IAS 28: Investment Cnarreran HAPTER-1 NAL ACCOUNTING STANDARD 28 ATIO! uD INTERN SVESTMENT IN ASSOCIATES LOL: DEFINITIONS ws: influence ‘An associate isan entity ver whic the investor bas significant Significant influence Significant influence isthe power to participate in the financial and operating poi S Oe Amvestee fan enary holds 20% or mare of the voting power (equity of another eaiy its pressed Significaot influence exis. (Holding 20° to $08 of the equity of another entity therefore meas wy shuence ex genera rue tha sigs The “20% or more’ rule is a general guideline, however, and IAS 28 states more specifically ty significant influence arses. The existence of significant influence is usually evidenced in one of meet the following ways: 1. Representation onthe board of directors; Participation in policy-making processes, including decisions about dividend distribution; ‘Material ansactions berween the two ene; ‘An interchange of management persone! heraeen the rwo entities; of ‘The provision of essential technical information by one entity tothe other. 02: ACCOUNTING FOR ASSOCIATES JAS 28 states that ssoiates mus be accounted for using the equty method {vestments inially recognised at cost and adjusted thereafter for the post acquisition change ia be investor's share ofthe invesee's et ase. omprebensveiacome includes its hare of the invesee's ober comprehensive income ‘There i no goodwil recognised fran investment in an associateCHAPTERAL 1AS 28 Investment in Ascites ‘02: ACCOUNTING TREATMENT OF TRANSACTIONS AFFECTING CSOFP : [Transsetion ~~ | Aion rou Kl ily be soil cos [Fire forajasine 2. | Recording of profit from Increase investment | Difference of —rewined teececacest” | > pce ag aa soa” | a : | a 7 agar rinamere | — race rer == io 4 | Sale of stock by Pt ~~ Reduce CRE | Profit on unsoid stock x P = ere a perce | macacet _| 7 Besta yasmaars — fat ita aS : ye iar frag art 2 [Pliocene [sce ae v |_| Ios receivable and paynble | tiabilities of associate } {ot ACCOUNTING TREATMEN OF TASRACTONS APRECHNGsIG | Action required TV ae for adjustment | Se Se] mie ur Sra) De ae a =e ; == nite ee |3 | Sak efack by Pio = Ineease conto ale Profit on wold sock xP eaeeea Sa « ‘Sule of ack by Associ «Reduce the figure of “Share of | mes nae a ns Sao Em =| |CHAPTER-1 1AS 28 PRACTICE QUESTIONS Question-t ; ‘Pee following surmarizd semen of financial position pertain to Hamschi Lu (1), Saba Ld (SL) and its associate Anoga Ll (AL) as at 31 March 2016. f Lad_[ Saba ie |g I Rupees in-090' Asset 4 ‘Noo-current assets Prope, lant and equipment 500 3604 investments 000 310 fi 12050 3305 Cunatasets Inventory BO | BT ‘Accnns receible 2 || aw Bank L Nil 0 Tot anes cia asi an abies utr rary shares och Rettinedeamings ‘Non-current Liabilities ~ 10% Loe noe Current liabilities Accounts pale Tenten Overt a Ss ef hm Ber Ts 5) Hamachi Ld acquire 90% of Saba Le = share, The balance on Saba "SRS, | ordinary shares on | April 2014 paying R-» 2014, Hamachi Lid ra 1 pail 2014 payin! waited ean a le mach Lad acu 30% of Anogy Las this date was Rs, £0,000. C8 | ie i) Oe Ap ne Sanne ERs. RE ein sae for Rs. 350 camyag ae (ook wing nt A hat afi au ofa 120000 wy ay meagan Yeu coded 31 Mach 2016 we oc 4 Dao company ease OS wld gots moe EES cn inno, Hs Sottero 6500 AL a ‘ue aw 30c. AL sold poods amounting to 0 HL: yearend enn of He Rs. 12,000 in respect of such goods. “ Nes) 4) Das rcongy bane io ws Hecibles om o831 Ma 206 prs » Payable to SL on 31 March 2016 as per Ls Boks is Difference is due toa cheque of Rs. 4 million issued by HL which was received by SL on 2 Apa 2016. ¥)__Anogo Ltd is to be treated as an associated company of Hamachi Lid. vv) An impairment test at 31 March 2016 onthe investment ic shares of Anoga Ltd conchided that it shouldbe written down by Rs. 217,000, No other assets were impaired, Required Prepare the consolidated statement of financial poston of Hamachi Lid a . 31 March 2016, Below are the statements of profit or loss forthe yeur ended 31 December 20X8 Revenue (Cost of sles Gross promt Operating expenses Otter income Profit before tax Tax Profit forthe year fou are ven the following information: Reece ee ris ue ofa. SL 00 are (Gp), Lid aoguized 60000 ordinary sares in A Lad « umber of years ago. A Ltd has 200,000 shares, (Dateien pnt i R008 PL lone fe rk nine ae a a came! lease eaning goss if 500 1 aE Beas eo sare o te pr tena Ae wo fs Mt nine fe 20 ¢ RESEELPUGE we topo wpm 225 lp we weeny ee Fare 60) non con E e e tod Cselwwnpid e e {ee pacers nwisteewee (¥) Tavestment a de associate was impaired forthe first time during the yearby Rs, 2,000. (2, Segre meee wa rad nib hore arapy cous otic eure Pech te consolidced statement of profit ole or PL inlding the reels of associated company ‘erthe year ended 31 December 20X8 5 aTLamy curs! 7 \ Questo! seman wane the PU Saba ST and Aso AUS Ny . pio | Sta tla eo —— stan soe a ome (ow 5) im Prof alteration 2000 1750 tam ‘Tre feowing infomation i relevant 1) PL asgured 60%» of share capital of {aso | July 2018 INVESTMENT LY (ssc S Lid on 1 March 2018 and 30% of share cat of A |) emay be assumed hat profits ofall companies had aecrued evenly during the year Required Prepare a consisted statement of prof or loss for P forthe year ended 31 December 2018 Quesion-+ Bil Limited (BL), acquired 80° equity shares of subsidiary, Mistll Limited (ML), om July 1.2017 and 25% shares of associate, Zoha Limited (ZL), January 01, 2018 ‘Statement of Financial Position asa June 30, 201 i Aes Necsumaiaes Proper plat and equipment {now toogbie ue | Anvestment in ML. | s en | i tee ae pe Cobendeah eps