EXAMINATION (online)

ASSIGNMENT 3
Code: INS 4007

Lecturer’s Signature& full name

Program: VNU
Course Code: INS 4007
Course Title: FINANCIAL REPORT FORMULATION Nguyễn Thị Phương

Level: ……………………………………………………. Date: 13/08/2021

Time allowed: 5 days Department’s Signature & full
Due date: 11 am 21/08/2021 name

Nguyễn Thị Kim Oanh

Date: ………………………………

Instructions to students:
1. Closed/Opened book examination: Opened book

2. Submitted your project as a PDF file or image file

3. The file name is as follows: Student name_Student number_Course code

(Example: Nguyễn Văn A_19071122_INE1050.01)

This exam paper contains 07 pages, including the cover page.

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Section A
1. Holder Inc acquired 150,000 $1 ordinary shares in Sub Inc on 1 July 20X6 at a cost of
$300,000. Sub Inc's reserves at 1 July 20X6 were $36,000 and its issued ordinary share capital
was $200,000. The fair value of the non-controlling interest at acquisition was $100,000.

At 30 June 20X9 Sub Inc's reserves were $16,000.

What is the goodwill arising on consolidation?

2. Winter Co had the following transactions during the year.

(a) Purchases from suppliers were $19,500, of which $2,550 was unpaid at the year end. Brought

forward payables were $1,000.

(b) Wages and salaries amounted to $10,500, of which $750 was unpaid at the year end. The

accounts for the previous year showed an accrual for wages and salaries of $1,500.

(c) Interest of $2,100 on a long-term loan was paid in the year.

(d) Sales revenue was $33,400, including $900 receivables at the year end. Brought forward

receivables were $400.

(e) Interest on cash deposits at the bank amounted to $75.

Calculate the cash flow from operating activities using the direct method.

3. Apple Co owns 70% of Pear Co. Apple has receivables of $70,000 and Pear has receivables of

$50,000. Pear owes Apple $15,000. What are consolidated receivables?

4. Micky Co has held 100% of the equity share capital of Summer Co for many years. Cost of
sales for each entity for the year ended 31 December 20X8 was as follows.
$

Micky Co 300,000
Summer Co 180,000

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During the year Micky Co sold goods costing $20,000 to Summer Co for $25,000. At the year
end, all these goods remained in inventory.

What figure should be shown as cost of sales in the consolidated statement of profit or loss of the
Micky Group for the year ended 31 December 20X8?

Section B
1. Parent Ltd owns 100% of Son Ltd. Will Parent Ltd show a non-controlling interest on its
consolidated statement of financial position? Would the answer change if it owned only 70%?
Will there ever be a case in which the subsidiary, Son Ltd is not consolidated? (mark: 0.5)

2. There are two principal methods of presenting cash flow from operating activities—the direct
method and the indirect method. Describe these two methods.

Search on the internet and download 01 example of consolidated financial statement of a

company in accordance with IFRS (mark: 1)

3. Present your knowledge about IFRS and the adoption of IFRS in Vietnam (mark: 0.5)

Section C
1. Statement of financial position of Anna Ltd and Peter Ltd at 31/12/2020 as following

ASSET Anna ($) Peter ($)

Non-current assets 200,000 90,000

Depreciation (60,000) (20,000)

Investment in Peter Ltd 100,000

Current assets

Inventories 90,000 25,000

Account receivables 75,000 30,000

Current account – Peter Ltd 9,000

Bank 12,000 8,000

Total asset 426,000 133,000

EQUITY AND LIABILITIES

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$1 common shares 171,000 35,000

General reserve 15,000 12,000

Revaluation reserve 20,000

Retained earnings 90,000 50,000

Current liabilities

Account payable 120,000 22,000

Taxation payable 10,000 5,000

Current account – Anna Ltd 9,000

Total equity and liabilities 426,000 133,000

Statements of comprehensive income for the year ended 31 December 2020:

Anna ($) Peter ($)

Sales 180,000 115,000

Cost of sales 50,000 55,000

Gross profit 130,000 60,000

Expenses 60,000 40,000

Dividends received from Peter 4,000

Profit before tax 74,000 20,000

Income tax expense 18,500 5,000

Surplus on revaluation 24,000

Total comprehensive income 79,500 15,000

Anna Ltd acquired 70% of the shares in Peter Ltd on 1 January 2020 when Peter Ltd’s retained
earnings were $28,000 and the balance on Peter’s general reserve was $7,000. The fair value of
the non-controlling interest at the date was £30,000. Non-controlling interests are to be measured
using Method 2.

Common share of Peter at 31/12/2020 was the same as 1/1/2020.

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On 31 December 2020 Anna revalued its non-current assets. The revaluation surplus of £24,000
was credited to the revaluation reserve.

During the year Anna sold Peter goods for $9,000 plus a markup of one-third. Half of these
goods were still in inventory at the end of the year. Goodwill suffered an impairment loss of
20%.

Required:

Prepare a consolidated statement of comprehensive income for the year ended 31/12/2020 and a
statement of financial position as at that date (mark: 2)

2. Peter plc acquired 70% of the common shares of Thomas plc on 1/1/20X0 and gained control.
At that date the statements of financial position of the two companies were as follows:

Peter plc Thomas plc

Asset
Non-current assets
Property, plant and equipment 230 130
Investment in Ball 170
Current assets 90 80
Total assets 490 210
Equity and Liability
Capital and reserves
Share capital 250 110
Share premium 30
Retained earnings 120 10

Current liabilities 120 60

Total equity and liabilities 490 210

Fair value of the property, plant and equipment in Thomas at 1/1/20X0 was £165,000. The fair
value of the non-controlling interest in Thomas at 1/1/20X0 was £65,000. The ‘fair value
method’ should be used to measure the non-controlling interest.

Required:

Prepare a consolidated statement of financial position for Peter group as at 1 January 20X0.

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3. White plc is a Trading company. The following is its trial balance as at 31 December 20X0.

Dr $000 Cr$000
Ordinary share capital: £1 shares 200
Share premium 30
General reserve 26
Retained earnings as at 1 January 20X0 145
Inventory as at 1 January 20X0 76
Sales 960
Purchases 490
Administrative costs 10
Distribution costs 6
Plant and machinery – cost 240
Plant and machinery – provision for 49
depreciation
Returns outwards 25
Returns inwards 27
Carriage inwards 9
Warehouse wages 105
Salesmen’s salaries 60
Administrative wages and salaries 50
Hire of motor vehicles 29
Directors’ remuneration 30
Rent income 9
Trade receivables 306
Cash at bank 62
Trade payables 56

The following additional information is supplied:

(i) Depreciate plant and machinery 30% on straight-line basis.

(ii) Inventory at 31 December 20X0 is £90,000.

(iii) Accrue auditors’ remuneration £3,000.

(iv) Income tax for the year will be £30,000 payable October 20X1.

(v) It is estimated that 6/10 of the plant and machinery is used in connection with distribution,
with the remainder for administration. The motor vehicle costs should be allocated to
distribution.

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Required:

Prepare a statement of income and statement of financial position in a form that complies with
IAS