1
|
Which
one of the following would help a company with high gearing to reduce its
gearing ratio?
|
|||||
|
A
|
Making
a rights issue of equity shares
|
||||
|
B
|
Issuing
further long-term loan notes
|
||||
|
C
|
Making
a bonus issue of shares
|
||||
|
D
|
Paying
dividends on its equity share
|
||||
|
|
|
||||
2
|
A company's gross profit as a percentage of sales increased from
24% in the year ended 31 December 20X1 to 27% in the year ended 31 December
20X2.
Which of the
following events is most likely to have caused the increase?
|
|||||
|
A
|
An increase in sales
volume
|
||||
|
B
|
A purchase in
December 20X1 mistakenly being recorded as happening in January 20X2
|
||||
|
C
|
Overstatement of the
closing inventory at 31 December 20X1
|
||||
|
D
|
Understatement of
the closing inventory at 31 December 20X1
|
||||
|
|
|
||||
3
|
Which of the
following transactions would result in an increase in capital employed?
|
|||||
|
A
|
Selling inventory at
a profit
|
||||
|
B
|
Writing off a bad
debt
|
||||
|
C
|
Paying a payable in
cash
|
||||
|
D
|
Increasing the bank
overdraft to purchase a non-current asset
|
||||
|
|
|
||||
4
|
From the following information regarding the year to 31 August
20X6, what is the accounts payable payment period? You should calculate the
ratio using purchases as the denominator.
|
|||||
|
Sales
Cost of sales
Opening inventory
Closing inventory
Trade accounts
payable at 31 August 20X6
|
$
43,000
32,500
6,000
3,800
4,750
|
||||
|
A
|
40 days
|
||||
|
B
|
50 days
|
||||
|
C
|
53 days
|
||||
|
D
|
57 days
|
||||
|
|
|
||||
|
The
following information is relevant for questions 5 to 7.
|
|||||
|
Quality Co is drafting their financial statements. An extract
from their draft statement of financial position at 31 March 20X8 is set out
below.
|
|||||
|
|
|
$
|
$
|
||
|
Non-current assets
|
|
|
450
|
||
|
Current assets:
|
Inventory
Receivables
Prepayments
|
65
110
30
|
|
||
|
|
|
250
|
|
||
|
Current liabilities:
|
Payables
Bank Overdraft
(Note)
|
30
50
|
|
||
|
|
|
80
|
|
||
|
|
|
|
125
|
||
|
Non-current
liability:
|
Loan
|
|
575
(75)
|
||
|
|
|
|
500
|
||
|
Ordinary share
capital
SPL
|
|
|
400
100
|
||
|
|
|
|
500
|
||
|
Note: The bank
overdraft first occurred on 30 September 20X7.
|
|||||
5
|
What is the gearing of the company? You should calculate gearing
using capital employed as the denominator.
|
|||||
|
A
|
13%
|
||||
|
B
|
16%
|
||||
|
C
|
20%
|
||||
|
D
|
24%
|
||||
|
|
|
||||
6
|
What is the quick
ratio of the company?
|
|||||
|
A
|
1.75
|
||||
|
B
|
2.56
|
||||
|
C
|
2.88
|
||||
|
D
|
3.20
|
||||
|
|
|
||||
7
|
What is the current
ratio of the company?
|
|||||
|
A
|
1.75
|
||||
|
B
|
2.56
|
||||
|
C
|
2.88
|
||||
|
D
|
3.20
|
||||
|
|
|
||||
8
|
Which of the following is a ratio which is used to measure how
much a business owes in relation to its size?
|
|||||
|
A
|
Asset turnover
|
||||
|
B
|
Profit margin
|
||||
|
C
|
Gearing
|
||||
|
D
|
Return on capital
employed
|
||||
|
|
|
||||
9
|
A business operates
on a gross profit margin of 331/3%. Gross profit on a sale was $800, and
expenses were $680.
What is the net
profit margin?
|
|||||
|
A
|
3.75%
|
||||
|
B
|
5%
|
||||
|
C
|
11.25%
|
||||
|
D
|
22.67%
|
||||
|
|
|
||||
10
|
A company has the
following details extracted from its statement of financial position:
|
|||||
|
Inventories
Receivables
Bank overdraft
Payables
|
$’000
1,900
1,000
100
1,000
|
||||
|
The industry the company operates in has a current ratio norm of
1.8. Companies who manage liquidity well in this industry have a current
ratio lower than the norm.
