ACCA FINAL ASSESSMENT
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This paper is divided into two sections:
Section A – ALL 35 questions are compulsory and MUST be
answered.
Section B – BOTH questions are compulsory and MUST be answered.
Do NOT open this paper until instructed by the supervisor.
Kaplan Publishing/Kaplan Financial
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This question paper must not be removed from the examination
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Paper F3
2 hours
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Time allowed
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December 2014
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Financial Accounting
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
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© Kaplan Financial Limited, 2014
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FINA L ASSESSMENT QUESTIO NS
SECTION A
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ALL 35 QUESTIONS ARE COMPULSORY AND MUST BE ANSWERED
The following sales tax account has been provided by Jenny for the quarter ended 30 June
20X9. The account was prepared by an inexperienced book keeper.
Bank (payment on account to
tax authority)
Bal b/d
2,325
160,245
–––––––
278,850
–––––––
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Bal c/d
–––––––
278,850
–––––––
160,245
116,280
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Bal b/d (amount owing to the
tax authority)
Sales (sales tax element)
Sales tax $
Purchases (sales tax element)
11,450
258,400 Purchases returns (sales tax
element)
9,000
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$160,245 debit
B
$146,895 credit
C
$160,245 credit
D
$123,995 credit
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What is the correct sales tax balance for the quarter ended 30 June 20X9?
A
(2 marks)
In the previous year Simone had a gross profit margin of 10%. In the current year, this
increased to 15%.
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Which of the following reasons might explain this?
The volume of sales has been higher in the current year
B
Current year prompt payment discounts have been higher
C
There have been higher levels of inventory obsolescence in the current year
D
The mix of products sold in the current year has changed
(2 marks)
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Below are the extracts of the trial balance of Pattinsons, a limited liability entity, for the
year ended 30 June 20X8:
Dr
$230,400
Plant and machinery cost
Accumulated depreciation
(as at 1 July 20X8)
Cr
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$115,200
During the year ended 31 June 20X9 a new piece of plant and machinery was purchased at
a cost of $50,000.
The entity depreciates plant and machinery at 20% per annum on a reducing balance basis.
$31,040
C
$72,000
D
$74,000
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B
(2 marks)
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When a prompt payment discount is received from a supplier the double entry is as
follows:
A
Dr Discounts received, Cr Payables control
B
Dr Payables ledger, Cr Discounts received
C
Dr Payables ledger control, Cr Discounts received
D
Dr Payables ledger control, Cr Discounts allowed
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$33,040
(2 mark)
When Roberts’ trial balance was extracted, the total of the debit balances was $208,462
and the total of the credit balances was $208,642. He opened a suspense account for this
difference and, upon investigation, he found that:
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The depreciation charge for the year ended 30 June 20X9 should be
(i)
a cash sale for $50 was debited to the cash account, but no entry was made in the
sales account;
(ii)
the opening inventory figure of $1,200 was omitted from the trial balance.
When Robert corrects these errors what is the balance on his suspense account?
$1,070 debit
B
$1,330 credit
C
$1,280 debit
$970 credit
(2 marks)
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D
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Whilst preparing is accounts, Edward discovered that he had incorrectly classified an item
of revenue expenditure as capital expenditure.
Capital
A
Increased
Reduced
B
Reduced
Increased
C
Increased
Increased
D
Reduced
Reduced
(2 marks)
At 31 May 20X8, Bella’s capital balance was $144,867. During the year to 31 May 20X9,
her profit was $25,764. At 31 May 20X9 her capital balance was $153,153
B
$17,478
C
$34,050
D
$70,814
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$8,286
(2 marks)
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What were Bella’s drawings for the year to 31 May 20X9?
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Net profit
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When the error is corrected, how will his net profit and capital be affected?
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FINA L ASSESSMENT QUESTIO NS
The following bank reconciliation has been prepared by an entity’s bookkeeper as at
31 July 20X9:
Overdraft per bank statement
Add: Unpresented cheques
Less: Lodgements/deposits credited
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Balance per cash book
$
47,500
2,400
45,700
––––––
95,600
––––––
What is the correct balance per the cash book?
B
$4,200 overdraft
C
$4,200 in hand
D
$90,800 overdraft
(2 marks)
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$90,800 in hand
At 30 April 20X9 Forks, a limited liability entity, was being sued by an ex-employee for
wrongful dismissal. Forks has been advised that the claim is 95% likely to succeed, and
that damages of $140,000 will be payable if the claim does succeed.