ty nd tier ton Sein See pen 100 owed cm 0 ‘Curreot liabiitiss ww 7 ‘Trude and other payables " oo || ia 1270 “ } foto | ftcanETEEAy IAS Dh: INVESTMENT IN ASSOCIATES, ‘Statement of Comprehensive Income fr yes ded June 3, 2018 Revenue Costof sales Gros profit Distribution and administrative cost Finanosoos Profit before tax Income ax expense Profit forthe year Mt 2 0h 11740 1,069 1260 40 148 Additional information: 2} TheBBL Group has the policy of measuring NCI at ir value tthe dt faust ad Fir Valse of NCI was Rs 210 lion te dt of sgusion “Their vale of cet ses of subsidiary a of quson was Rs. 80 milion Dien far ‘ale on the subsidiary relates to faciory plant Ding depeeited though cost of sles ov: the ening fife of 10 years tom he sequin te ‘Drag the yea ede Je $0, 2018 ML sold gros BL er KS. 130 mlion The company makes a pofiof 30% on the seling prc. R. 10 milion ofthese gods were eld by BL cw June 30,2018 BL sold goods wor Rs, L000 milion ZL during te jar by clrging 25% marin sl, i oft gods ill emsas sold by 2 sol gods wert Rs, 150 lon BL ding he year by carping 20% margin ov sles, 1110" of te gods il eins nso by BL » 9 4 ° 4) Annual imaiment-tets-bave-indiaed impairment loses of Rs. 20 million eeing to the recogsized goodwill of ML and Rs 2 milion rating tthe investment in ZL, 8) ntercompany blances at year ead a follows: lecompany balan kya en em folowe: _ [Restle rm Ma pe BLS Boks —_ yale BL as perMLs books Receivables fm a pe Ls Bos Payable BL apr ZLs books Require: Prepare Conldatdstomet of fsa poston athe statement of ‘eye ended ane 30,2018 ore BL. Grup, compre income forINVESTMENTIN associ cure ss tarnvesvestivassociqes 30 ne 26 ston eo Pld | Sta Asset Nonscurrent asses Propeny, plant and equpmsit 8950 3.500 2.000 Tnvesunents 960 Stars of SL 2.900 180 Shares of AL. 680 Total assets 1250 3500 ‘Equity and tiabiites — ~ Equity (Ordinary shares of RS. | each 5,000 1.200 Retained earings 7,500 2300 Total equity and labiles 12500 3500 ‘The following infomation i relevant 1 Pid acquired 80% oF Las Rs ody shares for Rs. 2 900,00 on OFA Lids Rs. odinary shares for Rs 6 1 October 2015 and 30% 5000 on | January 2016 1) net profi al companies ar as follows 3g 5 00 fi 1800 Ese geo aL on _ 19 Te scone ini mau se popes of SL's eat at ane ‘sy beaut pois oa compas had scaly dy ea Prepare he console satemest of anil potion of PL a 30 June 2016 7Anse IAS 24 INVESTME ST Im ASSOCIATES SOLUTIONS Ham tmited Consolidated Statement of finaneal Poston Assets Non-curent assets Property, plant and equipment Good wilt Investment + In Associates Others Curent assets lnventory Accounts receivable ‘Bank (including in transit) Share capita Consolidated retained earings Non-contolling interest Comentiabiities ‘Accounts payable exation “ven C20 aes 90% 1.080 shares xR, sar) NCU op. Sar) (220° 10%) ae Cost of Investment (For calculating Goodwill ‘As on March 31, 2016 Re ino) (8,050 + 3,600 + 120) 77 (Way 2 (wes) oy. (4,000 +910 3,240 0W-1)- 630(W-5)) Ay oy (30 + 340 -6.9(W-6) 10-8)) (520+ 290-19), 240 +044) ws) way (500 + 240) (420 + 960-15) (@20+250) (+190) 3,240 | Share Capital - 212 | Pre-Acquisition RE Revaluation Surplus-Land Goodwil bal) 2120 1332CHAPTERAL Subsidiary retained earnings a/c INVESTMENT IN ASSOCIA 115 iE 800 | bid ‘Balance sheet closing) (Post) 69| 193.1908) 1348.79 | (a9) tom 14931 po wa) SRO Fay apy Lola etaned earnings ae ©. Sok TPF oay 37 | Pare own RE 7.500 SookURP(AtwP) QW4) 1) Substary retained earings a/ 134-79 Investment (Imp.) 217 | Share of profit from Associate (W-5) 240 od al) 8,362.09 ow D Non-controlting interest a/c Cost of investment ave ed (eal Subsidiary 36131 ened earings ae 4931 (W-9) Investment in Associates lavesineat at Con ($00 30% = 190 x Rs. 35 pes wend oa teases caa"'W 33pe de Ba = Pros case ofteven (wy ‘LéSs: Impairment loss on investment Ca ‘Investment at Reporting a set stent at Reporting Da e483 Ww); Stock sold by $ to P Soid tock ‘Unsold stock oa Proto ot suk 24/t4x4 2 GY.) Stock sd by P to 4. Sau et Urmold sock Id PIpf on unsold sock (43/140 40) a a ease i W-8); Stack sold by A oP Soa Ses ‘Unsold stock = Proton ol sock * 02140140 fai PY Shor Ganson)” na meMAPTERAIL INVESTMENT IN SOCLATES Seaewpervent hare perce (5,00 share'50,00 stares) = 90 (60,00 shares 200,000 shares) = 308 ; - (Consolidated Statement of Profit and Losi For the year ended December 31, 20X8 Sales (G8S+ 100-30) Les Cost of sles (185 +60 —30+ 5w.7) +0759) Gros roi ~ — Operaang expenses (907 18+3) Otte Income 2 00- 25-*45) Shur of poi tom Asociate —{(W4) "150% 30% = 45, (5) Cafetation of NCL igure in CSOCK: Dr. S profit forthe year cr. SeaURP TW) 5] Spot 30 (Goce isp) d CRE 2290) owe) Nt 2x 1089 (C30CT 22) - (6) Calculation of share of profit from associate Star ofProtafAasper PI account @0x30%) ‘ ask: 's shar of uneizd poi on sof sock by Ato W- oy Ls: mpsimest aso nvestnest | a (¥-7 Sale otSuck py S10 P Sod sock we asad tock 0 Profit on unsold sock x (0 Sale ot Suck bv A oP Cin » sock Profi nun stock x Star of? @x30%) a 77(0V-9) Sale of Stock by Pte a fies Pret __ — Stu of pod fon Assi Profttelretx Lest Taxation G00 +7505 1012) fit er aon 5: Non-conroling interes sare ofproft_(W:S)_ Stare of para oes (0W-5) Calculation of NCI igure in CSOCL: Dr. ‘S profit for the year oo ‘Sproft ——_(1,/s0x 101) Tash CRE (1,458 x60%) (No we) -| NCI ~(¢s8xa0%ycsocty ~~ 543.) — ¥-6) Calculation of share of profit rom associate Share of Profit of Aas per PIL account (2,000 x 612 x 30%) 0 38(QHAPTER-LL AS 28: INVESTMENT IN ASSOCLATES Ansmert aod! Lined Ly Contd Senet Tac Pata wt Aon ne 320 ‘Nossa ass pommion Proper Pat andemipmen (01245205 10-19 ‘oo Inangiie ss oe (27508. ia levestentin Asorite WS a TH08 Ona sss ingen (620+ 1440.4205}-15 0011) 2os0s ‘Tae Reeivales (850+ 519-19) 1 Chand Bak ilances (990751) 1b ui and ais a : 1900 en Star preniam ° Consldted eine earings (W-3) 2 Noeconmolliginerst ——(W-) i ‘Curent bites (090+2489-19) oe ea milog 5,700 + 992 (30) 620+ 280 +20) , fi st wv mt iss 1s 182 Ty28: INVESTMENT IN ASSOCIAp,, cuarrEr.t ting Goodwill) —— c ow) — coxatsvasn ec — Bag ame a Tween ie a FY Pre-Acquisition 1) se Rovaunion Supls (ba) La co oodwvl ) — way ; a é ssiiary retained eaealngs ie ——— 4. Dr, __Sbstiry retained ear losing) (Post) 7 Pre-Acg RE 160 | bd Balance she 7% Dep (ev. Supls) 1001) 10 ‘Stock-URP wy) a Geodvil (np) » CRE (544 80%) 352 NCL (544x208) 1088 _—_ ws) Dr. Consolidated retained earnings ale Stock UPR AY WD) Pret own RE Stock URP(A0P) (WII) 15; Soba reaized 2 | Share of of fem o> 15082 No interest le c. Cost of lvesteat ale 0 ed (bal) 318.8 | Subsidiary retsined earnings a/c 108: (W-5 Calculation of NCL gure in CSOCI: Dr. $ profit for the ye Pe ___S profit forthe year ‘Dep (Rev. Surplus) (100710) ~~ 10 | Sprofit ——— Stock URP ws) a Goodwl xp) a CRE (544 80%) (No we) . NCI (S44 x 20%X SOC) 108% (0, Calculation of share ae Stare of Profit of A sper PL account Less: Ps shar of ureter ona fy oe 112) 228% 185 [Less Impairment loss on investment PY Ato P (W-11) a 2 —s Ty5 Eniag- peat Rein aig 0107.7 (9, rate Ted ye oe ‘ese | ‘$80, a tee Raied Eating 3006 gS) mae + Investment in Associates ene Cos : Seva pst at Prof ten oft year tase Revesal of poiton leaf sekby ppl 287)*23% 203 igor ) s nvsment at Reporting Date/ Balance sty 913+ 148x 6112) = 287 ee =a (9) Saleof Stok bv Stop Sold sok Used ck ; 130 Poftenunsold sock (140100230) vs (0 Sal of Stock by P to Associate Sod ek 2. cian i ‘gn Proton unsold stack (100/10055) 28 Surf? 252259) ‘ (AD Saleof Stock ssacate oP a Seid sock ge ‘Unsold stock (1,500 1/10) 30 Proton sold stock (150700220) 2 Shee of? (00325% By14S 28 INVESTMENT IN Asse 4, ky Guar ‘Answer: ‘P Limited Position consodated Statement of Financial “ison ne 30, 2016 Rinay Assets Fone punted equipment (69803500) aay Good will &3 s Invern in Associse : ~ 0 er Equity and Usbilities Equity Scapa =) ‘Consolidated retained earnings (W-3) Lee) LB Non-contoling interest (we) == Ber way Dr. Cost of investment (For calelating Goodwill) @. Investment 72900 Share Capi Tat [NCI (Prop. Share) (2$25x20%) ‘565 | Pre-Acquisition RE. (4000-6) +0031) [1s 2s coal (os) oa w2) a De. Subsidiary retained earnings» G. PreAcqusiion RE 1,625] Bi (Balance 3-0) Pony 73) CRE. (675x80%) so Net (675x20%) 1s (w-3) Dr. Consolidated retained earnings ne Parc owa RE ‘Subsidiary retained earnings a/c 50 cal) 8120] Staofpot fom Aseewe w-5) | _®. (Wd) Dr Nom-controlling interest ale _ ‘Cost of Investment a/c 3 cd (eal) — 200] Subsidiary retained earnings alc a =a” __—Las AVESTIMENT IV associates « 8 ained camings from acquisition til Bs 650, ioe a et Reporting Date ‘(40-4005 0 e129 x30y po 740 g_cobaaton of retained earnings ors PL SL AL ong Eaing—O.07.15 Bay mea re (ifrecorded by the accountant ee 1s gReined Eaming - 30.06.17 750 2300HAPTER-1 TAS 28 ICAP PAST PAPER QUESTIONS Question. Te following balances are extracted (GL) and Bronze Limited (BL)‘er the year fom the rad of oles Lined (CL, Sigua readed 30 Jue 2019: Additional information: (© Dewils of GL’s investments ar as follows: i Shs eit”? : | Dateofinvesnest Holding veces 10 ean i fnvestee et . Re. in milion —"*- oT CEE $000 0 of si 000" Sn (i) Cost of investment in SL inchides profesional fc of Rs. 20 (Gi) The following cosiderations relating to acquisition of SL's + Issuance of175 milion ordinary shares of GL. * Cash payment of Rs. 1,000 million after three years. Ca ie dite of invests, the mare rice of ares of GL and SL ere Rs 20 sad Bs I ‘respectively. Applicable discount rate is 12%, mast ® i) Abed ofumiston of leary ne (9) Ale a of tio SL cayig les ois act ass wer eu ir le ent million incured on acqusionofSL. shares are sil unrecorded: he of Re 6 Denecedy Sin ag See gan elt TTollowin8 t6t-company les a ine Pus 156, “e607 "Le BL : 9 bel lanuaiy 3618 Ge respectively, ating terest GL 20d BL follow bessurement of SE would have ectotarren —— SOLUTIONS Annet » ar) Golden Limited sated Statement of Compreneniv ACME Commipe gear ended 30830, 2019 . 2,300 +2080 -506) te Coto es {rss 1130-6 18008130897 Gres profit : Opening expenses ¢g10 1520 +20 + 301518) 40) Oaercone esp. BD 9 (150 12% x 612) +438 (W-1)) mee Cos Con a A5W.12) S080 x 12% 112) Ste of Associate Prot (WS) av Protit (tier Comprehensive leome evaluation sls (oos35) Cone of Asses Ct 2035) 7alcomprehesive income Profit atributable Parent aly Nel ws) ‘otal compretensv income atibuabe te: reat ‘est) Nel (048 w-5)+ 115.) » Golden Limited (GL) Investment in Asoc ‘Avon June 30,2019 Investment at Cost Share of Post- Acquisition Pros (2200-1400) 35% ‘Share in OCT (20:35%) Reversal of profit on sale of sock by Pio (W-5) Investment a Reporting Date / Balance sheet date oy Dr. __Cost of Investment (For calculating Goodwill) investment (Wil) 5,592 | Share Capital NCH@tEV) (W-13) 3060 | Pre-Acquisition RE. ‘Revaluation Suplus-intermal Software | Coningst Lisbility egitve Goodwill (a!) 28 m6 IAS 28; lovestment in As 198 2 Jovesent in Asie, Ro. ion” 44 ony ny 340) 959 226) 3030stat Asaiates Bova (0.400 a Souses sive (Smite, sini pee Cmieon gg SHS Ry 1 x00 a waa) a incest on deferred consideration (72x 12%) zo waa) " faiczalveofNCL (@5 6000 mons, 10a) = 60 mista 30510 (02), (3) 0-4) No need o prepare bares xR. tae ws S profit forte year or ‘Software (Amor. (150/5) 30) $ profit ce ‘Stock-URP (W-8) 18 | Contingent lability (Reversal) « cae 49217089 0.) Net Wax cso) as) — ws) is Sastry QCM ortheyear ee os CRE O54 HH Wo Lv Nal Bsasomtcsoc) = _1t) (W-6) Share of Profit from Associate Associate Profit —_(137(W-7)x35%) (0-7) Calelation of profits and retsned esis a 99-248 +0-38) si PAT @050-1180-$20+ 180-60): (1,00-550-28 : Stack sold by Sto F rg ws i Unsold 3915219) * Use prot ta (43) | Socksoldbe Pun 8 Sald sock 3 fae nse B Profi oa unsold stk 0x39) PiSie =JAS 28: Investment in Asso CHAPTER-11 IAS 28 ICAP QUESTION BANK, ‘The draft statements of financial poston as at 31 December 2016 of thee companies are et ou belo Helium L Assets ‘Non-current assets Property, plant and equipment 400 100 160 Investments: ~ shares in Sulphur (60%) 6 : = shares in Arsenic (30%) 30 Cumentassets 160 » 260 0 Equity and abilities —_— Share capital 30 o Retained earnings 180 100 Non-current loans 50 0 ¥ 260 0 The reserves of Sulphur and Arsenic when the invest «700 and 20,000 respectively Required Prepare the consolidated statement of financial position ast 3) Deince 2046 CAP Question bank Q6.1) Question-2 Hamachi Lid scquired 90% of Saba Lil's Rs. 1 ordinary shares on 1 April 20L4 paying Rs. 3.00 per stare, The balance on Sabe Ltd's retained cammings at this date was RS. 800,000. On 1 October 2015, Hamachi Ltd acquired 30% of Anogo Lids Rs 1 ordinary shares fr Rs. 350 per share, The statemens of fiancial postion ofthe three companies at 31 March 2016 are shown below: Property, plant and equipment Investments Inventory ‘Accounts receivable ‘Total assets—— : papa tabs ee Cant 5.000 . see gearings BE on . ween Mash 2016 _ 1500 ie equity and abilities ‘elewinginforatin is least Farvale adjustments Out Apel 2014 Saba Le owned a Landa bad 2 ibe of Rs. 100 i cf 8 Cammy ale (book value) The vale of hs propery bast bg! este. serpents sequin, Saba Lid was cet mapping for ye eee et of serra wane he hecce was Alte by co pverament a2 ot However Hh Lid Ccmaed thatthe icence was wort Rs. 180.00 abe dn ofseuiston | adnan 2016 Hatch Lad sold goods 0 Anogo Lad fr Rs, 6500 Tse nor wens 7 tcp of 30% on cost Two this of these goo We Mach 2016, 2) Totes the consaiaion procedures the peu sit tA in-company cect want Toi he es et Hore ae 0 es est tel ety Al 016 econ MS inden ‘cca eeivable and payable 8 FOP " imac i 1 See le eaten ‘a impimen esta 31 Mach 2016 00 Sa Should be writen down by RS, 468.000 ro ober ass Wee elite investor of Ago La 21 feeuree pete consti statement of aan POs ism SEES 0% of te ot sce ein Sone" Pst wrest auary 2016) m8 6 oF | Men eves aJAS 28: Investmen CHAPTERAY 00 ERR Ascot re 2016 ares out below. ye draft statements of profit or loss fr the year ended 30 June 2016 are set out Below. Theaan 5 prot or ye 6s ow. rr Tai erating 11,318) Opeaing eps at Dividends fom Sec is some wx (en) Profi after taxation 325; Other information Included in the inventory of Seek at 30 June 2016 was Rs, $0,000 for goods purchased from Hide» May 2016 which the later company had invoiced at cost plus 25¥%, These were the aly goods sold by ide Seek but it did make sales of Rs. 180,000 to Arve during the year. None ofthese goods reine) Arrive's inventory atthe yea end, Required: ‘Prepare a consolidated statement of profit or loss for Hide fr the year ended 30 June 2016. ICAP Question bank 63) Question-4 Hark acquired the following non-curent investments on 1 April 2015: |) 4 milion equity shares in Spa, by means of an exchange of on¢ share in Hark for every one share in Spark, plus Rs. 605 million in cash. The market price of shares in Hark at the date of the acquisition was Rs. 9 per share. The market pice of Spark shares just before the acquisition was Rs. 7. The cash part of the consideration is defered and will not be paid until two years afer the acquisition 2) 25% of the equity shares in Ar, ata cost of Rs. 6 per sbaze. The money to make this payment was obtained by issuing one million new shares in Hark at Rs. 9 per share. ‘None of these transactions has yet been recorded inthe summary statements of faancial position tht ae shown below. ‘The summarised raf statements of nancial poston ofthe tre companies a 3] March 2016 a ‘Statement of financial postion Assets Nox-curent asses Propery, plant and equipment Other equity investments ‘Corrent assets Total assets ‘Equity and Usbiiies Equity Equity shares of Rs. 1 each Shaze premium 330esaned ee = AUT April 20) + FOIE ed: Mat ag Liabilities = 6% loan notes © T¥6loan notes iil ‘otal equity and lisbilites ‘The following information is elovane 1) Ha has chosen value the nono by IFRS 3 (revised), The far val op cstimated to be the market valu of the san, 2) Atthe date of acquisition of Spark, the fr values oe 3) The cost of capital of Hark is 10% per year "Ss were equal their caring amounts 4) During the year ended 31 March 2016, Spsicsold gods fr ke 3 ono 5074 on cost, Hark had 75% ofthese goods in its iaventryat31 March 2016 8) There were no intra-group receivables and payables at 31 Narch 2016 6) On April 2015, Hark sold group of machines to Spark tthe ared fr vale of 3 millon [Ate time ofthe sale, the carrying amount ofthe machine wa R-2 lio. The machines dn estimated remaining life of five years o dat of sle 1) “Other equity investments” are included in the summary satemen of Ss! portin of ark at ~theirfar value on YApri 205: Tlie valu 31 March 016i ROS alo. £8) Impairment tests were caried out on 31 March 2016, he: show tt her is no ipsinmet of be ‘value of the investment in Ark or in the consolidated goodwill. 