Exercise 1:

Add info:
Operating exp
include a loss on
disposal of NCA
of $10,000. The
disposed plant
originally cost
$160,000 and had
acc.dep to the date
of disposal of
$30,000.

Required: Prepare SOCF

using indirect method. The
company classifies the
interest receipt and
dividend receipt as cash
flows from investing
activities.

period
Proofing’s statement of cash flows for the
Cash&cash equi at the beg 36
year ended 31 Dec 20X1
Cash and cash equivalent at the 84
end
I. CF from operating activities
Profit before tax 326
Adjustment
Depreciation expense (140+30) 170
Tax payable
Loss on disposal 10
Clo = 152 Op = 134
Finance charge 44
 Tax paid = 124 Tax exp = 142
Dividends income -114
Interest income -30
CF before changes in WC 406 Interest accrual
Decrease in inventory 14 Clo = 6 Op = 10
Increase in T/R -32  Interest paid = 48 Finance charge = 44
Decrease in T/P -4
Cash generated from o/act 384
Interest paid -48 Retained earnings
Dividends paid -70 Clo = 566 Op = 452
Tax paid -124  Dividend paid = 70 Profit = 184
Net cash generated from o/act 142
II. CF from investing activities
NCA
Purchase of NCA -356
Op = 1,500 Clo = 2,096
Proceeds from sale of NCA 120
Reval surplus = 400 Disposal = 160
(160-30-10)
Purchase = 356
Dividend received 100
Interest received 30
Net cash from investing act -106
III. CF from financing activities
Proceeds from share issued 212
Cash paid to loan -200
Net cash from financing act 12
Net cash increase during the 48

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 Dividend receivable
Op = 100 Clo = 114
Dividend  Dividend
income = 114 received = 100
Eg: The summarised accounts of the Emma Co for the year ended 31 December 20X8

SOFL $'000 $'000

20X8 20X7 Equity
$'000 $'000 Share capital ($1 ordinary shares) 250 200
Share premium account 70 60
Non-current assets revaluation surplus 110 100
PPE 628 514 Retained earnings 314 282
Current assets: 744 642
Inventories 214 210 Non-current liabilities
Trade receivables 168 147 10% debentures
Cash 80 50
7 – Current liabilities 136 121
389 357 Trade payables 39 28
Income tax payable 18 16
1017 871 Dividends payable – 14
Overdraft 193 179
1017 871
20X8 20X7

SOPL
$'000
Revenue 600
Cost of sales 319 Movement of retained earnings
Gross profit 281 $'000
Other expenses (including
depreciation of $42,000) 186 Balance at 31 December 20X7 282
Finance costs (interest paid) 8 Profit for the period 56
Profit before tax 87 Dividends (24)
Income tax expense 31 Balance at 31 December 20X8 314
Profit for the period 56
You are additionally informed that there have been no disposals of property, plant and
equipment during the year. The new debentures were issued on 1 January 20X8.

I. Cash flows from operating activities Cash received from debenture 30

Profit before tax 87 issued
Adjustments Cash generated from finan act 90
- Depreciation expense 42 Net cash increase during the 21
- Interest expense 8 period
CF before change in WC 137 Cash&cash equivalent at the -14
Operating before changes in WC beg
Increase in inventory -4 Cash & cash equivalent at the 7
Increase in T/R -21 end of the period
Increase in T/P 15
Cash generated from operation 127 Interest payable
Interest paid -8 C/B = 0 O/B = 0
Income tax paid -20  Interest exp Interest paid =
Dividend paid -22 =8 8
Net cash generated from 77
operating activities Tax payable
II. Cash flows from investing act C/B = 39 O/B = 28
Purchase of PPE -146  Tax paid = 20 Tax exp = 31
Net cash used in investing act -146
III. Cash flows from financing act Dividend payable
Cash received from share issued 60

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 C/B = 18 O/B = 16 PPE - CA
 Dividend Dividend O/B = 514 C/B = 146
paid = 22 declared/lia = 24 Reval sur = 10 Depr exp = 42
 Purchase = 146

Exercise 2
SOFP as at 31 Dec 20X1 SOPL for the year ended 31 Dec 20X1
Totto Kross Totto
$'000 $'000 $'000
NCA 1427 Revenue 400
Acc depn -380 COS 220
Investment in Kross 225 GP 180
Inventory 196 Distribution costs 40
T/R 204 Admin expense 80
Cash 99 Operating profit 60
Total 1771 Investment income from Kross 15
Share capital 400 PBT 75
Share premium 212 Tax 21
Retained earnings PAT 54
- opening RE 500
- this period RE 54
Loan 424
T/P 154
Interest accrual 6
Tax payable 21
Total 1771