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A
How should this matter be treated in the financial statements of Forks for the year ended
30 April 20X9?
A provision should be made for $140,000
B
The matter should be ignored
C
A provision should be made for $133,000
D
The matter should be disclosed by a note
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An entity lets out a number of properties. The total rent received in the year ended 30
June 20X9 was $617,000. The following amounts were received in advance or were in
arrears at the dates shown:
Rent received in advance
Rent in arrears (all subsequently received)
30 Jun 20X9
$
25,250
12,250
1 Jul 20X8
$
37,900
31,000
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What amount of rental income should appear in the statement of profit or loss for the year
ended 30 June 20X9?
(2 marks)
Smith acquired 80% of the equity share capital of Jones for $1,400,000. At that date the
share capital of Jones consisted of 600,000 equity shares of 50c each and its reserves
were $50,000.
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Which of the following statements is correct?
A
Capital expenditure on research must be capitalised and depreciated as normal
B
Dividends proposed after the year end must not be accrued in the accounts
C
Contingent liabilities should always be provided in the accounts
D
Land should be depreciated over 50 years
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The fair value of the non-controlling interest was valued at $525,000 at the date of
acquisition. In the consolidated statement of financial position of Smith Group what
amount should appear for goodwill?
(2 marks)
(2 marks)
Ark, a limited liability entity, has the following capital structure:
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200,000 Equity shares of 50c each
20,000 20% irredeemable preference shares of $1 each
$
100,000
20,000
The preference shareholders had their dividend paid during the year.
The following information has been provided for equity shareholders:
(i)
Dividend declared before the year end was 10 cents per share.
(ii)
Dividend declared after the year end was 15 cents per share.
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What are the dividends that should be included in the statement of changes in equity
(SOCIE) and the statement of financial position for the year ended 31 March 20X9?
Statement of Financial Position
A
24,000
20,000
B
20,000
20,000
C
50,000
4,000
D
50,000
50,000
SOCIE
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$
6
$
(2 marks)
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B
Statement of cash flows and statement of profit or loss
C
Statement of profit or loss and statement of financial position
D
Statement of changes in equity and statement of financial position
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Statement of cash flows
(2 marks)
A
$39,915
B
$40,755
C
$41,515
D
$42,995
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You are preparing the final accounts for a business. The cost of the items in closing
inventory is $41,875. This includes some items which cost $1,960 and which were
damaged in transit. You have estimated that it will cost $360 to repair the items, and they
can then be sold for $1,200. What is the correct inventory valuation for inclusion in the
final accounts?
(2 marks)
Mark’s trial balance at 31 October 20X9 includes the following balances:
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In a set of financial statements the proceeds received on disposal of non-current assets
are normally disclosed in which of the following statements?
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FINA L ASSESSMENT QUESTIO NS
Machinery at cost
Accumulated depreciation on machinery
Trade receivables
Allowance for receivables
Bank overdraft
Inventory at 1 November 20X8
$
85,800
21,750
42,650
1,570
6,470
21,650
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His inventory at 31 October 20X9 is valued at $22,300
What value should be reported for current assets in Mark’s statement of financial position
at 31 October 20X9?
(2 marks)
17
A trial balance is made up of a list of debit balances and credit balances.
Which of the following statements is correct?
Every debit balance represents an expense
B
Assets are represented by debit balances
C
Liabilities are represented by debit balances
Income is included in the list of debit balances
(2 marks)
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(ii)
Closing inventory.
(iii)
Loans.
(iv)
Proposed dividends.
(v)
Dividends paid.
A
(i), (ii) and (iv)
B
(i), (ii) and (iii)
C
(i) and (iv)
D
(i) and (v)
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Profit for the year.
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(i)
(2 marks)
During the year to 30 September 20X9 Claire paid $16,750 for light and heat. At
1 October 20X8 she owed $2,565 in relation to light and heat expenses incurred for the
period to 30 September 20X8 and at 30 September 20X9 she had paid $956 in advance for
light and heat.
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Which of the items listed below could appear in an entity’s statement of changes in
equity?
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What charge for light and heat will appear in the statement of profit or loss for the year
ended 30 September 20X9?
(2 marks)
At 30 September 20X8 Shauna had non-current assets with a carrying value of $345,876.
