Question 1

Consolidated Statement of Comprehensive Income

Sales 1,221,800
Cost of sales (734,267)
Gross profit 487,533
Operating Expenses (185,000)
302,533
Tax Expense (97,000)
Consolidated profit 205,533

Attributed to
Parent 193,520
NCI 12,013 205,533

Consolidated Statement of Financial position

Goodwill 46,400
Brand - Intangibles 43,000
Property plant & Equip 737,067
Stock in trade 235,000
Trade Receivable 235,000
Cash in transit 30,000
Cash in hand 208,000
1,534,467

Share capital 600,000

Share premium 150,000
Retained earnings 439,053
NCI 125,413
Current Liabilities 220,000
1,534,467

Working for Consolidated Statement of Comprehensive Income

P S AdjustmeCon P/L
Sales 835,000 430,000 (43,200) 1,221,800
Cost of sales (525,000) (264,000) 54,733 (734,267)
Gross profit 310,000 166,000 487,533
Operating Expenses (115,000) (68,000) (2,000) (185,000)
 195,000 98,000 302,533
Tax Expense (65,000) (32,000) (97,000)
130,000 66,000 205,533

Depreciation of Brand

Value at acquisition 45,000

Life 15 years
Time passed 8 months
Annual Depreciation 3,000

Depreciation for 2015 2,000

Brand Depreciation is charged to operating expenses.

Intra group trading of Machine

Machine cost 26,000

Depreciation for 2 years (5,200)
Book Value at transaction date 20,800

Disposal proceeds 24,000

Gain to seller 3,200

Incremental depreciation (267)
Net gain to be reversed 2,933

Adjustments to operating expenses

Brand depreciation 2,000

Parent management fee income (20,000)
Subsidiary Management fee ex 20,000
Oprt Exps to be increased by 2,000

Adjustments to Cost of sales

Incremental depreciation 267

Intra group trading - P to S (40,000) (for 8 months)
Intra group trading - S to P (20,000) (for 8 months)
Unrealized gain on stock 5,000 (on yr end balance)
(54,733)
Adjustments to Sales
gain on disposal of machine (3,200)
Intra group trading - P to S (40,000) (for 8 months)
Intra group trading - S to P (20,000) (for 8 months)
(43,200)

Intra group trading

From parent to subsidiary

Stock held at selling price 20,000
Unrealized gain 4,000

From subsidiary to parent

Stock held at selling price 5,000
Unrealized gain 1,000

Allocation of profit to NCI

Subsidiary profit 66,000
Unrealized gain on unsold stock (1,000)
Unrealized income on Machine (2,933)
Brand Depreciation (2,000)
60,067
NCI share 12,013

Net Assets of subsidiary

At Acq At RD
Share Capital 250,000 250,000
Share premium 60,000 60,000
Retained Earnings 212,000 278,000
Brand 45,000 43,000
Stock Adjust (1,000)
Gain on machine (2,933)
567,000 627,067
60,067
Parent 48,053
NCI 12,013
Goodwill
Consideration 500,000
Net Assets share (453,600)
Goodwill at acq and RD 46,400

NCI
At Acq 113,400
Post Acquisition 12,013
125,413

Group Reserves
Parent 395,000
Post Acq 48,053
Stock Adjustment (4,000)
439,053
Question

Notes to the Financial Statements

Taxation Expense
Current Tax Expense - Current year 27,236
Current Tax Expense - Prior year 4,480 31,716

Deferred Tax Income - Current year (2,916)

Deferred Tax - prior year - (2,916)

Tax Expense 28,800

Reconciliation

Tax on Accounting profit 25,600

Tax impact of capital gains (1,600)
Disallowed penalty 320
Tax impact on prior year adjustments 4,480
28,800

Current Tax Expense 31,716

Deferred Tax Income (2,916)
28,800
Current tax calculation

Profit before tax 80,000

Add Provision for gratuity 12,000

Bad Debt Expense 10,000
Accounting depreciation 17,450
Tax gains on disposal 11,510
Interest on finance lease 11,331
Depreciation on leased asset 24,000
Penalty paid 1,000 87,291

Less Capital gains (Exempt) (5,000)

 Tax depreciation (28,730)
Accounting gain on disposal (8,450)
Rental paid under finance le (30,000)
Gratuity paid (10,000) (82,180)