9) No dividends were paid during the year by any of the three companies tet asa Mach 2016 Pepe consid teen of ni poston raha ML = it ge hown elo, 931 Dever Ye. Themen of financial position of 3 ents P, Sand 2 fy Se Creatas “oa [0008 [= {BP plant and equipment ; (RSet in $a cost / asic! a Nestea in A at cost ue fiteasses 0000 ; 300 (story © Coa tccount with PJAS 26: Tavestment in Associates cuarres 20,000 ‘Curent account with A 110,000 Other current assets 7,110,000 Total assets Equity and reserves Eguity 100,000 Equity shares of Rs. 1 160.000 Share premium 650,000 ‘Accumulated profits 510,000 Nox- Curren iailtes ‘Long-term liabilities 40,000 (Curent abilities on (Cusreat account with P - . 00 (Current account with S| 60,000 2 Other current liabilities 100,000 00 ‘Total equity and abilities 1,110,000 570,000 Additional information bought 150,000 shares in S several years ago when the book value ofthe net assets of S was Rs 340,000. P bought 30,000 shares in A several years ago when A's accumulated profits were Rs 150,000, “There bas been no change in the issued share capital or share premium of either S or A since P sequirdits shares in them. 4. Theres been impuiment of Rs, 20000 in he spoil relating to te ivestnet in S, bu 30 impsimneat inthe vale of the investment in A 5. At31 December Yea 5, A holds inventory purchased during the year from P which is valued a Rs 16,000 and Pbolds inventory purchased from S which i valued at Rs. 40,000. Sales from P to A and fiom S to Pare priced at a mark-up of one shrd on cost. 6. None ofthe entities has pid dividend during the year. 7. uses the partial goodwill method 1 account for goodwill and no goodwill is attributed to the non- controlling intrest in S. Required ‘Prepare the consolidated statement of financial positon ofthe P group as at 31 December Year 5 (ICAP Question bank Q.65)uaPreR —__ Questions ia Limted (a, Limited 20 on os AS 2k: Ivetment in Asse i ta, vestment {9413.00 5s, 2018 Rs Teach Saari ae an = te — Nop-surrent assets aa ere Investment ia ML loveseat in ZL. Cent assets lavestries Trade receivables Cash and cash equivalents Equity and Liabilities Crntiabiliis ‘re and other payablesCHAPTER — Statement uf Comprene, Be Mm L Rs. in million“! Revenue 4400 4200 7 Cost of sales 2.8) _ ev z Gros profit 1790 a0 % Divdend income _ Profit before tm 0 omcetore _ aw, 7 Prat forthe yan mrcic on Retained earnings brought forward Additional information: 8) The BL Group has the poiey of measuring NCL a fair value at the dae of acquisition and Fair of NCI was Rs. 210 million atthe date of acquisition. ) Neither ML nor ZL had reserves other than retained earnings and share premium at the dat of quisition. Neither issued new shares since acquisition, ©) The fair value differeace on the subsidiary relates to property, plant and equipment being depreciated ‘through cos of sales over the remaining useful life of 10 years from the acquisition date 4) ML's intangible assets include Rs. 87 million of taining and marketing cost incured during the yee ‘ended June 30, 2018. The directors of ML beieve that these should-be capitalized as they relate 1 the startup period ofa new business, and intend to amortize the balance over five years from Jly 0 2018, ‘During the year ended June 30, 2018 ML sold goods to BL for Rs, 1,300 milli. The company makes a profit of 30% on the selling price. Rs. 140 millon of these goods were held by BI. ea Juze 30, 2018, 1) BL sold goods worth Rs. 1,000 to ZL during the year by charging 25% margin on seles, 10% of the ‘g00ds stil remains uasolé by ZL. Annual impairment tests have indicated impairment losses of Rs. 100 million relating to the recognized goodwill of ML including Rs. 25 millon in the current year. No impairment losses 0 date have been necessary forthe investment in ZL, ° ® Required: Prepare the Consolidated statement of financial position andthe statement of comprehensive income the year ended June 30, 2018 for the BL Group. (ICAP Question bank O64) 334Tied (QL) ba inves i i Listed (ML) 5 5 dete 1 ay 2010, Qs “ + fy 150 moo. oi has 4 ef va of ML'S ML hea el es we ‘suited HL) os veg (0830 November 2012, 01. soot RS 224 milion 4 The purchase consierticn was made vp Rs 190 milion cash paid en aca Aion hein OL Ate a ust. ‘iilin le Qs Ai at acu Q's hese eee S16 per sh yh tine ss ‘he det summarised statements offnca pos a meant Drsiton ofthe de companies vo 31 Deenber 212 ray shares ses opty, pln and equipment 50 lesen ML. ‘vement i HL ane aiets oo ca aly ad abies Ordinary share eapital(Rs.10 each) a a co ene 350 210 elas + ‘eftving in infin i sil Tioga ems Go AU RE a aes tenon conuoing ines tk opr si ne fae val . Ste in he mc alte pd P) iene yeti ft ml Te hve On Oe rR 26 ion, Te 2 om | Ose 24 ie as ANE uy 0 The mat ind wa 2 par to HL a in) th December 2012, QL 018 008 Sear end and the invoiced amount was 80 pa red: Prepare a consolidated jl Repri 7 rare oa Fs (CAP Question bask Q47) 3AAS 28: Inyestarcnt SOLUTIONS = Helium Lied Comtdate Statement of Financial Psion SSon Deemer 2016 asses atelaics Proper. an depment 100 Good wy : Unestet i Asoc 5 ‘ Creat anes (445-160) es uns ‘Consolidated retained earnings way a ‘Non-conulling interest ony “ ‘Long term borrowings 200+ 50) » way = Be. _ tena : « NCI (Prop. share) (100 x 40%) Capua 7 ae 40 PreAcaition Re 4 ww _ — RE MHonsor, we NCL (10x 40%) "1AS 28: Investment in Ascites S24: Investment in Ascites +3) é Consolidated retained earings we ' sé (al) s m4) a trolling interest ale ce. Costf invests ae a 4 (ly 84 Subsidiary eed earnings ue 4 (5) loveseat in Astsiate Sementt Cont PEESAPoR-Aca, profits (100-20) x 30%) lavetment at Reporting Date ‘Auver.2 Hamachi Limited (Consolidated Statemet of Fatal Psion ‘Aso March 31,2016 Ri n-000" Soames REY piatCand equipment (4 080+3,600+ 129 11,770 Toy Pt and ei es ~~ Good will. —-.