Arab Open University

B326: Advanced Financial Accounting

TMA – Fall 2023-2024 V1
Cut-Off Date: As decided by the Deanship
About TMA:
The TMA covers the advanced accounting concepts and practices in the businesses. It is marked
out of 100 and is worth 15% 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
a Part A Part B Part C & E-library Presentation marks
of ideas
Marks 40 30 30 (5) (5) 100

The TMA Questions:

PART A
Access Philips Company website and download: the annual report for 2021. Note: this file is
available at:
https://www.results.philips.com/publications/ar22/downloads/pdf/en/
PhilipsFullAnnualReport2022-English.pdf?v=20230426085127

From 2021 annual report, answer the following questions:

1. Determine the total amount of non-controlling interest in 2020 & 2021and state in which
statement it is disclosed and in which section.
2. State the amount of controlling interest share and non-controlling interest share in Philips
Company’s profit for 2020 & 2021
3. State Philips Company acquisitions during 2021and the aggregated goodwill resulted from
these acquisitions. How does each acquisition affect the goodwill? Support your answer by
writhing the page number in annual report.
4. State the amounts of impairment losses of goodwill & other intangible assets in 2021.Also,
State which cash generating unit/division/segment suffered an impairment loss related to
goodwill in 2021?
5. How did Philips reflect the 2021 goodwill impairment in its in its Financial statements?
6. Philips 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
7.
that the company is following IFRS and not following GAAP?

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

Answer Page(s) in
Annual report
1-

2-

3-

4-

5-

6-

*** Answers not provided in a tabular format will be disregarded

(40 marks)
PART B
1) Provide one example from the real world for successful mergers and acquisitions case in
recent years and state the specific reasons behind their success.
Notes:
 Do not provide general reasons behind success [as it will not be considered]

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

* Names of the companies
& Detailed information about this business Reasons for Success
combination

Answers not provided in a tabular format will be disregarded.

** Examples dated before 2006 will not be considered. (10 Marks)
2) What are the different types of synergies in mergers and acquisitions?
 Write your answer in the space provided in the following table:
* Type: Explanation:
….. Synergies
….. Synergies
….. Synergies
Answers not provided in a tabular format will be disregarded.
(10 Marks)
3) There are differences between the IFRS and GAAP (after FASB issued ASU 2020-04 to
simplify the accounting for goodwill impairment) regarding the following:
A. Assignment/allocation of goodwill. (i.e., The levels at which goodwill is assigned
/allocated)
B. Impairment of goodwill and test(s) applied and its steps (i.e., Methods of determining
impairment of goodwill)
C. How impairment loss is recognized and allocated. (i.e., impairment loss[charge] calculation
and allocation)
D. 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
A-
B-
C-
D-
(You must support your answer in this question with quality and up to date references.)
 (10 Marks)
PART C
Pat Corporation acquired an 80 percent interest in Sci Corporation for $480,000 on January 1,
2021, when Sci’s stockholders’ equity consisted of $400,000 capital stock and $50,000 retained
earnings. The excess fair value over book value acquired was assigned to plant assets that were
undervalued by$100,000 and to goodwill. The undervalued plant assets had a four-year useful
life.
Additional Information
1. Pat’s account receivable includes $10,000 owed by Sci.
2. Sci mailed its check for $40,000 to Pat on December 30, 2022, in settlement of the advance.
3. A $20,000 dividend was declared by Sci on December 30, 2022, but was not recorded by
Pat.
4. Financial statements for Pat and Sci Corporations for 2022 follow (in thousands):

Statements of Income and Retained Earnings Pal Sci

for the Year Ended December 31
Sales $1,800 $600
Income from Sci 76 -
Cost of sales (1.200) (300)
Operating expenses (380) (180)
Net Income 296 120
Add: Retained earnings January 1 244 100
Less: Dividends (200)
100 (40)
Retained earnings $ 340 $180
Balance Sheet at December 31
Cash $12 $30
Accounts receivable-net 52 40
Inventories 164 120
Advance to Sci 40 -
Other current assets 160 10
Land 320 60
Plant assets—net 680 460
Investment in Sci 560
Total assets $1,988 $720
Accounts payable $48 $30
Dividends payable — 20
Other liabilities 200 90
Capital stock 1,400 400
Retained earnings 340 180
Total liabilities and stockholders' Equity $1,988 $720
Required:
1) Prepare the elimination entries required for consolidation on December 31, 2022. Show
all required computations
2) Prepare the consolidation working papers for Parent and Subsidiary for the year ended
December 31, 2022.
3) State which items have been amortized and which have not, and why?
 (30 Marks)
[END OF TMA]