At 30 September 20X9 the non-current assets carrying value was $457,987. During the year
to 30 September 20X9 a non-current asset was sold for $2,870, resulting in a profit on
disposal of $1,500. Depreciation on all non-current assets during the year amounted to
$16,750.
A
$130,231
B
$131,731
C
$130,361
D
None of the above
(2 marks)
At 30 November 20X9 Hollie’s general ledger included the following balances:
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Assuming that these were the only adjustments to non-current assets during the year what
were the additions to non-current assets during the year to 30 September 2009?
Trade receivables
$132,425
$2,430
Hollie’s allowance for receivable should be revised to
$1,100
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Allowance for receivables at 1 December 20X8
How should receivables be reported on Hollie’s statement of financial position?
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Current asset of $132,425, Current liability $1,100
B
Current asset of $131,325
C
Current asset of $134,855, Current liability $1,100
D
Current asset of $133,755
(2 marks)
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A
Cash book
B
The journal
C
Purchase day book
D
Sales day book
(2 marks)
At 1 July 20X8 Jenks, an entity, had issued share capital of $1,500,000 comprised of equity
shares with a nominal value of $1.25 per share, together with a balance on its share
premium account of $320,000.
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In which of the following books of prime entry would a disposal of a non-current asset
appear?
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FINA L ASSESSMENT QUESTIO NS
During the year to 30 June 20X9, Jenks made a bonus issue of equity shares of 1 for 6. This
was fully taken up by the equity shareholders.
$70,000
C
$75,000
D
$320,000
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B
(2 marks)
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$120,000
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What is the balance on the share premium account at 30 June 20X9?
A
An entity, Dibble, has an accounting year-end of 31 December and has 120,000 $1 equity
shares in issue. During the year ended 31 December 20X0 an interim dividend of 5 cents
per share was paid and a final dividend of 10 cents per share was proposed on 30
December.
In relation to equity dividends how much will appear on the SOCIE for the year ended 31
December 20X0?
B
NIL
C
$18,000
D
$12,000
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$6,000
(2 marks)
Which of the following errors should be detected by preparing a trial balance?
A
A credit with no corresponding debit entry
B
An error of commission
C
A transaction for which no entries were made
An error of original entry
(2 marks)
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D
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Barrowhall, an entity, had an under provision of $5,000 on its tax liability account at 31
January 20X9 before accounting for the current year income tax charge.
The estimated tax on profit for the year ended 31 January 20X9 was $83,000.
A
$83,000
$83,000
B
$88,000
$88,000
C
$88,000
$83,000
D
$78,000
$83,000
(2 marks)
On 1 April 20X8 Brendon was owed $61,784 by his credit customers. During the year to 31
March 20X9 his credit sales totalled $660,846, discounts allowed totalled $11,945,
irrecoverable debts were $6,150 and dishonoured cheques amounted to $250. The
amount received from credit customers during the year was $655,135. On 31 March 20X9,
Brendon was owed $52,278 from his credit customers.
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Statement of financial position
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Profit or loss
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What amounts should be included in the financial statements for year ended 31 January
20X9 in respect of tax?
(i)
Develop single set of high quality accounting standards.
(ii)
Promote use and application of accounting standards.
(iii)
Encourage the convergence of national and international accounting standards.
A
None of the above
B
(i) and (ii) only
C
(iii) only
D
All of the above
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The International Accounting Standards Board (IASB) is the supervisory body for the
regulatory framework of accounting. Its objective is to:
(2 marks)
Which of the following choices comprises the four enhancing qualitative characteristics of
financial information based upon the IASB's Conceptual Framework for Financial
Reporting?
A
B
Relevance, reliability, prudence and understandability
Relevance, faithful representation, prudence and accruals
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Comparability, verifiability, timeliness and understandability
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What was the amount of interest was charged to credit customers for late payment during
the year ended 31 March 20X9?
(2 marks)
Relevance, reliability, prudence, and understandability
(2 marks)
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Carla is preparing a bank reconciliation. The bank balance in the general ledger is $3,750
credit. The only items which need to be dealt with are:
(i)
a cheque for $2,466 issued to a supplier which has not yet appeared on the bank
statement
(ii)
a cheque receipt from a credit customer of $1,701 has been dishonoured, Carla has
not yet recorded this
(iii)
bank interest of $735 has been charged by the bank, but not yet recorded by Carla.
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FINA L ASSESSMENT QUESTIO NS
$6,186
B
$3,750
C
$5,520
D
$3,720
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What is the closing balance on the bank statement (before adjusting for any of the above
items)?