The following notes are relevant to the preparation of the consolidated financial
statements:
(i) Totto acquired 3 million of the equity shares of Kross on 30 June 20X1 when Kross
had a total of 4 million equity shares in issue. Totto paid a total of $225,000 to acquire
the shares. At acquisition date, fair value of non-current assets of Kross is $10,000
higher than its carrying value.
(ii) It is group accounting policy to account for NCI at its fair value. At the date of
acquisition, the fair value of the NCI in Kross was $75,000
(iii) During the post-acquisition period, Kross sold goods to Totto. The goods
originally cost $20,000 and they were sold to Totto at a mark-up of 25%  Profit =
20,000 x 25% = 5,000. At 31 Dec 20X1, Totti still had 40% of these goods within its
inventory.  Unrealized profit = 5,000 x 40% = 2,000
(iv) At 31 Dec 20X1, Totto has a trade payable of $5,000 to Kross.

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Totto acquired (3/4) 75% of Kross on 30 June 20X1 (mid-year acquisition)
W1
Consideration 225
NCI 75
Fair value of net assets @ DoA
- Share capital -80
- Share premium -55
- Pre-acquisition RE -120-40x6/12 
(kì này acquire 6 tháng)
- FV adjustments at acquisition -10
-275
Goodwill 15

W2: sub bán hàng cho parent

Intra-group trading Cost Profit Sales
Kross sold goods to Totto 20 5 25
- Eliminate intercompany trade
Dr Sales 25
Cr COGS 25
- URP 2
Dr COGS/RE 2
Cr Group inventory 2

W3: Dr T/P 5
Cr T/R 5
W4: Group RE
Totto Kross
per question 554 140
Pre-acquisition RE -140
URP -2
-2
Group share of Kross’ post -2*75% =
ac-RE -1.5
Group RE 552.50
W5: NCI
NCI @ DoA 75
NCI share of Kross profit -2*25%
NCI at reporting date 74.5
(!Dividend income mà con trả cho mẹ  xoá đi
Dividend income con được hưởng  ghi giảm NCI)

Profit after tax con = 40

This period RE = 20
 Trả 20 cổ tức: 15 - mẹ, 5 – NCI

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 (20-2)*25%
SOFP không cần chia tỉ lệ

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Exercise 3: The following statements of profit or loss relate to Potto and its
subsidiary Sotto for the year ended 31 Dec 20X5:

Potto Sotto Potto Sotto

$'00
$'000 $'000 $'000
0
NCA 2,133 886 Revenue 600 133
Acc depn -570 -160 COS 330 67
Investment in Kross 408 0 Gross profit 270 66
Inventory 294 160 Distribution costs 60 13
A/R 306 96 Admin expense 120 20
Cash 149 24 Operating profit 90 33
Total 2,720 1,006 Investment income from Kross 15 0
Share capital 600 160 PBT 105 33
Share premium 388 110 Tax 32 7
Retained earnings PAT 73 26
- Opening RE 750 190
- This period RE 73 6
Loan 636 420
A/P 231 104
Interest accrual 9 6
Tax payable 33 10
Total 2,720 1,006

The following notes are relevant to the preparation of the consolidated financial
statements:
(i) Potto acquired 600,000 of the equity shares of Sotto on 30 June 20X5 when Sotto
had a total of 800,000 equity shares in issue. Potto paid a total of $408,000 to acquire
the shares. At acquisition date, fair value of a land of Sotto is $10,000 higher than its
carrying value.
(ii) It is group accounting policy to account for NCI at its fair value. At the date of
acquisition, the market value of Sotto’s share is 0.52$/share.
(iii) During the post-acquisition period, Potto sold goods to Sotto for $30,000 at a
profit margin of 30%. At 31 Dec 20X5, Sotto still had one third of these goods within
its inventory.
(iv) At 31 Dec 20X5, Sotto has an account payable of $8,000 to Sotto.
Requirement:

(1) Prepare the group’s consolidated statement of financial position as at 31 Dec 20X5

(2) Prepare the Group's consolidated statement of profit or loss as at 31 Dec 20X5

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