Which of the
following statements accurately describes the company’s liquidity position?
|
|||||
|
A
|
Liquidity appears to
be well managed as the bank overdraft is relatively low
|
||||
|
B
|
Liquidity appears to
be poorly-controlled as shown by the large payables balance
|
||||
|
C
|
Liquidity appears to
be poorly-controlled as shown by the company’s relatively high current ratio
|
||||
|
D
|
Liquidity appears to
be poorly-controlled as shown by the existence of a bank overdraft
|
||||
|
|
|
||||
11
|
Why is analysis of financial
statements carried out?
|
|||||
|
A
|
So that the analyst
can determine a company’s accounting policies
|
||||
|
B
|
So that the significance of financial statements can be better
understood through comparisons with historical performance and with other
companies
|
||||
|
C
|
To get back to the ‘real’ underlying figures, without the numbers
being skewed by the requirements of International Financial Reporting
Standards
|
||||
|
D
|
To produce a report that can replace the financial statements, so
that the financial statements no longer need to be looked at
|
Jessy Chong (JC)
Saturday, March 11, 2017
Interpretation of Financial Statements (Y7C22)
Consolidated Financial Statements (Y7C21)
|
The
following information is relevant for questions 1 to 3.
|
|||||||||||||||
|
On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in
Beta Co for $270,000. At that date Beta Co's retained earnings amounted to
$90,000 and the fair values of Beta Co's assets at acquisition were equal to
their book values.
Three years later,
on 31 December 20X2, the statements of financial position of the two
companies were:
|
|||||||||||||||
|
|
Alpha Co
$
|
Beta Co
$
|
|||||||||||||
|
Sundry net assets
Shares in Beta
|
230,000
180,000
|
260,000
-
|
|||||||||||||
|
|
410,000
|
260,000
|
|||||||||||||
|
Share capital
Ordinary shares of
$1 each
Retained earnings
|
200,000
210,000
|
100,000
160,000
|
|||||||||||||
|
|
410,000
|
260,000
|
|||||||||||||
|
The share capital of Beta Co has remained unchanged since 1
January 20X0. The fair value of the non-controlling interest at acquisition
was $42,000.
|
|||||||||||||||
1
|
What amount should appear in the group's consolidated statement
of financial position at 31 December 20X2 for goodwill?
|
|||||||||||||||
|
A
|
$52,000
|
||||||||||||||
|
B
|
$80,000
|
||||||||||||||
|
C
|
$122,000
|
||||||||||||||
|
D
|
$212,000
|
||||||||||||||
|
|
|
||||||||||||||
2
|
What amount should appear in the group's consolidated statement
of financial position at 31 December 20X2 for non-controlling interest?
|
|||||||||||||||
|
A
|
$49,000
|
||||||||||||||
|
B
|
$58,000
|
||||||||||||||
|
C
|
$51,000
|
||||||||||||||
|
D
|
$42,000
|
||||||||||||||
|
|
|
||||||||||||||
3
|
What amount should appear in the group's consolidated statement
of financial position at 31 December 20X2 for retained earnings?
|
|||||||||||||||
|
A
|
$280,000
|
||||||||||||||
|
B
|
$291,000
|
||||||||||||||
|
C
|
$354,000
|
||||||||||||||
|
D
|
$273,000
|
||||||||||||||
|
|
|
||||||||||||||
4
|
Which of the following companies are subsidiaries of Gamma Co?
Zeta Co: Gamma Co owns 51% of the non-voting preference shares of
Zeta Co Iota Co: Gamma Co has 3 representatives on the board of directors of
Iota Co. Each director can cast 10 votes each out of the total of 40 votes at
board meetings.
