SuUTSyeyS [eISueUy GOI (e weg) sjuswinsU! jeIoUeLy anueney smoy ysvo poyepljosuod dans 1202 Sjuawoye}s je}oueuy dnoigy ‘SMOY YSEO PayEPI|OSUED, uoneulquioo ssoulsng pue sjuswn.asul Ajunoddo say 1z0Z S|uOUNSU (sajeiossy) sjuawia}e}s jeIoueuy dnosD, 380] 49)S9WOS |Z0z (Sae;s0ssy) SyUAUIE}e}s je;ouEUY dno (0-94 ued) suswnnsut jeroueut SNAWTAS WOYS G3aNT1OXs-Ssd3. 'SMOY YSE9 Pa}EPI|OSUED, wiexe gL0z SHOU) USED PAyePI|OSUOD 72188) INL BLOZ. ‘Sjusuisyeys jeloueuy dnoss 2158} IML }Z0z ‘sWeUIETeIS eIoueUY dnoiD ‘sMoy Yseo parey uo} euIquica ssauisng pue sjuawns}sul waole|e|-amsalpaaraes| Ayunyoddo puovag 1Z0z Fee passasse So1d0) MNVE NOILSANO zz0z ge Bugunossy jessueg aavpy 140 JO AUSIOATUN] ‘suoNsanD oop S[EISP WSUISSOSSy |Na University of Fort Hare Togevber in Excellence NKUHLU DEPARTMENT OF ACCOUNTING GENERAL ACCOUNTING 3B ACG321E INTEGRATED ASSESSMENT — SECOND OPPORTUNITY NOVEMBER 2021 ASSESSORS: Mrs Dharmini Fakir MODERATOR: Mr Wayne Molete (Internal) Mrs Wendy Terblanche (Intemal) Mr Gordon Adams (Extemal) TIME: 3 hour (plus 30 minutes reading time) MARKS: 150 PAGES: 11 pages (including cover, worksheet and notes page) INSTRUCTIONS: 1. Show all workings clearly — marks are allocated to workings. 2. Only answersin ink will be marked (including workings). Pages where pencilor tippex were used will not qualify for remarking, 3. Only silent, non-programmable calculators are allowed. 4. Students that contravene the rules in the General Prospectus of the University of Fort Hare will be disciplined in accordance with said rules. ‘Question Details Marks | Minutes 1 Financial Instruments and Business Combinations | 50 60 2 | Consolidated Statement of Cash Flows 55 66 3 | Group Financial Statements 45 54, 150 | 180 Page 1 of 11QUESTION 1 50 MARKS, [4 Background CupAcakeLtd ("Cupcake") isa chain of coffeeshops situated in malls throughout the Eastern Cape and is interested in diversifying their investment portfolio. They have a 30 September financial year end. 2. Investments, debentures and preference shares 1. Cupcake acquired a 45% interest in Nespress Ltd on 1 April 2021. The bookkeeper has equity accounted for this investment, however the bookkeeper has been informed that the investment should be consolidated even though CupAcake owns less than 50% of the shares, 2. CupAcake acquired 10 000 shares in Idyllic Treats Ltd on 1 October 2019 for R150 000 and paid transaction costs of R1 500. CupAcake acquired these shares as part of a trading portfolio. On 30 September 2020, the market vaiue of each share as quoted on the JSE was R16,50 and on 1 January 2021 CupAcakesold 4 000 shares in ldyllic Treats Ltd when the shares were trading at R17 per share. The trading value of each share had dropped to R14,50 on 30 September 2021 3. CupAcake issued 200 000 RS preference shares that pay interest of 9% per annum at the face value of the preference shares annually on 30 September. The preference shares were issued at R6,95 each on 1 October 2020 and the costs of issuing these preference shares amounted to R7 500. The preference shares will be redeemed in 4 years’ time at its face value of R7 per preference shares. 4, On30 September 2021, CupAcake issued 1 000 debentures at their face value of R1 000 each and interest on these debentures is payable annually on 30 September starting on 30 September 2022 at a coupon rate of 10% per annum. Each debenture will be converted into 10 ordinary shares, howeverif itis not converted then it will be redeemed at the option of the debenture holder on 30 September 2026 at R1 100 per debenture, An appropriate market adjusted rate fora pure redeemable debenture is 12% per annum. Page2 of 113, SugarDotCom 5. CupAcake acquired a division of SugarDotCom as a going concem. CupAcake acquired all the assets and liabilities of the division on 30 September 2021 for R1 800 000. At this date the assets and liabilities of SugarDotCom were as follows: R Land and buildings 800 000 Machinery 504 500 Inventory 279.500 Receivables 223.600 Provision for bad debts (22 360) Payables (251 550) 71533 690 * CupAcake had the land and buildings valued by an independent valuator and it was found the land and buildings were undervalued in SugarDotCom's books by R150 000. + Machinery inckides a coffee machine that has a carrying amount of R20 000 that needs to be scrapped as it was damaged beyond repair when an employee tried to clean it. + CupAcake has calculated that it would cost R300 000 to purchase the inventory items at the current market prices, + All the customers will settle their accounts except for one customer who owes R50 000. Page 3 of 11Marks QUESTION 1—REQUIRED ‘Sub- fatal | Total @ | Explain what circumstances may lead to CupAcake consolidating | 5 its investment in Nespress Ltd. Include the definition of control b | Discuss, giving reasons: * Why theinvestment in Idylc Treats Lid is afinancialasset | in CupAcake's books; and + How the investment would be classified and subsequently | 2 measured in terms of IFRS 9 Financial Instruments. © | Assuming that the investment in the shares of ldylic Treats Lid| will be classified at subsequently measured at fair value through Profit or loss, prepare the journal entries to correctly record the investment in shares in Idylic Treats Ltd for the year ended 30 September 2021. | Prepare the journal entries to account for the preference shares | 14 issued by CupAcake for the year ended 30 September 2021 © | Prepare the journal entries to account for the debentures issued | 8 by CupAcake for the year ended 30 September 2021. T | Prepare the journal entries in the books of CupAcakeLid torecord| 9 the purchase of the assets and liabilities of SugarDotCom diviston on 30 September 2021 Presentation (Logical workings and neatness) 2 Total 50 Note: Show all workings. Journal dates are required. Journal narrations are not required. Round to the nearest R1 Ignore any tax implications. Page 4 of 11QUESTION 2 55 MARKS 7__Background Candies Delight Ltd ("Candies") are sweet shops situated throughout the Eastern Cape. As a recently qualified graduate, your cousin approached you to assist wit consolidated statement of cash flow for the year ended 30 September 2021 the preparation of a 2. Consolidated financial statements The consolidated finan CANDIES DELIGHT LTD AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2021 ASSETS NON-CURRENT ASSETS: Land Plant and equipment Goodwill CURRENT ASSETS Trade receivables bnventory Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES EQuiTy Share Capital Revaluation reserve Retained earings EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT Non-controling interest TOTAL EQUITY TOTAL LIABILITIES NON-CURRENT LIABILITES Long-term borrowings Deferred taxation CURRENT LIABILITES Trade and other payables ‘South African Revenue Services ‘Shareholders for dividends TOTAL EQUITY AND LIABILITIES Page S of 11. statements of Candies and its subsidiaries are as follows: 2024 2020 R R 301 543000 _231 403.000 “45 000 000 ‘25 000 000 249043000 | 201 403 000 7500 000, 5.000 000. 