(2 marks)
Durzo, an entity, has the following building in its financial statements at 30 June 20X8:
Cost
$2,400,000
Accumulated depreciation
$(600,000)
–––––––––
Net book value
$1,800,000
–––––––––
It has been decided to revalue the property to $3,600,000 on 1 July 20X8.
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What is the double entry to record the above revaluation?
B
Cost
Dr
Accumulated depreciation
Cr
Revaluation reserve
1,800,000
Cost
1,800,000
Revaluation reserve
1,800,000
Cost
1,200,000
Revaluation reserve
1,200,000
Revaluation reserve
1,800,000
Cost
1,200,000
Dr
Cr
C
Dr
Cr
D
$
Dr
Dr
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Cr
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Cr
Accumulated depreciation
1,200,000
600,000
600,000
(2 marks)
After completing his final accounts, Kyler identified that he had understated a year end
accrual.
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How are Kyler’s net profit and capital affected by the correction of the error?
Net profit
Net assets
A
Increased
Increased
B
Increased
Decreased
C
Decreased
Increased
D
Decreased
Decreased
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(2 marks)
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Whilst carrying out the reconciliation of the balance on the payables control account in
the general ledger with the supplier’s statements, Jarl discovered the following errors:
(i)
A supplier’s statement had not accounted for cash in transit of $1,200.
(ii)
The total of the purchase day book was overcast by $8,000.
(iii)
Jarl took a settlement discount of $400 that was not allowed by the supplier on their
statement as the payment was late.
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(i) and (ii) only
B
(ii) and (iii) only
C
(iii) only
D
All of the above
(2 marks)
Tanya’s accounting year end is 30 June. She depreciates motor vehicles at 20% per annum
on the straight line basis. A full depreciation charge is made in the year of acquisition, and
none in the year of disposal.
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In September 20X6 Tanya bought a van for $27,000.
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Which of the above errors require a correcting entry in the control account?
35
A
A profit of $4,200
B
A loss of $4,200
C
A profit of $1,200
D
A loss of $1,200
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If the van is sold for $12,000 in January 20X9, what will be Tanya’s profit or loss on
disposal?
(2 marks)
Barry’s Bakery has a quick ratio of 1.6:1 which had fallen from 1.9:1.
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Which of the following might explain this?
The allowance for receivables has been reduced
B
Credit control has been poor
C
The entity purchased new plant and machinery for cash
D
Inventory levels are lower in the current year
(2 marks)
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SECTION B
BOTH QUESTIONS ARE COMPULSORY AND MUST BE ANSWERED
The statements of profit or loss for the year ended 30 June 20X2, together with the
statements of financial position at 30 June 20X2 for two entities, Gold and Silver are given
below:
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Statements of profit or loss for the year ended 30 June 20X2
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Tax
Profit for the year
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Finance cost
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Gross profit
Distribution and admin expenses
Silver
$000
7,500
(3,000)
––––––
4,500
(1,000)
––––––
3,500
(150)
––––––
3,350
(450)
––––––
2,900
––––––
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Revenue
Cost of sales
Gold
$000
15,000
(9,000)
––––––
6,000
(1,500)
––––––
4,500
(250)
––––––
4,250
(500)
––––––
3,750
––––––
There were no items of other comprehensive income during the year
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Statements of financial position at 30 June 20X2
Non-current assets
Property, plant and equipment
Investments:
Investment in Silver at cost
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Current assets
Inventory
Trade receivables
Cash and cash equivalents
Silver
$000
11,000
7,000
10,000
––––––
21,000
––––––
7,000
10,000
9,000
2,000
––––––
42,000
––––––
4,000
3,500
500
––––––
15,000
––––––
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Total assets
Gold
$000
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
3,000
1,000
5,500
––––––
9,500
10,000
500
––––––
42,000
––––––
5,050
450
––––––
15,000
––––––
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Total equity and liabilities
20,000
4,000
7,500
––––––
31,500
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Current liabilities
Trade payables
Tax liability
Silver
$000
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Equity and liabilities
Equity shares of $1 each
Share premium
Retained earnings
Gold
$000
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Additional information:
The amounts included in the statements of profit or loss have accrued evenly
throughout the year.
(ii)
Gold acquired eighty per cent of Silver’s equity shares on 1 January 20X2. At that
date, Silver had a building which had a fair value of $1,000,000 in excess of its
carrying value. (Note: ignore any depreciation that may be required on this fair value
adjustment).