Kappa Co: Gamma Co owns 75% of the ordinary share capital of
Kappa Co, however Kappa Co is located overseas and is subject to tax in that
country.
|
|||||||||||||||
|
A
|
Zeta Co, Iota Co and
Kappa Co
|
||||||||||||||
|
B
|
Zeta Co and Kappa Co
|
||||||||||||||
|
C
|
Iota Co and Kappa Co
|
||||||||||||||
|
D
|
Zeta Co and Iota Co
|
||||||||||||||
|
|
|
||||||||||||||
|
The
following information is relevant for questions 5 and 6.
|
|||||||||||||||
|
Hilton Co acquired 80% of the share capital of Shrew Co on 1
January 20X3 for $280,000.
The statements of financial position of the two companies at 31
December 20X3 were as follows:
STATEMENTS OF
FINANCIAL POSITION
|
|||||||||||||||
|
|
Hilton Co
$
|
Shrew Co
$
|
|||||||||||||
|
Sundry assets
Investment in Shrew
|
660,000
280,000
|
290,000
-
|
|||||||||||||
|
|
940,000
|
290,000
|
|||||||||||||
|
Issued share capital
Share premium
account
Retained earnings
As at 1 Jan 20x3
Profit for 20x3
|
400,000
320,000
140,000
80,000
|
140,000
50,000
60,000
40,000
|
|||||||||||||
|
|
940,000
|
290,000
|
|||||||||||||
|
There have been no changes in the share capital or share premium
account of either company since 1 January 20X3. The fair value of the
non-controlling interest on acquisition was $65,000.
|
|||||||||||||||
5
|
What figure for goodwill on consolidation should appear in the
consolidated statement of financial position of the Hilton group at 31
December 20X3?
|
|||||||||||||||
|
A
|
$30,000
|
||||||||||||||
|
B
|
$55,000
|
||||||||||||||
|
C
|
$95,000
|
||||||||||||||
|
D
|
$(10,000)
|
||||||||||||||
|
|
|
||||||||||||||
6
|
What figure for non-controlling interest should appear in the
consolidated statement of financial position of the Hilton group at 31
December 20X3?
|
|||||||||||||||
|
A
|
$77,000
|
||||||||||||||
|
B
|
$85,000
|
||||||||||||||
|
C
|
$73,000
|
||||||||||||||
|
D
|
$105,000
|
||||||||||||||
|
|
|
||||||||||||||
7
|
Fanta Co acquired 100% of the ordinary share capital of Tizer Co
on 1 October 20X7.
On 31 December 20X7
the share capital and retained earnings of Tizer Co were as follows:
|
|||||||||||||||
|
Ordinary shares of
$1 each
Retained earnings at
1 January 20x7
Retained profit for
the year ended 31 December 20x7
|
$’000
400
100
80
|
||||||||||||||
|
|
580
|
||||||||||||||
|
The profits of Tizer Co have accrued evenly throughout 20X7.
Goodwill arising on the acquisition of Tizer Co was $30,000.
What was the cost of the investment in Tizer Co?
|
|||||||||||||||
|
A
|
$400,000
|
||||||||||||||
|
B
|
$580,000
|
||||||||||||||
|
C
|
$610,000
|
||||||||||||||
|
D
|
$590,000
|
||||||||||||||
|
|
|
||||||||||||||
8
|
Evergreen Co owns 35% of the ordinary shares of Deciduous. What
is the correct accounting treatment of the revenues and costs of Deciduous
for reporting period in the consolidated statement of profit or loss of the
Evergreen group?
|
|||||||||||||||
|
A
|
The revenues and costs of Deciduous are added to the revenues and
costs of Evergreen on a line by line basis.
|
||||||||||||||
|
B
|
35% of the profit after tax of Deciduous should be added to
Evergreen’s consolidated profit before tax.
|
||||||||||||||
|
C
|
35% of the revenues and costs of Deciduous are added to the
revenues and costs of Evergreen on a line by line basis.
|
||||||||||||||
|
D
|
The revenues and costs of Deciduous are added to the revenues and
costs of Evergreen Co on a line by line basis, then 65% of the profit after
tax is deducted so that only Evergreen Co’s share remains in the consolidated
financial statements.
|
||||||||||||||
|
|
|
||||||||||||||
9
|
Mercedes Co has owned 100% of Benz Co since incorporation. At 31
March 20X9 extracts from their individual statements of financial position
were as follows.
|
|||||||||||||||
|
|
Mercedes Co
$
|
Benz Co
$
|
|||||||||||||
|
Share capital
Retained earnings
|
100,000
450,000
|
50,000
120,000
|
|||||||||||||
|
|
550,000
|
170,000
|
|||||||||||||
|
During the year ended 31 March 20X9, Benz Co had sold goods to
Mercedes Co for $50,000. Mercedes Co still had these goods in inventory at
the year end. Benz Co uses a 25% mark up on all goods.