Taxable profit 85,111

Current tax expense - Current year 27,236

Current tax expense - Prior year 4,480
31,716

Deferred Tax based on Profit and Loss Approach

Accounti Tax difference
Gratuity 12,000 10,000 (2,000)
Bad debt expense 10,000 - (10,000)
Depreciation 17,450 28,730 11,280
Gains on disposal 8,450 11,510 (3,060)
Finance lease expenses 35,331 30,000 (5,331)
Net deductible differences (9,111)

Deferred tax income (2,916)

Deferred Tax based on Balance Sheet Approach

Year 2014 Year 2015

CA TB Differ CA
Property, Plant & Equip 315,000 283,500 31,500 311,000
Provision for Gratuity (13,000) - (13,000) (15,000)
Leased Assets - - - 96,000
Obligation under finance lease - - - ###
Provision for bad debts (2,000) - (2,000) (12,000)
16,500
DTL Closing balance 5,280

Opening DTL 5,280

Closing DTL (2,364)
Deferred tax charge 2,916
Working

Accounting Depreciation
Accounting Tax
Acq of PPE (1 Jan 2013) 350,000 350,000
Depreciation for 2013 and 2014 (35,000) (66,500)
Carrying amount at 1 Jan 2015 315,000 283,500
Disposal (27,000) (24,300)
Purchases 40,000 40,000
Depreciation for 2015 (17,000) (27,920)
311,000 271,280

Part disposed Accounting Tax

Cost 30,000 30,000
Depreciation for 2013 and 2014 (3,000) (5,700)
CA at 1 Jan 2015 27,000 24,300
Depr till 30 April 2015 (450) (810)
CA at disposal date 26,550 23,490

Proceeds 35,000 35,000

Gain on disposal 8,450 11,510

Depreciation for the year

Disposed assets (as above) 450 810

Remaining old assets 16,000 25,920
Purchased Assets 1,000 2,000
17,450 28,730
Year 2015
TB Differ
271,280 39,720 ###
- (15,000) 2,000
- 96,000 ###
- (101,331) ###
- (12,000) ###
7,389
2,364
Question 5

Alpha Limited
Statement of cash Flows
For the year ended 31 December 2015
Property plant equip
Operating Activities Opening
Profit before tax 78.00 Closing
Disposal
Depreciation 17.00 Acquisition
Gain on disposal (2.00) Depreciation
Interest expense 2.17
Gratuity expense 9.50 Intangibles
Opening
Closing
Increase / decrease in Acquisition
Trade receivables (12.63)
Provision 0.63 Advances (Except Advance T
Advances and prepayments (12.00) Opening balance
Inventories (14.00) Closing (Gross)
Short term Investments (3.00)
Trade payables (14.00)
Accrued Expense (12.17) Share Capital + premium
Cash generated from operations 37.50 Opening
Closing
Tax paid (25.00) Right issue
Gratuity paid (6.50) (31.50)
Cash generated from operating activities 6.00
Retained Earnings
Investing Activities Opening
Disposal of building 20.00 Closing
Acquisition of machine (65.00) Profit after tax
Intangibles acquired (45.00)
Cash consumed in investing activities (90.00) Profit before tax

Financing Activities
Proceeds against right shares 45.00
Loan obtained 40.00
Cash generated from Financing activities 85.00

Net Cash generated 1.00

Opening cash and cash equal 7.00
Closing cash and cash equal 8.00
nt equip Disposal
193.00 Cost 20.00
### Depreciation booked (2.00)
(18.00) Carrying amount 18.00
65.00
17.00 Trade Receivables Prov
Opening (Gross) 34.74 1.74
Closing (Gross) (47.37) (2.37)
23.00 (12.63) (0.63)
(68.00)
(45.00) Taxation
Opening payable 42.00
xcept Advance Tax) Opening Advance tax (6.00)
64.00 Opening DTL 7.00
(76.00)
(12.00) Tax expense 17.00

l + premium Closing payable (34.00)

150.00 Closing Advance tax 8.00
### Closing DTL (9.00)
45.00 Tax paid 25.00
-
Provision for Gratuity
Opening 3.00
53.00 Closing (6.00)
### Gratuity paid (6.50)
(61.00) gratuity expense (9.50)

78.00
Question

Journal entries Repayment sched

Date Account Amount Account Amount Yr

1 Jan Gross inves26,501,816 Sales 19,364,482 1
Cost of sal 15,364,482 Inventory 16,000,000 2
Unearned Finance 6,501,816 3
4
31 Dec Unearned 2,400,000 Finance Income 2,400,000

31 Dec Cash 6,375,454 Gross invest in FL 6,375,454

Notes to the financial statements

Shalimar Limited
Notes to the financial statements
For the year ended 31 December 2015