(iii)
At the date of acquisition, the fair value of the non-controlling interest in Silver was
$2,000,000. It is group policy to account for goodwill using the full goodwill method.
(iv)
Gold carried out an impairment review of the goodwill arising on acquisition of Silver
and found that as at 30 June 20X2, goodwill was not impaired.
(v)
Following acquisition of Silver, Gold sold goods to Silver for $500,000. Gold uses a
mark up of 100% on cost on the goods sold to Silver. At 30 June 20X2 all the goods
remained in Silver’s closing inventory and Silver had not yet paid for the goods.
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(i)
Required:
Explain the difference between a subsidiary and an associate. Your answer should
include reference to how they are accounted for in the group accounts. (3 marks)
(b)
Prepare the group statement of profit or loss and other comprehensive income, for
the year ended 30 June 20X2 together with the group statement of financial
position at 30 June 20X2 for the Gold group.
(12 marks)
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(a)
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(Total: 15 marks)
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FINA L ASSESSMENT QUESTIO NS
The following financial statements and supporting information relate to Bassoon, a limited
liability entity:
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Statement of profit or loss and other comprehensive income for the year ended 30 June
20X8
$000
Revenue
85,700
Cost of sales
(58,650)
––––––
Gross profit
27,050
Distribution costs
(2,270)
Administration expenses
(755)
Interest payable
(250)
––––––
Profit before tax
23,775
Income tax expense
(4,500)
––––––
Profit for the year
19,275
Other comprehensive income: Revaluation surplus on land
10,000
––––––
Total comprehensive income for the year
29,275
––––––
Bassoon - Statement of financial position at 30 June:
ASSETS
Non-current assets
Property, plant and equipment - cost or valuation
Property, plant and equipment – accumulated depreciation
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Current assets
Inventories
Trade receivables
Cash and equivalents
Total assets
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EQUITY AND LIABILITIES
Equity share capital
Share premium
Revaluation reserve
Retained earnings
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Total equity
Non-current liabilities
Bank loan
Current liabilities
Trade payables
Income tax
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Total equity and liabilities
20X8
20X7
216,250
(122,250)
–––––––
94,000
200,000
(110,000)
–––––––
90,000
37,250
39,250
3,750
–––––––
174,250
–––––––
31,500
32,500
8,000
–––––––
162,000
–––––––
35,000
3,000
19,000
85,275
–––––––
142,275
30,000
8,000
9,000
75,000
–––––
122,000
6,975
10,000
20,500
4,500
–––––––
174,250
–––––––
23,000
7,000
–––––––
162,000
–––––––
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
Notes:
The following information is relevant to the financial statements of Bassoon:
During the year ended 30 June 20X8, Bassoon recorded several transactions relating
to property, plant and equipment as follows:
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(i)
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(a)
Plant and equipment which cost $21.75 million was sold for $13.0 million. The
loss on disposal of $3.0 million is included in cost of sales.
(b)
Freehold land was revalued to its fair value at 30 June 20X8.
Bassoon estimated that the income tax liability arising on the profit for the year
ended 30 June 20X8 was $4.5 million.
(iii)
During the year, Bassoon made a bonus issue of one share for every six shares in
issue.
log
(ii)
l.b
Required:
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Based upon the available information, prepare a statement of cash flows using the
indirect method for Bassoon for the year ended 30 June 20X8 in accordance with the
requirements of IAS 7.
(15 marks)
16
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ACCA
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Paper F3 and FFA
Financial Accounting
ca
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December 2014
To gain maximum benefit, do not refer to these answers
until you have completed the final assessment questions
and submitted them for marking.
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Final Assessment – Answers
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
ac
© Kaplan Financial Limited, 2014
ee
All rights reserved. No part of this examination may be reproduced or transmitted in any form or
by any means, electronic or mechanical, including photocopying, recording, or by any information
storage and retrieval system, without prior permission from Kaplan Publishing.
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The text in this material and any others made available by any Kaplan Group company does not
amount to advice on a particular matter and should not be taken as such. No reliance should be
placed on the content as the basis for any investment or other decision or in connection with any
advice given to third parties. Please consult your appropriate professional adviser as necessary.
Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to
any person in respect of any losses or other claims, whether direct, indirect, incidental, and
consequential or otherwise arising in relation to the use of such materials.