85410000 _ 132 400000 21 400 000 ‘47 700 000 43210 000 50 300 000 20 800 000 34 400 000 385953000 _ 363,803 000 197261000 _160 308.000 ‘65 000 000 ‘45 000 000) 47 760.000 -40 000 000 84 501 000 75.308 000 797 261000 160 308 000 410 827 000 6.503.000 208088000 © _ 166.811 000 421207000 125 807 000 405906000] [112.402 000 15.301 000 43.405 000, 57 658 000 71.185 000 '39 160 000 “41-050 000 15 305 000 30 135 000 3.193.000, : 386953000, _ 363,803,000CANDIES DELIGHT LTD AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2021 2021 R Sales 376 000 000 Cost of sales: 10.000 000, Gross profit 176 000.000 Operating expenses 4139 920.000, Profit before taxation 36 080 000 Taxation © 10.824 000 Profitfor the year 25 256 000, Altributable to: Equity holders of parent 23.322 000 Non-controliing interests 1.934.000, 25 256.000, 3,_ Additional information value of the assets and liabilities of Choc Delight Ltd were as follows: Candies acquired 90% of the shares in Choc Delight Lid on 1 January 2021 and the fair Assets and liabilities R Land 10.000 000 Plant and equipment 12.500 000 Trade receivables 3.000 000 Inventory 1500 000 Cash and cash equivalents 2.400 000 Trade and other payables 500 000 23 900 000 Candies revalued the land and no land was purchased or sold during the current year. The proceeds on disposal of plant and equipment amounted to R43 000 and depreciation. for the year amounted to R34 050 000 and the profit on sale of plant and equipment was R11 000. Both amounts have been included in operating expenses. Finance costs paid for the year amounted to R1 000 000 and included in operating expenses. 5. Nother subsidiaries were sold or purchased during the current year. 6. The tax rate of 28% and the capital gains inclusion rate of 80% is applicable. 7. Goodwill has never been impaired. 8. Dividends were only declared by the parent company during the year. Page 6 of 11 Non-controliing interests are measured initially at their share of the net identifiable assets,Marks QUESTION 2— REQUIRED Sub- | Total total ‘@ | Prepare the Consolidated Statement of Cash Flows, using the direct method, for Candles Delight Ltd Group for the year ended | 8 30 September 2021 © | Prepare only the following notes to the Consolidated Statement of Cash Flows: ‘© Acquisition of Choc Delight Ltd 8 * Cash generated from operations 7 Presentation (In terms of IAS 7 and neatness) 2 Total 55 Note: ‘Show all workings. Round to the nearest R1. Ignore VAT. Page 7 of 11QUESTION 3 45 MARKS, (Background Nados Ltd (“Nados") is a supplier of all chicken related products to various restaurants throughout South Africa. During the current year, Nados acquired additional shares in McDees Ltd ("MeDees). Both companies within the group have a 30 September financial year-end, 2._ Consolidated financial statements Nados Ltd Group The following information relates to the companies within the group: Statement of Financial Position Nados | McDees as at 30 September 2021 R R Property, plant and equipment 258 000 190 000 Investment in McDees 250.000 = Net current assets (including deferred tax) 120 000 400 000 628 000 590 000 ‘Share capital (Ri shares) 250 000 200 000 Retained earings 330 000 211 200, (Current liabilities 48.000 178 800 628 000 590 000 Nados Ltd Group Statement of Financial Performance Nados | McDees for the year ended 30 September 2021 R R Sales 830 000 {660 000 Cost of sales -520000 ___-392.000 Gross profit 340 000 268 000 Operating expenses (including depreciation) -92.000 -68 000 Other income (including dividends) 88 000 - Profit before tax 308 000 210 000 Taxation (60 000) (58 800) Profit for the year 246 000 151 200 Nados Ltd Group ‘Statement of Changes in Equity-extract [_ Nados | McDees for the year ended 30 September 2021 R R Retained | Retained earnings | earnings Balance at 1 October 2020 7166 000 150 000, Total comprehensive income 246 000 151 200 Dividends paid (82 000) (20 000) Balance at the end of the year 330.000 214 200 Page 8 of 113,_Nados Ltd 1. Nados acquired 25% of the shares in McDees on 1 July 2015 for R70 000 when the retained earings were R15 000 and all the assets and liabilities were considered to be fairly valued except for land that was considered to be valued at R20 000 more than in the books of McDees. 2. During the previous financial year, McDees supplied Nados with stock of beef products at ‘markup of 25% on cost and at 30 September 2020, Nados had stock of these products to the value of R50 000. 3. On 4 April 2021, Nados acquired an additional 40% interest in, and obtained control of McDees for R180 000, when the land was still considered to be valued as at 1 July 2015. At this date all the inventory purchased from McDees had been sold. At 30 September 2021, the inventory on hand purchased by Nados from McDees was R60 000. The intercompany sales for the period 01 October 2020 to 31 March 2021 was R125 000 and R170 000 for the period 1 April 2021 to 30 September 2021. 4, On April 2021 the feir value of the original 25% holding in McDees was R140 000. 4,_ Additional information 1. Non-controling interests are measured intially at their share of the net identifiable assets. 2. Allincome and expenses for all companies are eared evenly throughout the year unless otherwise implied. 3. Assume that a normal tax rate of 28% and capital gains inclusion rate of 80% applies for alll years under review. 4. All companies within the Nados Ltd Group comply with International Financial Reporting Standards. 5. All investment in subsidiaries and associates are measured at cost in terms of IAS27 ‘Separate Financial Statements. 