What were the
consolidated retained earnings of Mercedes Group at 31 March 20X9?
|
|||||||||||||||
|
A
|
$560,000
|
||||||||||||||
|
B
|
$580,000
|
||||||||||||||
|
C
|
$570,000
|
||||||||||||||
|
D
|
$557,500
|
||||||||||||||
|
|
|
||||||||||||||
10
|
Micro Co acquired 90% of the $100,000 ordinary share capital of
Minnie Co for $300,000 on 1 January 20X9 when the retained earnings of Minnie
Co were $156,000. At the date of acquisition the fair value of plant held by
Minnie Co was $20,000 higher than its carrying amount. The fair value of the
non-controlling interest at the date of acquisition was $75,000.
What is the goodwill
arising on the acquisition of Minnie Co?
|
|||||||||||||||
|
A
|
$119,000
|
||||||||||||||
|
B
|
$99,000
|
||||||||||||||
|
C
|
$139,000
|
||||||||||||||
|
D
|
$24,000
|
||||||||||||||
|
|
|
||||||||||||||
11
|
On 1 April 20X7 Possum Co acquired 60% of the share capital of
Koala Co for $120,000. During the year Possum Co sold goods to Koala Co for
$30,000, including a profit margin of 25%. 40% of these goods were still in
inventory at the year end.
The following extract was taken from the financial statements of
Possum Co and Koala Co at 31 March 20X8.
|
|||||||||||||||
|
|
Possum Co
$’000
|
Koala Co
$’000
|
|||||||||||||
|
Revenue
Cost of sales
|
750
(420)
|
400
(100)
|
|||||||||||||
|
Gross profit
|
330
|
300
|
|||||||||||||
|
What is the
consolidated gross profit of the Possum group at 31 March 20X8?
|
|||||||||||||||
|
A
|
$627,600
|
||||||||||||||
|
B
|
$633,000
|
||||||||||||||
|
C
|
$622,500
|
||||||||||||||
|
D
|
$627,000
|
||||||||||||||
|
|
|
||||||||||||||
12
|
Which of the
following statements is/are incorrect?
|
|||||||||||||||
|
1
|
A Co owns 25% of the ordinary share capital of B Co, which means
that B Co is an associate of A Co.
|
||||||||||||||
|
2
|
C Co can appoint 4 out of 6 directors to the board of D Co, which
means that C Co has control over D Co.
|
||||||||||||||
|
3
|
E Co has the power to govern the financial and operating policies
of F Co, which means that F Co is an associate of E Co.
|
||||||||||||||
|
4
|
G Co owns 19% of the share capital of H Co, but by agreement with
the majority shareholder, has control over the financial and operating
policies of H Co, so H Co is an associate of G Co.
|
||||||||||||||
|
A
|
1 and 2 only
|
||||||||||||||
|
B
|
1, 2 and 3 only
|
||||||||||||||
|
C
|
3 and 4 only
|
||||||||||||||
|
D
|
4 only
|
||||||||||||||
|
|
|
||||||||||||||
13
|
Clementine Co has owned 21% of the ordinary shares of Tangerine
Co for several years. Clementine Co does not have any investments in any
other companies. How should the investment in Tangerine Co be reflected in
the financial statements of Clementine Co?
|
|||||||||||||||
|
A
|
The revenues and costs and assets and liabilities of Tangerine Co
are added to the revenues and costs and assets and liabilities of Clementine
Co on a line by line basis.
|
||||||||||||||
|
B
|
An amount is shown in the statement of financial position for
‘investment in associate’ being the original cost paid for the investment
plus Clementine Co’s share of the profit after tax of Tangerine Co. 21% of
the profit after tax of Tangerine Co should be added to Clementine Co’s
profit before tax in the statement of profit or loss each year.