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F I NA L A S SES S ME N T A NSWE RS
SECTION A
B
Sales tax
Bank (part payment on
account to the tax authority)
Purchases (sales tax element)
Bal b/d
Sales (sales tax element)
Purchases returns (sales tax
element)
Bal b/d
D
–––––––
272,175
–––––––
146,895
ria
2
$
11,450
258,400
2,325
log
146,895
–––––––
272,175
–––––––
l.b
Bal c/d
$
9,000
116,280
sp
ot.
1
Increased volume of sales would have increased costs too.
Settlement discounts aren’t part of the cost of sale calculation.
ym
ate
Higher levels of inventory obsolescence would result in a lower gross profit margin %.
3
A
C
5
D
D
Suspense a/c
$
180 Opening inventory
50
970
1,200
Bal b/d
$
1,200
1,200
970
ee
6
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Bal b/d
Cash sale
Bal c/d
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($230,400 - $115,200) × 20% = $23,040
4
7
B
/fr
Closing capital = opening capital + capital introduced + profit – drawings
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Drawings = opening capital + profit – closing capital
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Drawings = $144,867 + $25,764 – $153,153 = $17,478
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B
Balance per cash book
9
A
10
$610,900
log
Overdraft per bank statement
Unpresented cheques
Uncleared lodgements
sp
ot.
$
(47,500)
(2,400)
45,700
––––––
(4,200)
––––––
l.b
Total rent received during the year
Add:
1/7/X8 rent received in advance
Less:
30/6/X9 rent received in advance
Less:
1/7/X8 rent in arrears
Add:
30/6/X9 rent in arrears
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Total rent receivable for the year ended 30/6/X9
11
$
617,000
37,900
25,250
31,000
12,250
–––––––
610,900
–––––––
ria
8
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$
1,400,000
525,000
B
13
A
ac
12
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Cost of investment
FV of NCI @ acquisition
Less fair value of net assets at acquisition –
(600,000 × $0.50) + $50,000
ee
Equity shares
Irredeemable preference shares
200,000 @ 10c
$20,000 × 20%
(350,000)
–––––––––
1,575,000
–––––––––
SOCIE
$
20,000
4,000
–––––––
24,000
–––––––
/fr
Statement of financial position
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Dividends payable equity shares
4
200,000 @ 10c
$20,000
Dividend declared after year end are excluded from the financial statements.
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B
$
41,875
(1,960)
1,200
(360)
–––––––
$40,755
–––––––
Inventory
Damaged goods
Sale proceeds
Repair costs before sale
$63,380
$
22,300
Inventory
Receivables
Allowance for receivables
B
18
D
ria
42,650
(1,570)
–––––––
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17
l.b
16
sp
ot.
A
log
14
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F I NA L A S SES S ME N T A NSWE RS
41,080
–––––––
63,380
–––––––
$13,229
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Closing inventory will be included in the statement of profit or loss and loans will be
included in the statement of financial position. Dividends paid during the year should be
accounted for in the SOCIE whilst dividends proposed but not approved at the year-end
should be excluded from the SOCIE.
19
Bank payment – opening accrual – closing prepayment
$16,750 – $2,565 – $956 = $13,229
A
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20
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Bal b/d
Additions
Bal b/d
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Non-current assets
$
345,876 Disposal CV
130,231 Depreciation
Bal c/d
––––––––
476,107
––––––––
457,987
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$
1,370
16,750
457,987
––––––––
476,107
––––––––
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B
22
B
23
B
sp
ot.
($132,425 – $1,100)
$1,500,000/$1.25 = 1,200,000 equity shares in issue
1,200,000/6 = 200,000 bonus shares to be issued × $1.25 = $250,000
log
Increase equity share capital and reduce share premium account by $250,000
Share premium account balance = $320,000 – $250,000 = $70,000
A
l.b
24
25
A
26
C
27
$2,628
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The dividend must be proposed and approved before the year-end if it is to be accounted
for in the financial statements.
Receivables control account
D
29
A
Discounts allowed
Irrecoverable debts
Bank
Bal c/d
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28
$
11,945
6,150
655,135
52,278
––––––––
725,508
––––––––
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Bal b/d
ca
stu
d
Bal b/d
Dishonoured cheques
Interest
Credit sales
$
61,784
250
2,628
660,846
––––––––
725,508
––––––––
52,278
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D
Bank
Bal b/d
Dishonoured cheque
6,186 Bank interest
––––––
6,186
––––––
Bal b/d
log
Bal c/d
32
D
33
B
34
B
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Balance per updated cash book
(3,720) Bal Fig
(2,466)
––––––
(6,186)
l.b
Balance per Bank statement
Less: Unpresented cheques
31
$
3,750
1,701
735
––––––
6,186
––––––
6,186
sp
ot.