6. The issued share capital of all the companies have not changed since inception Marks QUESTION 3- REQUIRED Sub- total_| Total @ [Prepare the Consolidated Statement of Comprehensive Income and Consolidated Statement of Changes in Equity forthe Nados| 49 Ltd Group for the year ended 30 September 2021. Presentation (In terms of IAS 1 and neatness) Z Total 45 Note: Show all workings as a great deal of marks are allocated to the workings. Round to the nearest R1 Ignore VAT. Page 9 of 11Page 10 of 11Page 11 of 11ion saascorscki Nos on Nasa La he Yon gore anand ‘pining utes stun cny sss cian onc om acy en mah carat cto ow ne Rahat re arn pws Nexen Li. ry conrtNove Li ‘owe om mar an al vai ee tan areoret wh rn) tsb igore nan pent pa thy arnt cng) espe’ appt stan heart remove! fea ec) ‘Sreucior sarees ree nen Be ver enor hs i, abl reins ms cena wih ' {ewer ands ha ay fet bone rear pon ove Poe A ‘hewn he ar fe al ia son se os ny fn ry “Rammer ure thoaste cise anon messed ora rho ee Soa sensone Fore ur alsa shout hn potas eet tno Oat ye edt) rt tvestrest nye Tei Lid Cnaaas” vem Wea 080 Taran cas PH) Ta socnasse ‘remain yee Teas —TOTOIES TROT co ie cvovanas Bak oT To “4 soonaiat TeaonFVoguinot Pat) (6 100-('630- HS) Ee } treanertin yte Fes eo ‘ rv "Seas (000108957500 | Ae ‘aso (200367) ‘| few ‘2500 e@onaors7 " cvrazem ea govomream +2100 Fvotiesrument foxx ron | ew —= c eben ara Uy sz Doan Censanbaange (engin 80000) vena Mcnnan (oason 2000) a0 Roca 2x0.) ‘ws Poe asta ani nage 0490auesrion 1 [ARS] ‘CANDIES DELIGHT LTD AND ITS SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 20 JUNE 2021 g Cashflow from eperating setting 53685 009 og} Cash receipts rom customers 75 300 000 "| Cash paid fo surpirs and employees 203 681 000. | Cash gonortod from operations s[ iar 19.000 04} France costs paid 1000 000 4 Taxpais 25 908 000, 1 Dividends pa 10,636 000, | Cash flow from investing activities 30789 009 05) Procoods on dspotal of property, plant and equipment 73.000 4| Purchase of propery, plant end equipment 50222 000, 4 Acaustin of subdir, nat of cash acquired to|_21610.000, 1 Cash flow from financing activities +3508 000, og} Long term fabs rod =6496 000 4 Proceeds fom issuance of shares 20.000 009 | Net increase in cash and cash equivalents Lore ‘Gash and cash equivalents at beginning ofthe year ‘34400 000 (Gash and cash equivalents a end ofthe year 800 000 i ‘CANDIES DELIGHT LTD AND ITS SUBSIDIARIES NOTES FOR THE YEAR ENDED 30 JUNE 2021 10, Acquisition of subsidiary, net of cash [using na year he group acquired an intrest n an 0% held Subsiry. The fie | ales of te asset ana abies ransteres wore as TobOWs: Lan 10000 000, 25] Plantane equipment 12500 000, 5} “rade receltles "3000 000, 05} Inventory 41500 000, 25] Cash and cash equivaients 2.400.000, og “Trade and cher payables 5 500 000 og 73-000 000 Non-conteling intrest (25 900"10%) 2390 600 4| Goa (4000-24000) 2500 000, 4| Cash paid 70 600 1 Bark balance of subsidiary aoguires 2.400 000 ) Bie1o wo og 3 2. Reconciliation of profit before tax to cash generated from operations Prot before tax 35 080 000, 4 Aust or Profit onsale of PPE 11000 5) Depreciation 340500000, 1 Interest expanse 41000000 H (Operating prt before wrking capital changae: 71 000 Increase in trade payabies 7390 000 , Decreasin inventories ‘2590 000, Intense in rade ecewvabies 29 300 000, : Cash generate om operations 707 679 000 wrorkna| Prosonaten| eeSect SHowiron meeane or onreeTeness) Peer lpr wear ie arose egring tn pero sine Saosin aot pose cen: see a J eT eenremres gia Beane ati pring ete prt SHR segs Sc onmenin OEHS) Bde tite net pone (30 15305 Sass veprnng oe ps Biagio pe ase eeQuestion + Nados Ltd Group Consolidated Statement of Profit and Loss and Other Comprehensive Income For the year ended 30 September 2021 Salos {630 000 + 660 00°6/12-170 000) ‘990 000] 25 Costotesles (520.000 + 382 000"6/12 -170 000 + 12.000) 558.000, 35 Gross profit 432 000) ‘Share of associate's proft 20700 10) Fair valus adjustment 17 350| 10) Operating expenses (22 000 + 58 000°6/12) 121 000] 48) Other income (eluding dividends) (68 000-58 500) 23.500) 45) Proft before tax 378 550) Taxation (60 000 +52 2006123260) 26 020| 28 Prof and total comprehensive income forthe year 2250) Profit and total comprehensive incom forthe year attributable to 292 510] Equity holders of parent 260.074 10) Non-contoling interest 23.436 419) 755 Nados Ltd Group Consolidated Statement of Changes in Equity For the year ended 30 September 2021 Equity attributable tothe equity —_Non- Retained holders of controling ‘Share capital oarnings the parent interest. ‘Total Equity pening balance 280000 197850 447 980 2 1447 950) 10) ‘Agonal interest acqured - 157 528 457 528 10) Total comprehensive income 2ego7a 260078 23.438 202 510 10 Dividends paid “82000 82000-3100 443 500 20 Closing valance ZOO) 385 024 435 028 14464 78 485 RE-08 166000+31 960 45 85. Nados Ltd Group NOT REQUIRED - SHOWN FOR THE SAKE OF COMPLETENESS Consolidated Statement of Financial Pesition For the year ended 30 September 2021 Noncurrent assets Property plant and equipment (258 000 + 180 000 +20 000) 468.000 Goodvil 27 448 Currant Assets (120000 +400 oo-12000+7 840) 515.540 Tort 286, Equty and Liabites ‘Share capital 250.000 Rotsined earings 385.024 Enutyatvbutable to parents 535.028 Non-contoling interest 149 464] Total equity 788-465] Current Habities (4a 000 + 178 200) 226 600 Tori 288) soc! 7s SOCIE 65, SOFP. : AOE & workings [25] Presentation 2097 0ez so so so 09 se zi9.002 1st id eozi60/0e - L020 009 s2 zu/9.002 1st id eozeo/te - azozr ose ub 039 28 - 000 04 ~ 000 OF juouysnipe Ag 000 21 szLise. ‘00008 eozr6oi0e (00001 szug2. ‘00008 ozozieoj0e © dmyeus A1oUBAL| ye0ss erie o0v0se parr) Ovoley OrS1 —O00er 00002 OZ HIE ‘000 002 ‘008 8s" ‘00s €- 000.06" ‘000 06" ‘spueping, ves er gcrez 096899 gee © 000zI- 009 62 ota ose zt ose zt foe ag 09923 @6001- oo0sz + ezs.zs1 OD OSY «ORY Y 00002 09 szz 000002 %a¥ PPV IzozI6oIOe osazs__octol- 0000 oases ogo 0sr _oayy 000.02 __o09 sz 000 002 ‘002 02. ol za o08ze _o08z- 00001 ‘00952 Wore 1z0z/P0/L0 Ose ie fF Os 00D0L __ourssz vA 9E ORL 000 0z__009 081 000 002. 096 He oses6 08 Zzt 008¢ 0000 ‘000 seh ‘9se0:041 0Z0z/90/0€ OcLOI- 000s —o96zt_—CareEZ OB o000z_ 0001, 000z bok Wy sLoz/Zo/10 a mMapoo5 nu TON mo. ld nu puey By OS pri seoaow ous. zuonsanyRO (Le: versity of Fort Hare Tagether in Excellence u NKUHLU DEPARTMENT OF ACCOUNTING GENERAL ACCOUNTING 3B ACG321E TUTORIAL TEST 2 4 OCTOBER 2021 ASSESSORS: Mrs Dharmini Fakir MODERATOR: Mr Wayne Molefe (Internal) 4 hour (plus 10 minutes reading time) 50 PAGES: 3 pages (including cover and notes page) INSTRUCTIONS: 1, Show all workings clearly — marks are allocated to workings. 