MUNHUMUTAPA SCHOOL OF COMMERCE
DEPARTMENT OF ACCOUNTING AND INFORMATION SYSTEMS
BACHELOR OF COMMERCE DEGREE
LEVEL 4 SEMESTER 2
EXAMINATION QUESTION PAPER
MODULE CODE
HACC427/HSPAC421
MODULE NARRATION
GROUP FINANCIAL REPORTING
DATE
DURATION
4 HOURS
INSTRUCTIONS TO CANDIDATES:
1. Paper consists of three (3) questions.
2. Answer all questions.
3. Start each answer on a fresh page.
Question 1
The following information relates to companies A, B and C who are related parties in terms of IAS24
Credits
Share Capital: 400 000 shares
280 000 shares
300 000 shares
Retained earnings beginning of year
Profit before tax
Long term liability
Debits
Property, plant and equipment
Investment in B Limited
Investment in C Limited
Trade and other receivables
Income tax expense
Dividends paid
A Ltd.
B Ltd.
$
$
C Ltd
$
400000
280000
600000 380000
500000 400000
604000
0
2104000 1060000
300000
420000
420000
190000
1330000
690000 764000 874000
330000
464000
410000
96000 260000
150000 120000 126000
60000
80000
70000
2104000 1060000 1330000
Additional Information
1. A Ltd purchased 210 000 shares in B Limited on 1 January 2019 when B Limited's
retained earnings amounted to $120 000. The fair values of the identifiable assets, liabilities
and contingent liabilities at the acquisition date of B Ltd were considered equal to the
carrying amounts of these items.
2. A Ltd acquired 240 000 shares in C Ltd on 1 January 2020 when C Limited's
retained earnings amounted to $260 000. The fair values of the identifiable assets and
liabilities and contingent liabilities at the acquisition date of C were considered to be
equal to the carrying amounts of these items
3. Each share carries one vote.
4. The group uses the partial goodwill method to recognise goodwill. Goodwill was not
considered to be impaired at year end.
5. The fair value of available-for-sale financial assets is equal to the cost price thereof.
Required
Prepare the consolidated annual financial statement of A Group for the year ended 31
December 2022.
(a) Statement of financial position
(b) Statement of comphrensive income
(c ) Statement of changes in equity
(d) Workings to support your answer
14 marks
6 marks
10 marks
10 marks
Total 40 marks
Question 2
Costa Limited
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2022
Revenue
Cost of sales
Gross profit
Other income
Other expenses
Finance costs
Profit before taxation
Taxation
Profit after taxation
Other comprehensive income
Property Plant and Equipment revaluation
Property revaluation reserve
Deferred taxation
$
4364650
-3000000
1364650
479350
-565500
-74150
1204350
-362805
841545
900000
765000
135000
Available for sale investments revaluation
Available for sale investments reserve
Deferred taxation
Total comprehensive income for the year
75000
52500
22500
1816545
Profit for the year attributable to:
Equity holders of the parent
Non-controlling interest
Total income for the year
799545
42000
841545
Total comprehensive income for the year
attributable to:
Equity holders of the parent
Non-controlling interest
Total comprehensive income for the year
1774545
42000
1816545
Costa Limited
Consolidated trial balance on 31 December 2021 and December 2022
Credits
Share Capital - $2 ordinary shares
Share Premium
Revaluations surplus
Asset replacement reserve
Mark-to market reserve
Retained earnings
Non-controlling interest
Long-term borrowings
Deferred tax
Trade and other payables
Bank overdraft
Shareholders for dividends
Current tax payable
Debits
Property, plant and equipment
Goodwill at carrying amount
Available for sale investments
Inventories
Trade and other receivables
2021
$
500000
75000
0
150000
0
1987815
184500
1500000
0
3304950
10500
40000
740000
8492765
2022
$
650000
75000
765000
150000
52500
2058060
174100
2134000
157500
3094000
224500
90000
214865
9839525
3177500
60000
900000
4000000
355265
8492765
4125000
55000
1925000
2200000
1534525
9839525
Costa Limited group
Consolidated statement of cash flows for the year ended 31 December 2022
Capital Account
Share capital
Share premium
PPE revaluation
Asset replace Reserve
Financial asset revalue
Retained earnings
NCI
Opening
Changes during Dividend
Closing balances
balances
the year
$
$
$
$
500000
0
500000
75000
0
75000
0
765000
765000
150000
0
150000
0
52500
52500
1987815
7995445
(729300)
2058060
184500
42000
(52400)
174100
Additional information
1- No PPE were sold during the year. All the additions to PPE were in respect of
delivery vehicles to enable the group to be in a position to expand its operations.
2- After negotiations with the bank, the directors obtained a long term loan of $1 000 000
3- Other expenses consist of the following:
Depreciation $435 500-00
Impairment of goodwill $5 000-00
4- Other income solely consists of Investment income.
5- Assume a 30% tax rate
Required
Use the direct method to:
Prepare the consolidated statement of cash flows for the year ended 31 December 2022.
(40
marks)
Question 3
The following information relates to three companies Hat, Sat & All.
Statement of changes in equity for the year ended 31 December 2022
H Ltd
S Ltd
Balance brought forward
Net profit after tax
Dividends declared
Closing balance
A Ltd
$
$
$
1892800
851240
-500000
2244040
567840
362718
-200000
730558
371840
88234
-100000
360074
Statements of financial position as at 31 December 2023
Assets
Tangible non-current assets
Investments in quoted companies
70% in S Ltd
35% in A Ltd
Current Assets
Inventory
Trade receivables
Dividends receivables
Cash at bank
Hat Ltd Sat Ltd All Ltd
$
$
$
1960000 590000
520000
688000
116000
0
0
0
0
686140 793962
705744 176436
175000
0
170600
85200
4501484 1645598
76416
68614
0
104920
769950
Equity and Reserves
Share capital
Retained earnings
Shareholders capital and reserves
Non- Current Liabilities
Long term loan
Current liabilities
Dividends payable
1000000 500000
2244040 730558
3244040 1230558
200000
360074
560074
757444
215040
109876
500000 200000
4501484 1645598
100000
769950
Additional Information
1. When H Ltd acquired its interest in the other companies many years ago, the retained
earnings were $220 000 and $ 170 000 for S Ltd and A Ltd
respectively.
Required:
Prepare the consolidated statement of financial position as at 31 December 2022
(20 marks)
End of examination paper
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