$
co
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F I NA L A S SES S ME N T A NSWE RS
$27,000 × 20% = $5,400 × 2 (June 20X7 & June 20X8) = $10,800
$27,000 – $10,800 = $16,200 carrying value – $12,000 proceeds = $4,200 loss
C
ca
stu
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35
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A and B would both increase current assets, D refers to inventory which is excluded from
the calculation. C would reduce the cash balance and therefore reduce the quick ratio.
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
SECTION B
GOLD GROUP
(a)
sp
ot.
1
A subsidiary is an entity which is controlled by another entity, usually referred to as a
parent or holding entity. If one entity controls another, they are regarded as a group
and annual consolidated accounts must be prepared for the group. This will include
accounting for goodwill and non-controlling interest. Control is normally determined
by holding a majority of the voting share capital of another entity.
(1.5 marks)
log
An associate is normally regarded as being an interest in another entity where an
entity owns between 20% - 50% of the voting share capital of another entity. This is
not sufficient to enable control to be exercise, but
(1.5 marks)
Gold Group Consolidated statement of profit or loss and other comprehensive
income for the year ended 30 June 20X2
ria
(b)
l.b
(Total 3.0 marks)
ym
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Revenue (15,000 + (6/12 × 7,500) – 500(IC))
Cost of sales (9,000 + (6/12 × 3,000) – 500(IC) + 250(PURP)
Gross profit
Distribution and admin expenses (1,500 + (6/12 × 1,000))
Profit from operations
Finance cost (250 + (6/12 × 150))
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Profit before tax
Taxation (500 + (6/12 × 450))
Profit for the year
Other comprehensive income:
Total comprehensive income for the year
4,660
290
––––––
4,950
––––––
Marks
1.0
2.0
0.5
0.5
0.5
––––––
4.5
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Profit for the year is attributable to:
Group (bal fig)
Non-controlling interest (20% × 6/12 ×$2,900)
$000
18,250
(10,250)
––––––
8,000
(2,000)
––––––
6,000
(325)
––––––
5,675
(725)
––––––
4,950
Nil
––––––
4,950
––––––
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Gold Group - Consolidated statement of financial position at 30 June 20X2
log
1.0
0.5
0.5
0.5
l.b
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ca
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1.5
13,750
12,000
2,500
––––––
50,200
––––––
Total assets
Current liabilities
Trade payables (10,000 + 5,050 – 500(IC))
Tax liabilities (500 + 450)
2,950
19,000
––––––
21,950
Current assets
Inventories (10,000 + 4,000 – 250(W6))
Receivables (9,000 + 3,500 – 500(IC))
Cash at bank (2,000 + 500)
Equity and liabilities
Equity share capital
Share premium
Retained earnings (W5)
Non-controlling interest (W4)
Marks
sp
ot.
Non-current assets
Goodwill (W3)
Property, plant and equipment
(11,000 + 7,000 + 1,000(FVA))
$000
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F I NA L A S SES S ME N T A NSWE RS
20,000
4,000
8,410
2,290
––––––
34,700
14,550
950
––––––
50,200
––––––
1.5
1.0
0.5
0.5
––––––
7.5
Workings:
(W1) Group structure
•
•
Gold owns 80% of the shares of Silver so Silver is a subsidiary.
Note that the acquisition of shares was made during the year.
The NCI in Silver is therefore 20%.
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•
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
(W2) Net assets of Silver (sub)
sp
ot.