2. Only answers in ink will be marked (including workings). Pages where pencil or tippex were used will not qualify for remarking, 3, Only silent, non-programmable calculators are allowed. 4, Students that contravene the rules in the General Prospectus of the University of Fort Hare will be disciplined in accordance with said rules. Question | Marks | Minutes 1 50 60 40 60.QUESTION 1 50 marks 4. Background Fictt Lid (Ficit) is a company that offers plumbing, detection and damp-proofing and roof reconstruction. Their main office Is in East London and the staff travel throughout the Eastern Cape to provide any of their services, Due to the demand for tank installations, Fix-It acquired 8 70% shareholding in Tank Ltd (Tank) on 1 January 2021 to provide all water tank related services. Fixit also acquired a 30% shareholding in Plumb Ltd (Plumb) on 1 July 2019 to provide services in the Mthatha region. All the companies have a 30 June financial year-end, ‘The following is an extract ofthe trial balance as at 30 June 2021: Fixit Tank Plumb Dice) | Dri(cr) Del(Cr) [Extract of Trial balance -30 June 2024 R R R [Share capital (1 000, 1 200 and 1 500 shares) | (1-000 000) (1-000 000)| (7-500 000) Retained earnings - 1 July 2020 (2 100-000)| (597 600)| —_(3 200.000) Deferred tax (250 000)) (100.000)| (150 000) Investment in Plumb “100 000] = = nvestmentin Tank 2200 000] = = Property and equipment - carrying amount 4.853 600] 4 165000| 7 607 000) (Accounts receivable ‘550.000 335000[ 110009) ventory ‘100 000] 125000] 150 000] Bank 160.000] 154.000] 147 000] "Accounts payable (71030 000)| (425 000)| (340 000)) [Shareholders for dividends (420,000) (400 000)| (360 000) Sales {6.900 000)] (14 725 000)| (42 550 000) Cost of sales 10.490 000] 9.085 000] 7 700 000} (Other ineome (970 000)| (650 000)| (650 000) [Administration expenses +-300.000[ 900.000] 500 009] ‘Seling and distribution expenses 2300000] 4200000] 530.000] (Other expenses +400 000| 560000] 170 000] Income tax expense - correctly calculated 1786 400| 1013600] 1 176.000 [Dividend declared - 30 June 202% 420 000| _350.000| 360 000) 2. Investment in Tank Ltd 1. Atthe acquisition date, all the carrying amounts of the assets and liabilities as recognised by Tank were considered to be fairly valued, in accordance with IFRS 3, except for plant which was overvalued by R50 000. At acquisition date, the plant had a remaining useful life of 5 years with a nil residual value.ive in Plumb Ltd 1. At acquisition date, the retained eamings of Plumb were R1 498 000 and the ordinary share capital of Plumb has remained unchanged since that date. 2, Atthe acquisition dato, all the carrying amounts of the assets and liabilities as recognised by Plumb were considered to be fairly valued, in accordance with IFRS 3, except for land ‘which was undervalued by R500 000. 3. Since acquisition, Fix-It has purchased all ofits inventory from Plumb at a mark-up of 25% on cost price. At 30 June 2020, Fix-tt’s inventory on hand was R125 000. 4, The intercompany sales for the year between Plumb and Fix-It amounted to R1 200 000. 1. Non-controlling interest is measured at a percentage of the net identifiable assets, 2. Allincome and expenses for all companies are earned evenly unless otherwise implied. 3. Assume that a normal tax rate of 28% and capital gains inclusion rate of 80% applies for all years under review. 4. All companies within the Fi Reporting Standards. It Lid Group complies with the International Financial 5. All investment in subsidiaries and associates are measured at cost in terms of IAS27, ‘Separate Financial Statements. Marks QUESTION 1 - REQUIRED ‘Sub- feta | Total | a | Prepare the Consolidated Statement of Profit and Loss and Other| 47 Comprehensive Income and the Consolidated Statement of | Changes in Equily in respect of the Fix Lid Group for the year | ended 30 June 2021 [Presentation (in terme of AS 7 and neainess) 3 Total 50 Note: ‘Show all workings. Round to the nearest Ri[sos] [oz _Jucnewosoic | o'6z_ from 30v ost (9070S 100s oze'ses'0r Osy'9vi't ‘oo0'szs- _00'sol- ogs'ssr'9 —avo'zee Opp'ess = Obr'ege ooz'sov'e ~ Aynby feo. ION, oro zee avo'ego'9 ‘ogg'ssy'9 og9'ssy'9 oez‘0ss'e ‘000‘006"2- ez'06 000'0S2"1- 000'Z%6 o00'szz'eL oos‘zaz'ez Noumios aais399Ns ‘009°F62 2 ‘000°S9" = ‘005°2£0°S1= (002 $03+000 001 z a0 -34 oreere’s oreeree 0000001 souejeq Buts019 ‘00.0 000 0zr- spuspinia ov9'e90'90+9'¢90'9 OL Asetpisqns ® Jo uoqisinboy ooz'sos's —0z'S09'z 0000001 ‘oueyeq Buluedg Jed OVNWIOL WER IS os 1z0z eunr o¢ pepue seek ayy 104 ‘Aunb3 ul se6uey9 Jo wuewiayers parepllosueg dnosg PY wxId 3802014 Bu}0.)U00-LON - quaied Jo suepjoy Aynb3 ~ oy e1geinqune seo oy) 40} 1YO%e} se 0K otf 40} 3Y04e (oor 1+Z1/9.009 £40 | + OOF Ge 1) asuadxo uojexey, x8} 810)99 Old (000 ¢-21/9,000 093+000 oor) $1809 18410 (219.000 002 1+000 00¢ 2) sis09 uoRNgUISiP pue BLES youd s.aje190sse Jo areus (Z1/9,000 006+000 00€ 1) sisoo uoneaIsUUPY (000 201-000 sbz-21/9.000 0S9+000 026) @WODU! 10410, oid $8015) (219.000 $06 6+000 06% OL) SBS 40 1809 :3807 (21/9,000 S22 #1 + 000 006 02) saleg 1z0z aun og pepue 420K 04} 104 owoou aAlsuaysidwoy 19410 pue SSO7 PUP yo4d Jo UBUID}Ig PoyepIlosuCD nos pr x | uonsenp luotantos z 3591.34 SOVww Ej University of Foct Hare Tipp a fact NKUHLU DEPARTMENT OF ACCOUNTING GENERAL ACCOUNTING3 ACG321E TUTORIAL TEST 2 15 OCTOBER 2018 ASSESSORS: Ms Tinneke du Plessis MODERATOR: Mrs Dharmini Fakir (Intemal) TIME: 4 hour (plus 10 minutes reading time) MARKS: 50 PAGES: 5 pages (including cover and notes page) INSTRUCTIONS: 1. Showall workings clearly ~ marks are allocated to workings. 2. Only answersin ink will be marked (including workings). Pages where pencilor tippex were used will not qualify for remarking. 3. Onlysilent, non-programmable calculators are allowed. 