QUESTION 1
Plastic
Consolidated Statement of Profit or Loss and other comprehensive income for
Year ended 30 September 2014
R’000
Revenue
Note 1
82 400
Cost of Sales
Note 2
(61 320)
Gross Profit
21 080
Expenses:
(8 585)
Distribution costs [2 000 + (1 200 ×9÷12)]
2 900
Administrative costs
Note 3
5 350
Finance costs
Note 4
335
Profit before tax
12 495
Tax expense [3 100 + (1 000×9÷12)]
3 850
Profit for the year
8 645
Other comprehensive income:
Gain on revaluation (1 500 + 600)
2 100
Total Comprehensive income
10 745
Profit for the year attributable to:
Parent/ Group
NCI
8 465
Note 5
180
8 645
Total Comprehensive income attributed to:
Parent
NCI [180 (note 5) + (600×20%)]
10 445
300
10 745
1
Plastic
Consolidated Statement of financial position for the year ended 30 Sept 2014
R’000
Assets
Non-current assets
PPE
Note 6
37 100
Intangible asset: goodwill
Note 7
5 200
42 300
Current assets
Inventory (4 300 + 1 200 – 120)
5 380
Trade receivables (4 700 + 2 500 – 1 200)
6 000
Bank
300
11 680
Total assets
53 980
Equity and liabilities
Share Capital (10 000 + 4 800)
14 800
Share premium
9 600
Revaluation surplus (2 000 + 600×80%)
2 480
Retained earnings
Note 8
6 765
NCI
Note 9
4 800
Total Equity
34 445
Non-current liabilities
Loan (2 500 + 1 000 – 1 000)
2 500
Current liabilities
Trade payables (3 400 + 3 600 – 800)
6 200
Current tax payable (2 800 + 800)
3 600
2
Deferred consideration (1 800 + 135)
1 935
Bank (1 700 – 400)
1 300
13 035
Total equity and liabilities
53 980
Both the research project and the customer list should recognised as separate
intangible assets on the acquisition of Dilemma. IFRS 3 Business Combination
permits the recognition of separate intangible assets. Both IFRS 3 and IAS 38
require in-process research in a business combination to be separately
recognised at its fair value if it can be reliably measured (R 1 200 000). The
recognition of the customer list should also be recognised at fair value as
prescribed by IFRS 3, that is at R 3 000 000.
3
Notes
R’000
1. Revenue
Parent revenue
Subsidiary revenue (30 000×9÷ 12)
Intragroup sales (300×9)
2. Cost of sales
Parent CoS
Subsidiary CoS (24 000 ×9÷12)
Inventory [Unrealised Profit] (600×25÷125)
Depreciation
Intragroup purchases (300× 9)
3. Administration costs
Parent
Subsidiary (1 800 ×9÷12)
Goodwill impairment
4. Finance costs
Parent
Deferred consideration (1800 ×10%×9÷12)
5. Non-controlling interest
Subsidiary Profit as reported
Post-acquisition (2 000 ×9÷12)
Depreciation
Goodwill impairment
Adjusted post-acquisition profit
Therefore:
NCI in subsidiary profit (900× 20%)
6. Non-current assets
Parent
Subsidiary
Fair Value adjustment @ acquisition
Depreciation
Fair Value adjustment since acquisition
62 600
22 500
(2 700)
82 400
45 800
18 000
120
100
(2 700)
61 320
3 500
1 350
500
5 350
200
135
335
2 000
1 500
(100)
(500)
900
180
18 700
13 900
4 000
(100)
600
37 100
4
R’000
R’000
7. Goodwill
Purchase consideration at cost
2
Share capital (9 000 × 80%× 3 ×R 3)
Deferred consideration (9
14 400
1
000×80%×0.275× 1.1)
1 800
NCI (9 000×20%×R 2.50)
Net Assets of subsidiary (30 Sept 2014)
Post-acquisition profits (2 000×9÷12)
Fair value adjustment: property
Net asset @ acquisition
Goodwill on consolidation
Impairment (30 Sept 2014)
8. Retained earnings
Retained earnings (Parent) - 30 Sept 2014
Less: Profit for the year (Parent)
Consolidated profit for the year
9. NCI in Statement of financial position
NCI @ acquisition
NCI post-acquisition
4 500
20 700
(12 500)
1 500
(4 000)
(15 000)
5 700
(500)
5 200
6 300
(8 000)
8 465
6 765
4 500
300
4 800
5
QUESTION 2
2.1
This is a finance lease.
a) The lease contract covers the significant part of the Asset’s economic or useful life ( the
lease is 5 years and the useful life of the Asset is 5 years)
b) At lease inception the fair value of the Asset (R 250 450) is almost equal to the present value
of the minimum lease payments (368 000)
Amortisation table
Year
1
2
3
4
5
Opening
Balance
MLP
250 450
215 462
175 639
130 312
78 721
69 600
69 600
69 600
69 600
89 600
Interest
Component Capital
Closing
(13.82%)
Component Capital
34 612
34 988
215 462
29 777
39 823
175 639
24 273
45 327
130 312
18 009
51 591
78 721
10 879
78 721
----
2.2
Journals in Ntsenga Ltd
Date
Details
Dr
Cr
Leased Asset(Machine)
250 450
Lease Liability
Acknowledging the leased Asset and lease
liability acquired
Depreciation
50 090
Accumulated Depreciation
Accounting for depreciation for the year
Interest Expense
34 612
Lease liability
34 988
Bank
Recording the interest expense and lease liability
paid for the year
250 450
50 090
69 600
6
QUESTION 3
1. Earnings attributable to ordinary shareholders
Profit for the period
R 1 700 000
Less: Class B dividends
(R
Profit attributable to ordinary shareholders
R 1 680 000
20 000)
2. Weighted Average Number of Ordinary Shares (WANOS)
Class A shares- 30 June 2014
1 000 000
Capitalisation shares- 1 Jan 2015
300 000
3
New Issue- 1 April 2015 (200 000 × 12)
WANOS issued
50 000
1 350 000
3. Basic Earnings Per Share(EPS) for Class A shares
𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠
𝑊𝐴𝑁𝑂𝑆
=
=
1 680 000
1 350 000
R 1. 24
7