|
||||||||||||||
|
C
|
An amount is shown in the statement of financial position under
‘investments’ being the original cost paid for the investment, this amount
does not change. Dividends received from Tangerine are recognised in the
statement of profit or loss of Clementine Co.
|
||||||||||||||
|
D
|
An amount is shown in the statement of financial position under
‘investments’ being the original cost paid for the investment, this amount
does not change. 21% of the profit after tax of Tangerine Co should be added
to Clementine Co’s profit after tax in the statement of profit or loss each
year.
|
||||||||||||||
|
|
|
||||||||||||||
14
|
Which of the
following statements relating to parent companies and subsidiaries are
correct?
|
|||||||||||||||
|
1
|
A parent company could consolidate a company in which it holds
less than 50% of the ordinary share capital in certain circumstances.
|
||||||||||||||
|
2
|
Goodwill on consolidation will appear as an item in the parent
company's individual statement of financial position.
|
||||||||||||||
|
3
|
Consolidated financial statements ignore the legal form of the
relationship between parents and subsidiaries and present the results and
position of the group as if it was a single entity.
|
||||||||||||||
|
A
|
1 and 2 only
|
||||||||||||||
|
B
|
1 and 3 only
|
||||||||||||||
|
C
|
2 and 3 only
|
||||||||||||||
|
D
|
3 only
|
||||||||||||||
|
|
|
||||||||||||||
15
|
P Co, the parent
company of a group, owns shares in three other companies. P Co’s holdings
are:
|
|||||||||||||||
|
Q
|
Shares giving
control of 60% of the voting rights in Q Co
|
||||||||||||||
|
R
|
Shares giving control of 20% of the voting rights in R Co. P Co
also has the right to appoint or remove all the directors of R Co
|
||||||||||||||
|
S
|
Shares giving control of 10% of the voting rights in S Co, plus
90% of the non-voting preference shares
|
||||||||||||||
|
Which of these
companies are subsidiaries of P Co?
|
|||||||||||||||
|
A
|
Q Co, R Co and S Co
|
||||||||||||||
|
B
|
Q Co and S Co only
|
||||||||||||||
|
C
|
R Co and S Co only
|
||||||||||||||
|
D
|
Q Co and R Co
|
||||||||||||||
|
|
|
||||||||||||||
16
|
Which of the following should be accounted for in the
consolidated financial statements of Company A using equity accounting?
|
|||||||||||||||
|
1
|
An investment in 51%
of the ordinary shares of W Co
|
||||||||||||||
|
2
|
An investment in 20%
of the preference (non-voting) shares of X Co
|
||||||||||||||
|
3
|
An investment in 33%
of the ordinary shares of Y Co
|
||||||||||||||
|
4
|
An investment in 20% of the ordinary shares of Z Co, and an
agreement with other shareholders to appoint the majority of the directors to
the board of Z Co
|
||||||||||||||
|
A
|
1 and 4 only
|
||||||||||||||
|
B
|
2 only
|
||||||||||||||
|
C
|
3 only
|
||||||||||||||
|
D
|
3 and 4 only
|
||||||||||||||
|
|
|
||||||||||||||
17
|
Breakspear Co purchased 600,000 of the voting equity shares of
Fleet Co when the value of the non-controlling interest in Fleet Co is
$150,000.
The following
information relates to Fleet at the acquisition date.
|
|||||||||||||||
|
Share capital. $0.5
ordinary shares
Retained earnings
Revaluation surplus
|
At acquisition
$’000
500
150
50
|
||||||||||||||
|
|
700
|
||||||||||||||
|
The goodwill arising on acquisition is $70,000. What was the
consideration paid by Breakspear Co for the investment in Fleet Co?
|
|||||||||||||||
|
A
|
$420,000
|
||||||||||||||
|
B
|
$770,000
|
||||||||||||||
|
C
|
$620,000
|
||||||||||||||
|
D
|
$570,000
|
||||||||||||||
|
|
|
||||||||||||||
18
|
Date Co owns 100% of the ordinary share capital of Prune Co. The
following balances relate to Prune Co.
|
|||||||||||||||
|
Tangible non-current
assets
Freehold land
Plant and equipment
|
At acquisition
$’000
500
350
|
At 31.12.x8
$’000
500
450
|
|||||||||||||
|
|
850
|
950
|
|||||||||||||
|
At acquisition, the fair value of Prune Co’s land was $50,000
more than shown in the financial statements of Prune Co. At 31 December 20X8,
Date Co’s financial statements show a total tangible non-current asset
balance of $1,250,000.