— — {1,1 700W-1) ~ 468), — tec, Homwe (180-60) reset Paes : 717 > Others (ote +910 3.240 (1) - 630(¥3)) 1,040 leroy (630340) 1.170) routs Teceivable (520 + 290 - 40) 770 “(acing in ast) (4070-74) in) x Tee Bakesna aii, 7 ee 5005 “Swoidtedreuinedeamings —(W3) a5) "soon inet way set ‘Peseta Citece Ne (500240AS 28: Lnvet0:H eA sStigprepeyy ent (For caleulating Goodwill) _ te 3.24). Share Capital 230. Pre-Acquisition RE, Revaluation Surplus-Land Revaluation Surplus-Brand Goodwill bal) way «. A Subsidiary retained earings ale SS PreAsisiion REDD bd ee losing) (Post) a0 ices (Amor) (180/62) @ CRE (1440 x90%) 1.296 NCI (440 x 10%) 144 | — ws) Dr. Consolidated retained earings ae ___& ‘Stock URP(PwA) WH) 3 Patent own RE EA ‘Goodwill dnp) 468 Subsidiary reine earnings ae i oa (eat, SAAS) Star ofFossAcgisiion RE WS} ——__"8- ws Dr, 3 at Cost, (600 x 30% = 189 Rs. 3.5, a er Seen Oo nat eae ; ‘nvestment at Reporting Date ‘estoy me = = Ww) Stock sold by Py 4 ae é ae Profit on unsold stock. (x20) i Potton (3130230) 5 hie BTry os AS 2 vermin Ase es For the year em f Prone ar ende and “ 'd June 30, 2016 ™~ i ‘ober income (Dividend) (ESB * 5328 51250 san, i Sect ot om Associate (oiaa (35) ‘fit before tax xy Uv Ts Texation us ra (2142752512, {ss Noncontling interest share o ‘Sur of parent owners et 2) (0 Sack sold by Po § ‘Sold ‘Unsold stock ” Frfton unsold stock (50/125 x 25) aa i (on of NCL gure CSOCL: a S profit for they _ cn [Specht G6rx3ii 150 CE GE U9. 999 owe 120 (1s0520% (esc) 30 soot Hark Limited Consolidated Statement of Financ “Aron March 3, 2016 Raia milion (6031-1 402003) 3 ws) : we (08 -0.5(W-3)) 7 3248-09007) “caov- 4) 108-62) 67S es) e862) 4 * 73 (ws) a = isisCHAPTER 6% Loan Notes [a 7 Lowa Notes faa Provision for defened pment (S05) (W-61) Loss a Corentuabtit ars 2 aime Cost of Investment (For ealulating Goodwill) ao 4 Se aia 4 ‘bare Premium aed 1 mil shares | | PresAcguisiton RE (W-.1) Ls z Goodwill) 2B Subsidiary retained earnings aie oe. Pre-Acquisition RE 16 bid Balance sheet cg) (Posy » Soa URP (7) 09 exe 1x0) 8 Nel @1x20%) 092 wa) Dr ___ Consolidated retained earnings fe ce. Intrestexp Gefaredpay) O61) 05 | Parent own RE ‘4 PPE (Gas Revers) 3-2) | RPE (Dep. Reversal) (1 02 Equity insrument- Loss (080.65) 0.15 | Subsidiary etaned earnings ae 168 ea (eal) 45.73 | Share ofAsroits prt (W-5) as on, De. ‘Noo controlling interest le ce. Cost of faves ae 7 cd (eal) 7.42 Subsidiary retained easings ae oun (5) Javestment in Asocates Investment at Cost (ws) ° ‘Shave of Post Acquistion Profs (10-8=2x 28%) os iene Re DD der 38 (W200) Journal Baris not Purchase ofS SPARE OEP ius o aque are ofS K means allon shares of Hark essed 2) arte. we wil pay cash in fae of Re 6.05 milion fer? year. 1) Tora consideration given compres “Milo shares of Har (lion 9 persue) ‘Preset vale of 805 001.0815 (60sxt1)(aAPTERSLL juaentry for Purchase of § et ee Share Cepia (Smilic shaesx Rs 1) 4 Shae Prem (Gili res RS) 2 Defeed payment payable (608 1) 5 De ee ‘nerest Expense 0s 7 Dalered payment “ayble (53 10%) os (a) Purchase of Atk 9) fie forking fis ey Suing P shes Cab (Lion shares Rs, 9) Share Copal (0 culin stares R51) 1 SMe Prem (Clon ares R58) 8 9 Sn for ving invesonent Coe Te] fost in Associates (6m shares x25%= LS. R&. 6) 3 ‘ash, . (Sock old Sto P ‘eld Stock : 36 Ul Sek 05x75) 22 ei Pop @2/150%50) —. 03 farmers PLimtea ‘Consolidated Statement of Financial Poston on Decenber 3, Year § i ‘As 09 Decembe pow 2 let cupmest (450+240) Gd oe (ovine 1s Seti Asocate 3) oa (70+ 90-102) i Cire asses (20+ 110+ 130) i ast cua14828: Inv CHAPTER. tIeRt a Aces cuarrenyy __1AS 24: vestments Aug Nonureiaits 4-20) ange bites ‘Cua ibis | (100+ 80) = i oy De__ Cost of Investment (For calelating Goods ss Ines 520" Share Cail $e [NC Prop shar) 4025 85 Stare Penna 7 ee » Pre-Accuisiton RE a | 30 Gon a ‘ ow be slay retained earsns _o. Pr Raion RE Yb Bare i Pay 1 Soa RP oes sain3) 1) ce cox) 25] Net onan ns os) Re seaiamey Louie retained earings ae te. ‘Goodwal iapy 20) Pues ows RE co Sock “URP Pte (H5) 12] Stay ied ings te 2s oe 111.3 | Share of profit from Associate (W-S) x ows) - ae Noxconling interest we Cet ent tat) 102s] Sian ied ingle (09) Ineximentin Atos, 20,000/ 100,000 100= 30% Ey Pua) nor ‘ct at Cat a fF Aegon Pros (250-130 x 30% a Reem ftoemlesfuadbyPiod (tenia) eax 2 8 Reporting Date Balance shes ae aeBilal Limited (aL) Conoated Stat For they sta milion sss (4880 +4.200- 1300) 7380 UeCatetsdesantcwnnses 69042940 10-1300 200-7 +6) 4388) Gros Ft i952 Deon nd Ad sive Cos (620+290 + 87 +25) amy Fees Coa (6080) (30) Died ame (28-240 -20) These ae died adjustments Ss Saeofpof fom Asse (ABTS) 3 Prete ation iar 1s Tat 30427 604) tae ation 123 Le Noncontoling cst (WS) (50 ‘Stare of parent owners 1.183 BL Limits ‘Consolidated Statement of Financial Pos = ‘Avon June 30,2018 . Rein ition Non-curent assets ‘T2P2y, lant and equipment (1,012+ 920 + 100-40) 1992 leugtie 50-87 (W-9) 263 foot (075-100) ‘ree in Associate ws) —m 7 ea ‘aay (620 +1460-<2 06-7) 208 Tee Recetin (630+ 525) 1479 04 Bank balances (900+ 510) 1410 o er Sui os ein CSthted rene canings (3) x “Catling interest (way Sama ar ma iis (1,880 +2300) 180 erCHAPTER: nd stent for alenlating Good) —— Belen Ca Investment 210 Share Premium NcI(atEY) ar gion RE ‘Revaluation Surplus BAL.) Goodwill al) ea retand earings «. pe Aegon RE 0] Baars 3 Pere) ao/10x8) A ‘Training expense a ‘Stock-URP w7) 42 ‘Goodwill (Imp.) 