4. Students that contravene the rules in the General Prospectus of the University of Fort Hare will be disciplined in accordance with said rules. Question | Marks | Minutes 4 50 60, 50 60QUESTION 1 50 marks, Background Power Limited (Power) is an East London based company that manufactures safety gear for construction purposes and the financial year end of the company is 30 June. 4. Consolidated financial statements follows: ‘The consolidated financial statements of Power and its subsidiaries at 30 June 2018 are as POWER LIMITED AND ITS SUBSIDUARIES CONS STATEMEN' ‘As at 30 June 2018 Non-current assets Land Property, plant and equipment Goodwill Patent, amortised historic cost Caren Aan pete eee ‘Cash and cash equivalents EQUITY & LIABILITIES, Equity attributable. to parent, shareholders, ‘Share Capital "Nor-controlling interest Total Equity Non-current liabilities, ‘Account payables Smohokio for denas ur 4.500 000 800 009 3.012 100 2.550 000 330.000 | 120 900 232.000 | 254 000 B.074 100 | 5734 000 483,600, 3 300, 1751 640 24s s40 | 910-240 to 62 640 | 6 644 200 Tost 180 [4749 570 1700, 000 | 1.500 000 ‘519 200[" 0 G07 980 [5288 570 ‘092 110] 138 650 3 143 200 | 4076 220 “ess 000 |” 445 000 473.560) 206 200 7128 650 | 740-200 “aso g00 | 258 600 250 400) 268 800, sao 500 | 603 400 1.200 800 | 7.025 800 70 sez 640 | e644 240QUESTION 4 (CONTINUED) POWER LIMITED AND ITS SUBSIDUARIES _ CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | for the year ended 30 June 2078 : sae a 2.018... ‘Sales of 10.580,000, Cost of sales Ferree oa Gross profit = 4843 000 Operating exp zits ‘(1239 200) Finance cost _ Gee (18 200 Profit bel ce eee 3.484 600 Taxation ess 400) Profit forthe eee __|_ 2539 200 “Attibutabie to: “Equiy holders of parent 1904 400, Non controling shareholders interest 634 800 a z ce 2.539 200, 2. Additional information ] 1. Power decided to expand its business by acquiring a controling interest in RockTech Limited (RockTech) and entered into negotiations with the shareholders of RockTech during January 2018. On 2 February 2018, Power acquired 80% of the shares in RockTech at which date the assets and liabilities of the RockTech were fairly valued and correctly reflected in the trial balance of RockTechas follows: Rand Land 1000 000) Property, plant and equipment 443 000 ‘Accounts receivable 240 200 Inventory 127 600 Cash and cash equivalents 47500 ‘Accounts payable 739000 2. The non-controlling interests was initially measured at their share of the identifiable net assets of the company. 3. No other subsidiaries were sold or purchased during the year. 4, Power revalued its land for the first time during the year. No land was purchased or sold during the year.QUESTION 4 (CONTINUED) . Property, plant and equipment was sold for R113 500 at a loss of R27 400. The total depreciation for property, plant and equipment was R282 800. 6. There was no impairment of goodwill during the current year. In order to fund the expension, the directors of Power decided to issue additional shares to the value of R200 000 and raise a loan of R400 000. 8. The tax rate is 28% and the capital gains inclusion rate is 80%, Marks QUESTION 1-REQUIRED Sub- total_| Total a | Prepare the Consolidated Statement of Cash Flows, using the| 34 direct method for Power Limited and its subsidiaries for the year ended 30 June 2018. b) | Prepare the following notes to the Consolidated Statement of Cash Flows: 1, Reconciliation of cash generated from operations 6 2. Acquisition of the subsidiary 8 Presentation marks (presentation, layout and neatness) 2 Total 50This page is provided for you to make notes on during reading time. It is NOT to be handed in and it must therefore not form part of your final solution,ibs i es seeete € i itt Sif geese tsi tsi Gee EEGTUT TEST2-2018-Q1-ACG3B SOLUTION POWER LIMITED AND ITS SUBSIDUARIES Consolidated statement of cash flows for the year ended 30 June 2018 Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Tax paid Dividends paid to non-controlling interest Dividends paid Cash flows from investing acti Purchase of plant and equipment Proceeds from sale of plant and equipment Acquisition of subsidiary, net of cash acquired Cash flows from financing acti Proceeds from share capital Proceeds from long term loan Repayment of long-term loan ‘Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Difference wt Balancing Given wa we wa wa Given (1700000-1500000) Given ws Note 7,086,100 7,751,640 R 2,544,540 665,540 SUGGESTED SOLUTIONEXAM-2018-ACG 38, University of Fort Hare Together in Excellence NKUHLU DEPARTMENT OF ACCOUNTING GENERAL ACCOUNTING 3B ACG321E FINAL ASSESSMENT OPPORTUNITY NOVEMBER 2018 ASSESSORS: Ms Tineke du Plessis MODERATOR: Mr G Adams (External) Mrs Dharmini Fakir (Internal) TIME: 3 hour (plus 20 minutes reading time) MARKS: 150 PAGES: 12 pages (including front page) INSTRUCTIONS: 1. Answer all the questions. 2. Start each question on a new page. 3. Show all workings clearly — marks are allocated to workings. 4. . Only answers in ink will be marked (including workings). Pages where pencil or tippex were used will not qualify for remarking. 5. Only silent, non-programmable calculators ere allowed. 6. Students that contravene the rules in the General Prospectus of the University of Fort Hare will be disciplined in accordance with said rules. Question | Marks | Minutes 1 53. 64 2 23 28 3 40 48 4 | 34 a1 [150 | 180 Page 1 of 12EXAM-2018-ACG 38, QUESTION 1 53 marks Background BeachVibes Limited ("BeachVibes”) is a manufacturer of outdoor watersport equipment and apparel. The financial year of the company ends on 30 June. 4. Consolidated financial statements The following information relates to the group financial statements as at 30 June 2018: BeachVibes Group: ‘onsolidated statement of financial position as at 30 June 2018 2018 2017 Notes R00 = R'000 Goodwill 14000 12000 Property, plant and equipment 271300 255000 Debentures 967 - Bank 48.736 Receivables 31000 48000 Inventory 19000 _ 16000, Total assets 385003 331,000 Share capital 120000 100000 Retained earnings 96103 $7439, Non-controlling interest 18909 12505 Interest bearing liabilities 91500 70000 SA Revenue Services 16491 22901 Payables 42000 57000 Bank Overdraft - 11155 Total equity and liabilities 385003 331000 Beachvibes Grou onsolidated statement of profit and loss and other comprehensive income for the year ended 30 June 2018 R000 Revenue 1920000, Operating profit 122300, Interest income 129 Finance costs (1.800) Profit before taxation 120629 Taxation (53.000) Profit and total comprehensive income for the year 67628 Page 2 of 12EXAM-2018-ACG 38, 2. SandCastle Limited 2.1. On 1 December 2017, BeachVibes acquired an 80% interest in the ordinary shares of SandCastle Ltd (SandCastle) and gained control of the company. 