BS 420 PRACTICE TEST

PRINCE DANIELS TUTOR

0972286191

PRINCE DANIELS – 2024

QUESTION ONE
On 1 September 20X5 Mapalo Bee Co acquired 70% of Peter Co
for K5,000,000 comprising K1,000,000 cash and 1,500,000 K1
shares.
The statement of financial position of Peter Co at acquisition was
as follows: Z
K'000
Property, plant and equipment 2,700
Inventories 1,600
Trade receivables 600
Cash 400
Trade payables (300)
Income tax payable (200)
4,800
The consolidated statement of financial position of Mapalo Bee Co
as at 31 December 20X5 was as follows:
20X5 20X4
Non-current assets K'000 K'000
Property, plant and equipment 35,500 25,000
Goodwill 1,400 –
36,900 25,000
Current assets
Inventories 16,000 10,000
Trade receivables 9,800 7,500
Cash 2,400 1,500
28,200 19,000
65,100 44,000

PRINCE DANIELS – 2024

Equity attributable to owners of the parent
Share capital 12,300 10,000
Share premium 5,800 2,000
Revaluation surplus 500 –
Retained earnings 32,100 21,900
50,700 33,900
Non-controlling interest 1,600 –
52,300 33,900
Current liabilities
Trade payables 7,600 6,100
Income tax payable 5,200 4,000
12,800 10,100
65,100 44,000
The consolidated income statement of Mapalo Bee Co for the year ended
31 December 20X5 was as follows:
20X5
K'000
Profit before tax 16,500
Income tax expense (5,200)
Profit for the year 11,300
Other comprehensive income
Revaluation surplus 500
Total comprehensive income for the year 11,800
Profit attributable to:
Owners of the parent 11,100
Non-controlling interest 200

PRINCE DANIELS – 2024

 11,300
Total comprehensive income for the year attributable to
Parent 11,450
Non-controlling interest 200 + (500 × 30%) 350
11,800
Notes:
1. Depreciation charged for the year was K5,800,000. The group made
no disposals of property, plant and equipment.
2. Dividends paid by Mapalo Bee Co amounted to K900,000.
3. It is the group's policy to value the non-controlling interest at its
proportionate share of the fair value of the subsidiary's identifiable net
assets.
Required
Prepare the consolidated statement of cash flows of Mapalo Bee Co for
the year ended 31 December 20X5. No notes are required.
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QUESTION TWO
On 1 January 20X0 Taonga Ltd acquired 90% of the ordinary shares of a French subsidiary
Lauren SA. At that date the balance on the retained earnings of Lauren SA was €10,000. The non-
controlling interest in Lauren was measured using proportionate method. No shares have been
issued by Lauren since acquisition. The summarised statements of comprehensive income and
statements of financial position of Taonga Ltd and Lauren SA at 31 December 20X2 were as
follows:
Statements of comprehensive income for the year ended 31 December 20X2
Taonga Ltd Lauren SA
£000 €000
Sales 317,200 200,000
Cost of sales 170,000 100,000
Gross profit 147,200 100,000
Dividend received from Lauren SA 1,800 NIL
Administration 30,000 30,000
Other expenses 15,000 7,000

PRINCE DANIELS – 2024

Interest paid 6,000 3,000
Total expenses 51,000 40,000
Profit before taxation 98,000 60,000
Taxation 21,000 15,000
Profit after taxation 77,000 45,000
Dividend paid 20,000 10,000
Statement of financial position as at 31 December 20X2
£000 €000
Non-current assets 94,950 150,000
Investment in Lauren SA 41,050
Current assets:
Inventories 60,000 12,000
Trade receivables 59,600 40,000
Lauren SA 2,400
Cash 11,000 11,000
Total assets 269,000 213,000
Current liabilities:
Trade payables 45,000 18,000
Taonga Ltd 12,000
Taxation 21,000 15,000
Non- current liabilities
Debentures 40,000 10,000
Equity
Share capital 80,000 60,000
Share premium 6,000 20,000
Revaluation reserve 10,000 12,000
Retained earnings 67,000 66,000
269,000 213,000
The following information is also available:
(i) The revaluation reserve in Lauren SA arose from the revaluation of non-current assets on
1/1/20X2.
(ii) No impairment of goodwill has occurred since acquisition.
(iii) Exchange rates were as follows:

PRINCE DANIELS – 2024

At 1 January 20X0 £1 = €2
Average for the year ending 31 December 20X2 £1 = €4
At 31 December 20X1/1 January 20X2 £1 = €3
At 31 December 20X2 £1 = €5
Required:
Assuming that the functional currency of Lauren SA is the euro, prepare the consolidated accounts
for the Taonga group at 31 December 20X2.
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PRINCE DANIELS – 2024

QUESTION THREE
The following are the financial statements of the parent company Njivwa plc, a subsidiary
company Wendy and an associate company Natasha.
Statements of financial position as at 31 December 20X3
Njivwa Wendy Natasha
ASSETS £ £ £
Non-current assets
Property, plant and equipment at cost 320,000 180,000 100,000
Depreciation 200,000 70,000 21,000
120,000 110,000 79,000
Investment in Wendy 140,000
Investment in Natasha 40,000
Current assets
Inventories 120,000 60,000 36,000
Trade receivables 130,000 70,000 36,000
Current account – Wendy 15,000
Current account – Natasha 3,000
Bank 24,000 7,000 6,000
Total current assets 292,000 137,000 78,000
Total assets 592,000 247,000 157,000
EQUITY AND LIABILITIES
£1 shares 250,000 60,000 50,000
General reserve 30,000 20,000 12,000
Retained earnings 150,000 120,000 50,000
430,000 200,000 112,000
Current liabilities
Trade payables 132,000 25,000 34,000
Taxation payable 30,000 7,000 8,000
Current account – Njivwa 15,000 3,000
Total equity and liabilities 592,000 247,000 157,000
Statement of comprehensive income for the year ended 31 December 20X3

PRINCE DANIELS – 2024

 £ £ £
Sales 300,000 160,000 100,000
Cost of sales 90,000 80,000 40,000
Gross profit 210,000 80,000 60,000
Expenses 95,000 50,000 40,000
Dividends paid (shown in equity) 40,000 10,000 8,000
Dividends received from Wendy and Natasha 11,000 NIL 10,000
Profit before tax 126,000 30,000 30,000
Income tax expense 30,000 7,000 8,000
Profit for the period 96,000 23,000 22,000
Dividend paid (shown in equity) 40,000 10,000 8,000
Notes

(a) Njivwa acquired 90% of the shares in Wendy on 1 January 20X1 when the balance on the
retained earnings of Wendy was £60,000 and the balance on the general reserve of Wendy
was £16,000. Njivwa also acquired 25% of the shares in Natasha on 1 January 20X2 when
the balance on Natasha’s accumulated retained profits was £30,000 and the general reserve
£8,000
(b) During the year Njivwa sold Wendy goods for £16,000, which included a mark-up of one-third.
80% of these goods were still in inventory at the end of the year.
Required:

(a) Prepare a consolidated statement of comprehensive income, including the associated

company Natasha’s results, for the year ended 31 December 20X3.
(b) Prepare a consolidated statement of financial position as at 31 December 20X3. The group
policy is to measure non-controlling interests using the proportionate method.
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PRINCE DANIELS – 2024