100) cre (5003 80%) a0 Net (600320%) 100 a ws) be comolduted reine earings eh SET PEN WH | Parntown RE i ‘Subsidiary retained earnings w/e “ a (ol) zm| Staot potion socme(#) _Non-controling interest a/e_ ___—-* ‘Cost of Investment alc am od (bal) 310 | Subsidiary retained earnings a/c _ ((W-5) Caleulation of NCI fire in CSOCI: Rew Supls (Dep) (100710) 10|Spoft SSS Tring expense 8 SocURP(W-7) a Gootwil (np) a CRE W280 Nowe) 7 Nel ts2x209 (C500) « Imam Asis (5220 10)= (itm (5:20 1 «25% sae gid Scccipay Pott easter 6 or. Perilcatpmtonncefacstye fey? Ite a poring ae Be he Se =<(CHAPTERS! (w-7 Sale Stock by Sto P so sok Ul sock am Prien sol! stock (140/100 30) i o (4 Saleaf Stock by Pto Aucine Soi sock Unt tock mn Poftea unsold stock (100 10028) 7 Sear snag % (9 Restiving Fy Taig Ege ee “nungible xing Frei Js Aawwer7 Qudsia Limits QL) Consolidated Statement of Final Fstion “As on December 31,2012 wee Pope pet sa pen lat ad 5.000 559-32+ 01) ee ( Jest in Assoite Santas East and abies ion $a capil et Consideraon Payable (W'S) Cmdaed eiied exngs (8) cotati es Samuibites Semler 350 2790 Cure liabilities (2.400 +350) T17s85 ertavstent (Fr calesinting Goodell) —_—_—_—_ fe : cnt 6] meus) l Prop, tae) (650 x 20%) 130) PreAew «0 ten pani eecuarrery AS 2 Haven crit (W22) Dr Subsidiary retained earings fe Pre Aegision RE i od ace sie ca FH) PPE Gain reversal) (W-6) 32 | PRE (Dep reveal) 28x32) CRE (53:1 80%) 2a Jct (331320%) tia ned earnings ale i y 50) Parent own RE sud Stock URP (P18) (W-7) 48 | Shure of profi fiom Assisi (5) 64 Subsidiary retained exmings e248 od (eal) 28812) — wy Dr _____Non-contraing interest ae : . Subsidy rained caraingrae «1062 | Cosof investments BD a (eal) 11938 (WS) Investmentin Asecates (16 Milo 4 Mion) ~40% Ling Investment at Cont 2s inaon Casha (Give) Stare of QM tobe sued x15) ‘Add: Share ofPost-Asgistion Profs (240-724) 40% Les: Reversal ofProfton uso stock (W-7) 49 avestment at Reporting Date/ Balance shet date 718 5 pase in the books of P be. Invertnest @xi9 « Purchase consideration payable a wo br sary — PAs Dookie GS-20 08 - | prey a (00-7 Saleof Sack br Pa Asrosiate Sold stock 2 aso stock 2 Proton ansldseck ——(52/130%30) 2 Shar ofP (axon +=(CHAPTER: 14S 2: INVESTMENT IV ASSOCIATES CHAPTER 1S 26:1 INTIN ASSOCIATE: {ULTIPLE CHOICE QUESTIONS eo fr eaten ofa nse as asi (2) Owneship of majority ofthe cguty tees . ©) Abily exert conto! ene of sign atence (@) Exposure to variable re tus fom involvement wt the investee 2 Anassoc ‘als ian entity in which a investor as sgniisantinfleoce ver the inveee Which TW of the following indicate te presence of sgn: infuene? (©) The svestor owns 330,00 of he | 500.000 equity vting shares of he inven ©) invesor as epresecatin onthe beard of irean ofthe nese © vest able toss hat ale sales of he inves ae made fo sbsdary « wNeser @ "he wvexor contol the votes of majority ofthe board members ow shouid an asociate be atcoumed for inthe cosoliated satement of comprebensive (0) The associ’ income and expenses ae ade oboe ofthe group oa is by tne (©) The group stare ofthe assoc income and experts is ded oh group fps on ine byline bss (©) The group share fie associa’ profit ater a recorded 8 nine ety (©) Only dividends recived fom tbe asoite we recacded inthe group stent of comprehensive income 4 Ansar Limited has eld 290% subsidiary, Fite Limited or many yer and 3 mets before the yearend acquired a 40% associa, hag Limite. ‘Their tmover Big forthe year wer: ce Ramilon ‘Ansar Lied 30 Fine Listed ” hg Limited seep CCalealte te trove fie ape in econo sateen of compen acme forte oop, ©) Re630.ilion (©) Rs 603 milion (© Re f10zilion Ra 675 milion were Mien ote fatiwing tidied wn tig (0) Acquistion scouring (©) Proprionteonsciton (© guy acoating (©) Pooling of nee [2 coe14s 28: INVEST soctates (06. Nain Zited ns 70% of Fiza Limited and 30% of arn Limited The charge forex, ‘Rampur for the years Naa Lined Re 60 alin Faia Late Rs, 64 mion ta Fy, Lined Rs 8 lion especie ‘What shoul! be stow 2 the tx charge i te consolidated statement of compete (Rs 1248 aulien (©) Re 144 win (Rs 1392 elon (@) Re 182ailles (07, 1A828 defines signieaninuence in elton to associ (8) Power parcipat i policy decisions () —_Powerto parcial in ial sd opening pole decisions bu oct te (©) Powsrw pariipt in policy decisions but not contol them (©) Power parcipt in aan and operating policy deisions Best Limied has subsidiary Bete: Lined and 40% assxite Good Leites os ‘The thre companies have efits afer tx of RS 150 alo each Calelate the profit afer tx forthe period tat wl be shown inthe consoled satemen of conpechensv income (a) Rs. 360 milion () Re 450 milioe (© Rs 300milboo (@ Rs 390:ilhon (09, dees Limited hasan 80% subsidiary, Sad Lied anda 40% associat, Sesh Limited “The tree companies ve reveaue of Rs. 120 milion each ‘What shouldbe shown a the revenue Sgue in the consolidated stut-ment of comprehensive (2) Rs. 264 milion (©) Rs 360 milion (© Rs 240.lion (@ Rs 288 ilioo 410, Fahad Limite bought 30% of Mabsd Limited on I July 2014. Maa inita’s semen of comprehensive ieome forthe yer shows a profit of Rs, 400 mulion. Maha Limited pad 2 dividend to Fahad Limited of Rs. $0 milion on 1 December 2014 At he yearend, te investment in Fahad Limited was judged to ave boenipaied by Rs. 10 milan, ‘What will be the share of prof from escociate shown in the consolidt statement of profi or loss forthe year ended 31 December 2014? (@) Rs STmilloo (©) Rs.SOmilion (©) Rs 6Omilioe (@) Rs 110milion 11, Bahadur Limited bought 30% of Sbazor Limited on 1 January 2018, when Sbahzor Limited ‘had share capital of 10 