What amount should be included in the consolidated financial
statements of the Date group at 31 December 20X8 for tangible non-current
assets?
|
|||||||||||||||
|
A
|
$2,250,000
|
||||||||||||||
|
B
|
$1,000,000
|
||||||||||||||
|
C
|
$1,850,000
|
||||||||||||||
|
D
|
$2,200,000
|
||||||||||||||
|
|
|
||||||||||||||
19
|
Six Co owns 80% of the equity share capital of Seven Co. At 31
December 20X4, the trade receivables and trade payables of the two companies
were as follows:
|
|||||||||||||||
|
Trade receivables
Trade payables
|
Six Co
$64,000
$37,000
|
Seven Co
$39,000
$48,000
|
|||||||||||||
|
These figures include $30,000 that is owed by Seven Co to Six Co
for the purchase of goods, for which Six Co has not yet paid. These goods
were sold by Six Co for a profit of $15,000 and 50% of them were still held
as inventory by Seven Co at 31 December 20X4.
What should be the amounts for trade receivables and trade
payables in the consolidated statement of financial position as at 31
December 20X4?
|
|||||||||||||||
|
A
|
Trade receivables
$73,000, Trade payables $55,000
|
||||||||||||||
|
B
|
Trade receivables
$88,000, Trade payables $70,000
|
||||||||||||||
|
C
|
Trade receivables
$95,000, Trade payables $77,000
|
||||||||||||||
|
D
|
Trade receivables
$103,000, Trade payables $85,000
|
||||||||||||||
|
|
|
||||||||||||||
20
|
Donna Co acquired 80% of the equity share capital of Blitsen Co
on 1 January 20X4 when the retained earnings of Blitsen Co were $40,000. The
fair value of the non-controlling interest at this date was $25,000. At 31
December 20X4, the equity capital of Blitsen Co was as follows:
|
|||||||||||||||
|
Share capital
Share premium
Retained earnings
|
$,000
40
10
60
|
||||||||||||||
|
|
110
|
||||||||||||||
|
During the year Blitsen Co sold goods to Donna Co for $20,000.
This price included a mark-up of $12,000 for profit. At 31 December 20X4, 50%
of these goods remained unsold in the inventory of Donna Co.
What is the value of the non-controlling interest in the Donna
Group at 31 December 20X4, for the purpose of preparing the consolidated
statement of financial position?
|
|||||||||||||||
|
A
|
$20,800
|
||||||||||||||
|
B
|
$27,800
|
||||||||||||||
|
C
|
$26,600
|
||||||||||||||
|
D
|
$29,000
|
||||||||||||||
|
|
|
||||||||||||||
21
|
Volcano Co acquired 75% of the equity share capital of Lava Co on
1 September 20X3. The retained profits of the two individual companies at the
beginning and end of their financial year were as follows.
|
|||||||||||||||
|
Retained earnings at
1 January 20x3
Retained earnings at
31 December 20x3
|
Volcano Co
$’000
596
650
|
Lava Co
$’000
264
336
|
|||||||||||||
|
What is the parent company’s share of consolidated retained
earnings that should be reported in the consolidated statement of financial
position of the Volcano Group at 31 December 20X3?
|
|||||||||||||||
|
A
|
$668,000
|
||||||||||||||
|
B
|
$674,000
|
||||||||||||||
|
C
|
$704,000
|
||||||||||||||
|
D
|
$722,000
|
||||||||||||||
|
|
|
||||||||||||||
22
|
Tin Co acquired 90% of the equity share capital of Drum Co on 1
April 20X3. The following information relates to the financial year to 31
December 20X3 for each company
|
|||||||||||||||
|
Retained earnings at
1 January 20x3
Profit for the year
|
Tin Co
$’000
840
70
|
Drum Co
$’000
170
60
|
|||||||||||||
|
Retained earnings at
31 December 20x3
|
910
|
230
|
|||||||||||||
|
Neither company paid any dividends during the year.