2.2. The fair value of the net identifiable assets of SandCastle at the date of acquisition comprised the following: Acquisition of SandCastle- Assets & Liabilities R000 or/(cr) Property, plant and equipment 13.860 Accounts Receivables 840 laventory 640 Bank 3200 Interest bearing liabilities (2600) SA Revenue Services (1800) Accounts Payable (530) 7610 2.3. The non-controlling interest was initially measured at a percentage of net assets. No other subsidiaries were purchased or sold during the current financial year. 2.4. The purchase consideration was paid in cash. 3._ Additional information 3.1. During the current financial year, equipment was sold on 1 March 2018 for R1.5 million cash sold at a profit of R250 000. The depreciation relating to property, plant and equipment amounted to R27.5 million that is included in operating expenses. On 1 July 2017, BeachVibes purchased 2 000 12% debentures for R500 each at a discount of 5%. BeachVibes incurred R8 000 transaction costs with the purchase. The interest on debentures is payable annually in arrears. The debentures are redeemable at par on 30 June 2021. 3.3. Ordinary dividends were declared and paid by BeachVibes and its subsidiaries on 30 June 2018. 3.4, The non-controlling interests share of the current year's profit was R12 milion, 3.5. Goodwill has never been impaired. 3.6. Ignore deferred taxation. Page 3 of 12EXAM-2018-ACG 38 Marks QUESTION 1 - REQUIRED ‘Sub- Total total In full conformity with all applicable International Financial Reporling Standards: (@) [Prepare the consolidated statement of cash flows for the| 51 BeachVibes Limited Group for the year ended 30 June 2016 using the direct method of presenting the Cash generated from operations. The following notes to the cash flow statement are required ‘+ Anote reconciling profit before tax to cash generated from operations ‘+ Acquisition of SandCastle Limited Round amounts to the nearest R'000. ‘Show your workings clearly. Presentation 2 Total 33 Page 4 of 12EXAM-2018-ACG 38, QUESTION 2 23 marks Background Sunshine Limited (Sunshine) is a listed company with a year end of 30 June 2018, 4. Additional information 1.1 The issued share capital and related information at 1 July 2017 is as follows: * 1200 000 ordinary shares issued at R2 per share at inception ‘+ 150 000 convertible 8% preference shares issued at R5 each + 100 000 12% convertible debentures issued at R4 each ‘+ Options held by the senior management to subscribe for 50 000 ordinary shares on 30 June 2020 granted for no value. 4.2 On 1 October 2017, a rights issue of 1 share for every 6 ordinary shares held was offered to the existing shareholders at a price of R3.40 per share. The market value of the shares ‘was R5.50 per share at this date. All the shareholders took up the offer. 1.3 On 1 February 2018, there was a capitalisation issue to the shareholders in the ratio of 2 ordinary shares for every § ordinary shares held on that day. 1.4 Profit for the year ended 30 June 2018 is R2 870 000 and included in this amount is finance costs relating to the preference shares and debentures. 1.5 The preference shares are non-cumulative and are convertible at the option of S preference shares for 1 ordinary share. 1.6 The debentures are convertible at a rate of 1 debenture for 1 ordinary share. 1.7 No options were exercised during the 2018 financial year. 1.8 Assume a normal tax rate of 28% and capital gains inclusion rate of 80% is applicable. Marks | | QUESTION 2- REQUIRED Sub- Total total (@) | Calculate the basic and diluted earnings per share for the year | 23 ‘ended 30 June 2018. Comparatives are not required. Note disclosure is NOT required Total 23 Page 5 of 12EXAM-2018-ACG 38, QUESTION 3 40 marks, [ Backgro ‘Summertime Limited (Summertime) manufactures beverages (drinks other than water). The accountant of Summertime needs to draft the financial statements for the year ended 30 June 2018, She has asked for your advice on the following matters. [1. Acquisition of assets and liabilities of Hydrate The directors of Summertime acquired Hydrate Limited (Hydrate) a fruit juice manufacturing company as a going concern, Summertime acquired all the assets and liabilities of Hydrate on 1 February 2018. At this date, the assets and liabilities of Hydrate had the following values: Carrying amounts Assets and liabilities In Hose eeechn R Property, plant and equipment 7 460 000 Trade receivables 279 000 Inventory 325 000 Trade payables (@58 000) 4.1, The property, plant and equipment were overvalued by R220 000. 1.2. The customers will settie all their accounts except for one customer who owes R28 000. 1.3. Inventory was valued at cost price. Inventory has a selling price of R480 000 and the costs of disposal will amount to R50 000, and a reasonable profit allowance is considered to be 15 % of the selling price Hydrate has developed their brand of juices over the past 10 years. The brand is expected to provide future economic benefits to Summertime for 15 years. The market value of the brand is R420 000. 1.5. Summertime paid R2.2 million cash for the purchase of Hydrate. 2. Licence to manufacture 2.1. Summertime has a five-year licence to manufacture a famous brand of cooldrink in South Africa. The license was acquired at a cost of R2 million on 1 October 2017. Summertime intends on renewing the license for a further five years. The cost of renewing the license at 1 September 2022 is R50 000. Page 6 of 12EXAM-2018-ACG 3B QUESTION 3 (Continued) = Preference Shares 34. 32. 33. 3.4. 35. Summertime issued 50 000 ‘R3 12% preference shares' for R140 000 on 1 July 2017, an amount considered to be a fair value for these preference shares. These preference share carry with them @ mandatory preference dividend based on a coupon rate of 12% payable on 30 June each year. In addition, the preference shareholders have the right to receive dividends equal to 5% of the ordinary dividend declared in any one year. ‘The shares are redeemable at the option of the holder at a premium of R0.20 per share on 30 June 2021 ‘Summertime declared and paid ordinary dividends of R60 000 plus both preference dividends on 30 June 2018. The market-related rate of 15% applies to similar debt instruments that do not offer discretionary dividends. Page 7 of 12EXAM-2018-ACG 38, Marks QUESTION 3 - REQUIRED ‘Sub- Total total in full conformity with all applicable International Financial Reporting Standards: {(@)_| Acquisition of assets and liabilities of Hydrate Limited {()__ Prepare ONLY the journal entry to account for the purchase | 8 of the assets and liabilities of Hydrate Limited in ‘Summertime Limited