milion Rs. 10 shares and Rs. 400 million retained earings THe consideration comprised one Babadur Limited share fr every 3 shares bought in Sbatzr Limited At the date of acquisition, Bahadur Limited's shares had » market value of Rs 4050 and Sahzor Limited’ had markt value of Rs. 20. At 31 December 2018, Shabor Limited's 6 assets were Rs. 460 million =What she vale of inven i postion as a 31 December 20187 Se shown i the cons (Rs 3Saulon etal samen of aan © R285 mln (© R585 lion @ Rs. 123 aalion 2 Falcom Limited acquired 30% of Eagle Limited oo | Ju Falcon Limted bas clasfed Eagle Lam iy 2013 aa con of Ra 55 Forty cn Sopenbe 1) rae a SR 5S mon Whats the value of the asociateinvermeat athe wn ee PO of Rs 65 0. September 20137 athe pop sates of anc postion wat 30 (BS. 5.346875 © Bs 5,500,000 (@Bs.6125,000 (@ —Rs.5,968,750 1 Reliance Group acquired 24 ' ee ip pdf Aa ama oye penn 400,000. ‘year ended 30 September 2014 was Rs. nthe assurrvon that ote ania St eats aa imrn enemas position of Ri snce Group as at 30 September 2014” ‘iatreat of Gonncial (Rs 5,000 @ —_R209.000 fo Rs 5.000 Rs! 5.000 “An associ: an entity over whic the ivestor assign inns” Which TWO te following do ot inate te preece of sigue ien? (a) Thes~=stor ows 60,00 ofthe 3, 000,00 equity ing shares of te ieee 0) The svestorhas representation tbe bo of recta oft invete () The _vestor is able to insist that al of the sales of the investe are made wo a subsidiary ofthe svestor (&) The snvestor conto the vtesof majority ofthe bard mendes 1S. Yoosiay Limited owns 30% of Huss Limi whic it pacased co 1 May 2017 Re 7-5 rmllion At that date Hussain Limited had retained earings of Rs $33 million. At the year-end eee eee eas O17 Hussain Limited bad rend earings of Bg 64 mln a8 penn pact | ealen, 0230 September 2017 Youbay Limtd sl Rs 7008 of ‘goods to Hussai ‘Limited, on which it made 30% profit isin Limited had resold none ofthese gods by 37 Ove: Naan eee ean Yooay Uinied mel to wconest aman Lint ® Consolidated statement of fate posto 131 Osabe 20177 Re, __28; INVESTMENT IN ASSocy (CHAPTER uss tes cuted 35% of te egy sares of Anum Limited it gy 16 Ge Ftnary 201 Skim Lint ed cule paneer patos Seb pas Lined me dit pt me yates att ed eT Sigg geet tA te ace Anca ee ee ree con a Pe riser ee ee etree cae eae Se oe ate cee Sons Str or Soe ade ie ean 5 Wat aunount should be deduced from consolidated retained earings in respect of tis Re, 18, 00 1 Ociober 2018 Usut Limited acquired 3 million of Abdullah Limited's 10 mailion shes in exchange for 75 million of is own shares. The stock market value of Usuf Limted’s shares the date ofthis share exchange wat Rs. 16 etch, Abdullah Limited's profi is sobjet to seasonal vation. Ii forthe yer ended 31 Maes 2019 was Rs, 100 milion. Rs: 20 milion of this profit was nws\- from 1 Ap 2018 1030 Sepnber 2018 ‘Una Lie hs oe ssi nd oer invests Ali ‘Mat cnt will be stove a vest inne noted ace Snail potion of Ut Lind as a3 March 205% me 1B. Stain Lie ova 3% of Shan Lined. Dring eye: 31 December 201 Sind Lied sold Rs. 2 ailln f goods Shani Lined wish 48C mee al eg ‘ety by Shin Lined te yee Sui Ld yes amaryl ‘What i the amount of adjustment for removal of untalized profit fom inventory? x C ventory a——HSLIWESIE VT assocaares LIONS ‘is wrong because we don’ is wrong because we dota tl se co of les iy is wrong rather wea our shin PAT €S0C1 strats si ion 1300 +270) €S0C extra) | o) o 0c (Ext ® Siac tom este sa Profit before tax 6 rene ts) +) au) mae cmon ‘Less: NCI nn | __| Stare of Parent Owner | o | Sales 1) OR 30 (w-5) Cael "lice | U BT eH ober rome silos dv Note: Asoctne oy gs | tlie upper waCHAPTER LAS 28: INVESTMENT IN ASsocLaTys Barter ASE IESTRENTIN ASSOCUTES. VE) (Re 2S | Cueto | (Prion wn | 1 Toa Shares of ‘Olio srs || No oft ofAoupttyP (Omilshaes 30%) "3 agen | Pissed is sare forevery? Gall 3)x1 | cs 1 lice sae 4 Comtoffavestnest (Ql xR. 405) Rs 40mg ow | | tae capa (om xR 19) Retained eines | | Nevases (68-3 vesment in associates aie Invests a Cost oy “3 ‘Share of pot aeq Profit lend ofthe year (360-400) 30% Investment at Reporting Date Balance seet date = | GUS CW) Invenment in Asociates $346,575 a Investment t Cast S000 | | Share of Profi fom Acq tbs die (625,000 « 312) 30% ac | || |e ec |_| Seem, come Tae ‘crema “Aa a erecta nine 1S.) RS 278 | Not: Dividend is ignored because already dei: mulion | (W-1) Investment in Associates «reaching at Rs. 64 al wl) Reiamen | Investneat at Cost Fa | Shar of post acq Profit tlleadftie year (55-53)x30% 038 | Less. Reversal of rf onsale ofstoekby PC? 05, | Taestmeat at Reporting Date Balance abet cate 2 | (9:2) sale of Sock by Po Amodate | Sold sock ” Unsold sok u Profitonmsol stack (07/130.x30) oe Star of (0 162x30%) 005 L — || =CHAPTER-AL ie) R985 sulin fr eRe sullion TB RS HBO, Note: Dividends conered because ot ddd wp OW) vestmeat ie Asoc lnvereat a Cost Share of post acq. Profit till end of the year (3m x $/12 x 35%) 07 Less: mpainmet las cn invesnest, os) | Les: Divend (mrs) 038) | Investment at Reporting Date /Balasce shet Jat 38 {13 ourk upon cost means: 33.335% profit on cos] - | OW) Salcof Sock bv AtoP | Sold sock 160,000 | Unsold stock (160,000 x 25%) 40,000 | Profcon unsold fs0.000 1333303333) 10,900 sock Sars of 10.000 30% ____ 3,000 1) loveseat a Ascites [5 mvon Shire malin Shares = 30%) Reclemltion evenment at Cost 7sma16) 120 | Siar of postacg Poi llendafthe year (100~ 0) 13084 24 ovestment at Reporting Date Balance sect. ia °Y) Sale of Stock by Pio Associate Sold sock 2.000.000 sol ck 00,00 x 4% 300,000, sfiton uso stock (40000125 x25) 160,000 Shae ef P {ist000 x 30%) $8,000