Net Investment in Finance Lease

Rentals 19,126,362
UGRV 1,000,000
20,126,362
Unearned Finance Income (4,101,816)
16,024,546
Current portion (4,452,508)
11,572,037

Maturity Profile

Due in GIFL NIFL

With in 1 year 6,375,454 4,452,508
2 years to 5 years 13,750,908 11,572,038
5 years or more - -
20,126,362 16,024,546
Unearned Finance In (4,101,816)
16,024,546
Repayment schedule

Opening Inter Prin Close

20,000,000 2,400,000 3,975,454 16,024,546
16,024,546 1,922,946 4,452,508 11,572,038
11,572,038 1,388,645 4,986,809 6,585,228
6,585,228 790,227 5,585,227 1,000,000
6,501,816
Question 7

A. Engineering Limited
Statement of Changes in Equity
For the year ended 31 December 2015

Opening Retained Earnings As reported previously 224,000

Change in Accounting Policy 44,000
Opening Retained Earnings - Restated 268,000
Profit for the year 138,000
Closing Retained Earnings - Restated 406,000

Opening Retained Earnings As reported previously 347,000

Change in Accounting Policy 59,000
Opening Retained Earnings - Restated 406,000
Profit for the year 137,450
Closing Retained Earnings - Restated 543,450

A. Engineering Limited
Statement of Comprehensive Income
For the year ended 31 December 2015
2015 2014
Profit 129,000 123,000
Change in Accounting Policy 8,450 15,000
137,450 138,000

A. Engineering Limited
Statement of Financial Position
As at the year ended 31 December 2015

2015 2014 2013

Non Current Assets
Property, Plant and Equipment 2,497,450 2,461,000 2,149,000

Current Assets
Stores and spares 73,000 80,000 70,000

Equity
Retained Earnings 543,450 406,000 268,000
Year Expense Booked Expense to be booked Difference
2013 55,000 11,000 44,000
2014 39,000 24,000 15,000
2015 44,000 35,550 8,450
fference
Expense over booked
Expense over booked
Expense over booked
Question

Notes to he financial statements

Property plant and Equipment

2015 2014
Opening Balance 238,000 306,000
Additions - -
Disposals (66,000) -
Exchanges - -
172,000 306,000

Revaluation Surplus 17,000 -

Revaluation Loss - (54,000)
Reversal of Rev Loss 17,000
Impairment Loss - -
34,000 (54,000)

Depreciation for the yea (14,000) (14,000)

Closing Balance 192,000 238,000

Workings

Revaluation Surplus
Year 2012
Acquisition 300,000 Date
Depreciation (15,000) 1 Jan 2013
Closing Balance 285,000 31 Dec 2013
31 Dec 2013
Year 2013 1 Jan 2014
Opening Balance 285,000
Revalued by 38,000
CA after revaluation 323,000 1 Jan 2015
Depreciation (17,000) 30 June 2015
Closing Balance 306,000 30 June 2015
31 December
Year 2014
Opening Balance 306,000
Revaluated by (54,000) Disposal of building on 30 June 20
CA after revaluation 252,000 Carrying amount
Depreciation (14,000) depreciation for 6 months
Closing Balance 238,000 Carrying amount at disposal date
Disposal proceeds
year 2015 Gain on disposal
Opening balance 238,000
Revaluation 34,000 Revaluation pertaining to this ass
CA after revaluation 272,000 Balance at 1 Jan 2015
Disposal (68,000) Incremental depreciation
Depreciation (12,000) Transferred to RE on disposal
192,000
Depreciation for 2015 on remainin

Carrying amount
Depreciation
Closing balance

Balance of revaluation (Other Assets)

Transferred to Retained Earnings
ation Surplus

Transaction Amount
Revaluation 38,000
Transfer to Retained Erngs (2,000)
Balance 36,000
Revaluation (36,000)
- ### Transferred to P/L as loss

Revaluation 17,000 17,000 Transferred to P/L as income

Transfer to Retained Erng (125)
Transfer to Retained Erng (4,125)
Transfer to Retained Erng (750)
12,000
al of building on 30 June 2015
g amount 68,000
ation for 6 months (2,000)
g amount at disposal date 66,000
l proceeds 80,000
disposal 14,000

ation pertaining to this asset

at 1 Jan 2015 4,250
ntal depreciation (125)
rred to RE on disposal 4,125

iation for 2015 on remaining assets

g amount 204,000
(12,000)
balance 192,000

of revaluation (Other Assets) 12,750

rred to Retained Earnings (750)
12,000