What profit is attributable to the parent company in the
consolidated statement of profit or loss of the Tin Group for the year to 31
December 20X3?
|
|||||||||||||||
|
A
|
$83,500
|
||||||||||||||
|
B
|
$110,500
|
||||||||||||||
|
C
|
$115,000
|
||||||||||||||
|
D
|
$124,000
|
||||||||||||||
|
|
|
||||||||||||||
23
|
Sand Co acquired 80% of the equity share capital of Sun Co
several years ago. In the year to 31 December 20X4, Sand Co made a profit
after taxation of $120,000 and Sun Co made a profit after taxation of
$35,000. During the year Sun Co sold goods to Sand Co at a price of $40,000.
The profit mark-up was 40% on the sales price. At 31 December 20X4, 25% of
these goods were still held in the inventory of Sand Co.
What profit is attributable to the parent company in the
consolidated statement of profit or loss of the Sand Group for the year to 31
December 20X4?
|
|||||||||||||||
|
A
|
$144,000
|
||||||||||||||
|
B
|
$148,000
|
||||||||||||||
|
C
|
$144,800
|
||||||||||||||
|
D
|
$151,000
|
||||||||||||||
|
|
|
||||||||||||||
24
|
On 1 August 20X7 Patronic purchased 18 million of the 24 million
$1 equity shares of Sardonic. The acquisition was through a share exchange of
two shares in Patronic for every three shares in Sardonic.
The market price of a share in Patronic at 1 August 20X7 was
$5.75.
What is the fair
value of the consideration transferred for the acquisition of Sardonic?
|
|||||||||||||||
|
A
|
$103.5 million
|
||||||||||||||
|
B
|
$69 million
|
||||||||||||||
|
C
|
$155.25 million
|
||||||||||||||
|
D
|
$92 million
|
||||||||||||||
|
|
|
||||||||||||||
25
|
X Co acquired 80% of the equity share capital in Y Co on 31 July
20X6. Extracts from the two
companies'
statements of profit or loss for the year ended 30 September 20X6 were as
follows:
|
|||||||||||||||
|
Revenue
Cost of sales
|
X Co
$’000
3,400
1,500
|
Y Co
$’000
2,400
1,800
|
|||||||||||||
|
During the year ended 30 September 20X6, Y Co sold goods for $5
000 each month to X Co, at a mark up of 25%. At the end of the year X Co had
50% of these goods left in inventory.
What is the group
gross profit for the year ended 30 September 20X6?
|
|||||||||||||||
|
A
|
$1,901,000
|
||||||||||||||
|
B
|
$2,001,000
|
||||||||||||||
|
C
|
$2,004,000
|
||||||||||||||
|
D
|
$1,904,000
|
||||||||||||||
|
|
|
||||||||||||||
26
|
WX acquired 75% of the equity share capital of YZ several years
ago. At 31 March 20X6 WX had goods in inventory valued at cost of $60,000
that had been purchased from YZ at a mark-up of 20%.
What is the effect on the profit attributable to the
non-controlling interest, and the profit attributable to the parent company
for the year ended 31 March 20X6?
|
|||||||||||||||
|
|
Profit attributable
to non-controlling interest
|
Profit attributable
to WX
|
|||||||||||||
|
A
|
No effect
|
Decrease by $5,000
|
|||||||||||||
|
B
|
No effect
|
Decrease by $12,000
|
|||||||||||||
|
C
|
Decrease by $3,000
|
Decrease by $9,000
|
|||||||||||||
|
D
|
Decrease by $2,500
|
Decrease by $7,500
|
|||||||||||||
|
|
|
||||||||||||||
27
|
P owns 80% of the equity share capital of S The profit after tax
of S for the year ended 31 December 20X6 was $60 million. During 20X6, P sold
goods to S for $4 million at cost plus 20%. At the year end 50% of these
goods were left in the inventory of S.
What is
non-controlling interest share of the after-tax profit of S for the year
ended 31 December 20X6?
|
|||||||||||||||
|
A
|
$11.36 million
|
||||||||||||||
|
B
|
$11.6 million
|
||||||||||||||
|
C
|
$11.68 million
|
||||||||||||||
|
D
|
$12 million
|
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