books on 1 February 2018. Ignore all tax effects (i) Calculate the amortisation expense and the camying| 2 amount of the intangible assets acquired from Hydrate Limited that will be included in the financial statements of ‘Summertime Limited as at 30 June 2018. (b) | Licence to manufacture () List the identification and recognition criteria of an| 5 tangible asset. (i) Calculate the carrying amount of the license as at 30 June| 3 2018. (© | Preference Shares @ Explain how the preference shares, in terms of IAS 32| 7 Financial Instruments: Presentation, should be classified. DO NOT discuss the measurement of the preference shares. (i) Provide all the journal eniries necessary to account for the | 13 preference shares issued by Summertime Ltd for the year ‘ended 30 June 2018. No narrations are necessary. Presentation 2 Total 40 Page 8 of 12EXAM-2018-ACG 38 QUESTION 4 34 marks Background The Paradise group of companies offers luxury hotels and conference venues carefully situated in various travel destinations in the Eastern Cape. The information below represent the draft financial statements of the companies within the group for the year ended 30 June 2018. 1. Financial inform Draft Statement of Profit and Loss and other comprehensive income Paradise Safari R R (Gross profit 1520000 | 1 140.000 JOther income and expenses [987.000 |- 740.250 Dividends received 80.000 - Profit before tax 613000 | 459750 Income tax expense > 153.250 / 114750 ‘Total comprehensive income 459750 | 345000 Draft statement of changes in equity Paradise Safari R R Retained earnings Balance at 1 July 2017 1737000 [561.000 Profit forthe year 459750 | _ 345.000 (Ordinary dividends paid 30 June 2018 = 300000 |/ 50.000 Balance at 30-june 2018, 1.896750 856000 Draft statements of financial position as at 30 June 2018 Paradise Safari R R Property, plant and equipment 2917000 | 1263000 Vehicles 1440000 | 1143 000 Investment in Safari td 1.265.000 [Other assets 371750 | 142000 5993750 | 2548000 (Ordinary share capital 2000000 | 1000000 Retained earnings 1.896750 | 856000 3.896750 | 1856000 Long-term loans '360 000 Deferred taxation 84000 | 28000 [Other liabilities 74530000 | 664.000 3993750 2548000 Page 9 of 12EXAM-2018-ACG 38 QUESTION 4 (continued) 2.1 On 30 June 2011, Paradise Limited (Paradise) acquired a 30% stake in the ordinary share capital of Safari Limited (Safari) for R315 000. At this date the retained earnings of Safari were R35 000 and the assets and liabilities of Safari were considered to be fairly valued. The share capital of Safari has remained unchanged since June 2011. 2.2 0n 2 January 2018, Paradise acquired an additional 50% of the ordinary share capital for F950 000, The assets and liabilities of Safari were considered to be fairly valued at this. date, with the exception of equipment which was considered to be worth an additional R90 000. The remaining life of the equipment was 3 years at this date. 2.3 The original investment in Safari Limited had a fair value of R540 000 share on 2 January 2018. 2.4 The profits of Safari were earned evenly throughout the year. 3. Additional information 3.1 Assume a normal tax rate of 28% and a capital gains inclusion rate of 80%. 3.2 The non-controlling interests are initially measured at a percentage of net assets. Marks QUESTION 4 ~ REQUIRED Sub- Total total In full conformity with all applicable International Financial Reporiing Standards: (@) | Prepare the consolidated statement of comprehensive income and | 32 statement of changes in equity for the Paradise group for the year ‘ended 30 June 2018. Show your workings clearly Round to the nearest R’000. Presentation 2 (layoutipresentation in terms of IFRS, neatness, logical thinking) Total 34 Page 10 of 12ZT JO TT aed GE DDV-ST0?-WWxaEXAM-2018-ACG 38 This page Is provided for you to make notes on during reading time. It is NOT to be handed in and it must therefore not form part of your final solution. Page 12 of 12xAM-2028-AC538-01 SOLUTION yeticn sa Beaciibes Group: Consolidated cash few statement forthe year ended 30 June 2038 R000 cashflows om operating activites ‘aah cepts om aastomers avsr 440 ‘ash payments to supers an ermployes (bs Ree) (2768340), Cash generate rom epertons 9 50 lnterertncore (2000500442) 0 Finance costs (1200) ‘ivicen ald to Basehvibesshareholiers (as96s) DOvisende paleo non-conzalingncerest yrue) Tevation sid isi 210) ash no from operating ates coy (ath nto rom investing acts Aequltion of eotrling terest insubsary (esse) Aegulion of debentures (25008) (958) Proceeds on disposal a PE (ve) 2500 ‘euision of property, plont end equgmant (21390) 5836) ‘azn low rom financing acts Proceeds of oan ried uring the yoor 12900 Proceeds from ocdnary share sve (120000100000) 20000 32900 Nat cath erase forthe year soa. (ash and neh equiva the bepnning othe year ‘ceshand ash equivalents a the end of he yar Notes tothe conoldsted cashflow staternet Reconelaton of profit before teration aca ganerted fom operations 000 Prot belore tation 120629 Aust for: interes income (129) Finance costs 1800 Potton sale on proverty plant and equipment (250) Depreciation (even) 27500 amosation Decrease i racehraes(31000-680006840) a7a00 Inereasein inventors (19000-260004640)) (2360 Decrease in ayabls(42000,(570004530) (05530, T5300 2 Acquistion ofzubsiiory e000 ‘uring the year the group obtalnes contro of subslary SendCastle and hea val oftheasets acquired ad lables aumed were asfolows: R Property, plant nd equipment m850 Accounts Racetabie 240 Investory 60 Bank 3200 Interest ening abies (609 Sh Revenue Serices (4300), Accounts Payable 530 780 Non-controing terest (208) sz) ‘Sood 2000 Total purchase pie palin cash 3088 Leech ane eaehequlvalentsof subser) 2200) Cath pit obtain conto net of cash ered aes Presentation ‘werkinge TARE 20 10 20 40 20 05 10 as os. 10 as os 10 os as as os os os 05, os. 10 a0 30 Bs 70 its 550 suseesteD sowWTION==] Marks “Trade receivables ‘Opening balance 48.000 os Subsleay aquired 810 10 sales 1.920009 10 Closing balance (i000) 5 Balancing figure -cash receipts “1937 840 inventory Opening balance Subsisieryaeauired Clesing balance = Aalancing figure = purewsse “Trade payables — ‘Opening balance (67.000) subsicary ecquired (530) Cloring balence 72.000 Balancing Migure-cash payments to Suppliers 45530), Non-contrlling interest Opening balance (22505) os share of TC (22.000) 10 Subsidiary acquired 1822) 10 ‘Closing balance 36903 os. Balancing