Setro Co

had retained earnings of $395 consideration paid by Prite Co was
mixture of cash and share as follows:
*$200,000 cash
* 100,000 ordinary 50c shares with a fair value of $3.50 per share
The fair value of the non- controlling interest at the date was $50,000
The only adjustment that Prite Co has made to date in relation to the
acquisition to account for the………..
The draft statements of financial position for Prite Co and Sero Co as at
30 September 20X4 are:
Prite Co Sero Co
$'000 $'000
Non- current assets
Property , Plant and Equipment (PPE) 1,400 400
Investment in Sero Co 200

Current assets 1,250 270

Total assets 2,850 670

Equity
Equity shares of 50 c each 500 120
Other components of equity (share premium) 760
Retained earnings 950 465
2,210 585
Non – current liabilities 300
Current liabilities 340 85
Total equity and liabilities 2,850 670

These have been no impairment to goodwill. During the year ended 30

September 20X4, Prite Co Sold to Sero Co at a value of $120,000. Prite
Co makes a margin of 30 % on all goods sold. At 30 September 20X4 of
the goods sold were still in inventory and 50 % of the goods had not yet
been paid for by Sero Co.
Prite Co intends to purchase 40 % of the shares of Pixie Co during the
next financial year ending 30 September 20X5.
Task 1
Complete the following to determine the goodwill arising on the
acquisition of Sero Co.
$'000
Value of investment at acquisition
Cash paid by Prite Co 200
Shares issued by Prite Co
Fair value of consideration paid

Total value of investment at acquisition

Fair value of the net assets of Sero Co at acquisition

Equity share capital

Total fair value of the assets of Sero Co at acquisition

Goodwill at acquisition expressed as a formula

Task 2
Prepare the Prite group consolidated statements of financial position
30 September 20X…..
Prite group
$'000
Non-current assets

Goodwill
Current assets
Total assets
Equity
Share capital
Other components of equity (Share premium)
Group retained earnings

Non- current liabilities

Current liabilities
Total equity and liabilities

Task 3
Which of the following statements about the proposed acquisition of
Pixie Co are TRUE or FALSE?
Pixie Co would be consolidated on a line by line basis
Prite Co would recognize Pixie Co as a subsidiary in the financial
statements
Prite Co would not have to make a consolidation adjustment for
dividends received from Pixie Co.
Pritie Co would recognize Pixie Co as an associate in the consolidated
financial statements.