Reporting date
$000
3,000
1,000
5,500
1,000
––––––
10,500
––––––
log
Share capital
Share premium
Retained earnings (W2a)
Fair value adjustment
Date of acquisition
$000
3,000
1,000
4,050
1,000
––––––
9,050
––––––
l.b
(W2a) Retained earnings at date of acquisition
$000
5,500
(1,450)
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Retained earnings at reporting date
Less: post-acquisition element of profit for the year
(6/12 × 2,900)
Retained earnings at date of acquisition
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–––––
4,050
–––––
(W3) Goodwill on acquisition of Silver
ca
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Cost of investment
Fair value of NCI at date of acquisition
Net assets of Silver at acquisition (W2)
Goodwill at acquisition
$000
10,000
2,000
–––––
12,000
(9,050)
–––––
2,950
–––––
(W4) Non-controlling interest
ac
$000
2,000
290
ee
Non-controlling interest at date of acquisition
NCI share of post-acquisition retained earnings
(20% × (10,500 – 9,050)) (W2)
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–––––
2,290
–––––
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(W5) Retained earnings
$000
7,500
1,160
sp
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Gold
Group share of post-acquisition retained earnings
(80% × (10,500 – 9,050) (W2))
Less: Provision for unrealised profit made by Gold
(W6)
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F I NA L A S SES S ME N T A NSWE RS
(250)
log
–––––
8,410
–––––
(W6) Provision for unrealised profit
ria
ym
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Selling price (200% of cost)
l.b
Cost (100%)
Profit (100% of cost) all unrealised (W5)
$000
250
250
–––––
500
–––––
Marking scheme
(a)
(b)
Subsidiary and associate
Group statement of P&L
Group statement of financial position
Marks
3
4.5
7.5
–––
15
–––
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
2
BASSOON
Bassoon - Statement of cash flows for the year ended 31 March 20X1
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation charge (W2)
Loss on sale of plant and equipment (W1)
Interest payable
Increase in inventories ($37,250 - $31,500)
Increase in trade receivables ($39,250 - $32,500)
Decrease in trade payables ($23,000 – $20,500)
23,775
log
18,000
3,000
250
(5,750)
(6,750)
(2,500)
$000
Marks
sp
ot.
$000
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0.5
0.5
0.5
1.0
1.0
1.0
–––––
25,525
(250)
(7,000)
l.b
Cash generated from operations
ria
Income taxes paid (W3)
ym
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Cash flows from investing activities
Cash purchase of property, plant and equipment (W2)
Disposal proceeds of plant and equipment (W1)
–––––
0.5
1.0
22,775
(28,000)
13,000
–––––
Cash flows from financing activities
Repayment of bank loan (W4)
(3,025)
Dividend paid (W6)
(9,000)
–––––
1.0
1.0
(15,000)
1.0
2.0
2.0
(12,025)
ca
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d
–––––
Decrease in cash and cash equivalents ($8,000 - $3,750)
Cash and cash equivalents b/fwd
(4,250)
8,000
1.0
0.5
–––––
Cash and cash equivalents c/fwd
3,750
0.5
–––––
–––––
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15.0
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Workings
(W1) PPE disposal in year
sp
ot.
Disposal proceeds (per question)
Cost of PPE disposed of
Acc dep’n to date (bal fig)
$000
13,000
21,750
(5,750)
–––––
CV of disposal
(16,000)
–––––
(3,000)
–––––
log
Loss on disposal
ca
stu
d
(W3) Income tax paid
ria
Cost or val’n
$000
200,000
(21,750)
10,000
ym
ate
PPE b/fwd
PPE disposal in year (W1)
Revaluation of land
Depreciation charge (bal fig)
Cash paid – additions (bal fig)
l.b
(W2) PPE reconciliation for the year
PPE c/fwd
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F I NA L A S SES S ME N T A NSWE RS
Income tax liability b/fwd
Income tax charge for the year per P&L
Cash paid in year
Income tax liability c/fwd
Acc dep’n
$000
110,000
(5,750)
18,000
28,000
–––––
216,250
–––––
–––––
122,250
–––––
$000
7,000
4,500
(7,000)
–––––
4,500
–––––
ac
(W4) Bank loan – amount repaid
ee
Bank loan b/fwd
Cash paid
$000
10,000
(3,025)
–––––
6,975
–––––
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Bank loan c/fwd
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A C C A F3 A ND F F A : FI NA NCI AL AC CO U NT I NG
(W5) Issue of shares in the year
Balance b/fwd
Bonus issue (1/6) not a cash issue
log
Balance c/fwd
Share
premium
$000
8,000
(5,000)
–––––
3,000
–––––
sp
ot.
Share
capital
$000
30,000
5,000
–––––
35,000
–––––
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(W6) Dividend paid
l.b
Retained earnings b/fwd
Profit after tax for the year
Cash paid
$000
75,000
19,275
(9,000)
–––––
85,275
–––––
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Balance c/fwd
Marking scheme
Marks
15
–––
15
–––
Statement of cash flows (per answer)
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Total
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