fgure - dividends declared SARS Opening balance (22901) os Subsidiary acquired (1.800) 10 “Tox expense (53.000) 10 Closing balance T5091 os Balancing figure tax paid ery PPE Opening balance 285000 os: Subsidiary acquired 13860 10 sold (1250) 19 Depreciation (27500) 19 ‘Closing balance ezr200; os Balancing figure - Acquistion pits) Retained earnings Opening balance (57439) os ‘Share of profit (67500-12000) (55.528) as Closing balance ‘36103 05. Balancing feure -Dividends Teac) Interest bearing Habilites Opening balance (70000), os. Subsidiary acquired (8600) 10 Closing balance 31 500 os Balancing figure -raised 2900 Goodwill Opening balance 12.000 os. Closing balance {4.0007 os. aalaneing figure -subsduary acquires —"7000° Tes[EXAM-2018-ACGB®-02 SOLUTION Rev SUGGESTED SOLUTION cuestion 2 Earnings per share Basis earings ctuah 2018 011072017 Opening balance “200000 1200000 1100017 Rights isue 120000008'3.48 5 123696 20 pooccoe3 48 402 soar 40 ase | ame ‘200000I62-145 76384 48 129272711329638°76904 14500 15 mo Ter 08 o1ro27018 Capiasue 400000152 560 000 10 +967308/1400000°880000 548073 to Teo | _ iets Basie EPS _Carrings 2670 000 10 7 of shares 1914 208 40 z 449.83 conts 05 Diluted earnings per share ‘Adjust numeretor (earrings) Pref shares Dabentures Options Savings 60.000 (%) 48.000 (1) - 25 Tex on sevings =) __13.440_ (1) _ 4 20 am, 34 560 = Calculate the number of notional share Inoreage inthe numberof shares 30.000 100.000 50,000 30 Caleulate the dilutive effect of each class, 200 35 : Rank 3 2 1 10 Compute the diluted earnings per share Earnings Wanos EPs, Basic earnings 2.870000 1914231 180 cents options 50.000, 2870 000 7964251 14 conts | 1.0 Debentures 34500 +499 000 2804 2064231 141 cents | 1.0 Preference shares, 60 000 30,000 7984 560, 2034251, 142 conte | 1.0 Diluted earnings per share 441 cents 10‘QUESTION Issue 1: Acqulstion of Hydrate Limited (sours DePropeny, plant and equipment 1 460000-220000 1.240000 Dr inventory (480 000°85%) -50 000 358000 br Recehables 2790000-28 000 254.000 Drarand ‘420000 ccrayables 358000 crank 22000000 Dr ocd 789 000 (i) Amoctisation ‘rand cost 420000 Amortisation| 420000/15 5/12 a1 667) Carrying Amount 308533 Issue 2 tlence te manufacture (i) ldentifetion and recognition criteria Intangible assets are identifible(5) non-monetary ($)asets (5) without physica substance, (5) ‘An assets defined asa resource controle by the entity (2) rising from past evens, (5) form which future economic benefits [5 se expected to flow tothe entity, ‘An assets kentifiablef its ether separable 2) or arises from legl (05) or contractual rights{0) (i) Armortisation License 2000000 Amorisetion| 2000 000 / (545) *9/22 \as0 000) Carrying Amount 7.850000 Issue 3: tesue of preference shares (0) Classification of preference shaves 185 32 defines fisancalitlity 2:2 contraetul obligation (to deliver cash or another nancial asset (4) to another entity’). “Te sue of the incl instrument shal lass the instrument asa labty or equity in accordance withthe substance a the agreement. 2) “The cial feature to citferentiate between ability and equity s whether the entity has a present obligation. (1) Ifthe entity has Itle ono ‘éseretion to avold the outflow of resources to ancther par then there is fan obligation and thus the Ietruments recognised asa iablty (0); if the entity dies have the‘lscretion ta avoid the outflow of resources to another party, there ean be ‘no obligation and thus the Instrument is recognised as equty (2) “The isue ofthe redeemable preference shares represents a ‘compound financial instrument 2) “The preference shares haves laity component because Summertime has an obligation fo pay ‘annual prferance dvidendsbased ona coupon rate of 12%. (1) ‘Furthermore, the redemption ofthe preference shares at the of the holders presenta further oblzstion. 1} “The eiscretionary dividend isnot an ebligation and thus represents an equity instrument. (2) 15] 0.5 workings, Ljoural 2] a workings, journal 15] 05 workings, 2journal os| os} CI limited to limited to(0) Jourmats (2 July2037, Dr Bank Preference share ailty (4) Preference share equity (Ea) Issue of redeemable preference shares - Working 3 30 June 2018 br Interest expense (/t) (24267001585) cr Prefrence share ably () Interest expense forthe yeorbesed on market rote Dr Praference share labity (2) wa cr Bank Payment of preference divklend at coupon rate ‘r Preference didend (bist of) cr Banke (60000455) ‘Adeltonal preference dudends of 5% of ordinary cvidends working Liability component pm {50.000xA3«22%) Compute PV of dividends fv (0000 xR3.20) Compute V of redemption ameunt aie value ‘ability componant Equity component 200000 aie 18000 3.000 2970 57130 aaa 18000 3000 8000 4 ass 51390 160 000 4 13% van, 12870 200000 142.870, 37130, Presentation] as ol os} as os. os. as] os} os| os. 0s 06 5 Cae, 3 Journal (05 Cok, 05 Journalradse Lt and its subiduarier ‘Consolidated Statement of Profit and Loss and Other Comprehensive Income ‘orth year encing 30 June 2038 Grose prot thar income and expenses Dividends recenad ‘Share ofseocitae prot Gain on remeasurement of assocate Profi before tax Tots comprehensive nome Profit aibutable to Paradise td net Paradise td and ts subsiduaris ‘Consolidated Stternent of Changes in Ena For the year ending 30 une 2028 Balance at 1 July 2017 Profit forthe year Dividends Increase in NCI on acauston Balance at 30 June 2018 Retained earnings sly 2007 520+ 1180/2 987+ 790/2-18 9060-20 ate cote 353.25 +114.75/2842 ‘Share eapitat K 2.000 00 et Earn 1.806500 000 2090000 - ass «0000 51750 15450 5075 15327 57798 29458 2M ae Total NC Total 3898800, eapaseX 629458 + 340000 340000 - 0000 350000 T0000, Row 1797booe157600 Zia TEs a Toa Te - %55400 32340 % 71798 “4 Bee TES Workings Presentation cory 15] as og as| as 03] 1s| TEs Te Totalsxav wae swaunsnfpe oweatea 000 085 eed asses 055 602 au ovo ste Joenuer 238 w94ns9AU) twounsnipe anies seg “woos 000 056 saa 0s ono ste sear not 2woUEONUT were [ose —[eoorwe [oooorer [ooor [oonse [oo0sss [osoo00% foot [0008 oo00s “| ovees [aoe tot footy O00t 3} 00s zr oy : Ze a otee [mosey [osm ese_[Oneaezt [oese 00005 Jooseez | 0000008 1 i ZA Ch 055602 Doo sTe Doseect ‘os EEL | 000 0007 O62 TS os zcr Fr 0s te unr 9 -aya1g oA wD ones owe 000 195% 000 9s | 060 000 Zioc he - ura 08 (St 00825 F coo ses opps ooose0T ‘ifooo se — [0000007 TOE BUNT GE- LORIE DAW x cc) 0 ou | wo, | ag [ar [a 35 08 - 408 ‘GRU RWS 40 SISKTINY