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FAC2602 - PAST EXAM PACK SOLUTIONS & BRIEF NOTES
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FAC2602SELECTED ACCOUNTING STANDARDS AND SIMPLE GROUP STRUCTURES
PAST EXAM PACK QUESTIONS AND ANSWERS
(2020 – 2014)
2020 MAY/JUNE EXAM QUESTIONS AND ANSWERS
2020 SUMMARISED NOTES
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, FAC2602 EXAMINATION PACK 2020
SELECTED ACCOUNTING STANDARDS AND SIMPLE GROUPS
PAST PAPERS AND SOLUTIONS
MAY / JUNE 2020
OCTOBER/ NOVEMBER 2019
MAY/ JUNE 2019
OCTOBER / NOVEMBER 2018
MAY / JUNE 2018 PAPER 1
MAY/JUNE 2018 PAPER 2
OCTOBER/NOVEMBER 2017
MAY/JUNE 2017 P1
MAY/JUNE 2017 P2
OCTOBER/NOVEMBER 2016
MAY/JUNE 2016
OCTOBER/NOVEMBER2015
MAY/JUNE 2015
OCTOBER/NOVEMBER 2014
,UNIVERSITY EXAMINATIONS
May/June 2020
FAC2602
Selected Accounting Standards and Simple Group Structures
100 marks
2.5 hours
This paper consists of seven (7) pages.
Instructions:
1. This paper consists of THREE (3) questions.
2. All questions must be answered.
3. Basic calculations, where applicable, must be shown.
4. Each question attempted must commence on a new (separate) page.
6. PROPOSED TIMETABLE: (Avoid deviating from this as far as possible.)
Question Time in
no Subject Marks minutes
1 Group statements and consolidation 17 20
2 Group statements and consolidation 55 66
3 Statement of cash flows 28 34
TOTAL 100 120
Please remember to complete the Honesty Declaration.
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[TURN OVER]
, 2 FAC2602
MAY/JUN 2020
QUESTION 1 (17 marks) (20 minutes)
Muccro Ltd, a company in the retail industry, sells home and office furniture. Gammis Ltd is a company
that sells a variety of products, ranging from furniture, equipment, food and stationery. Muccro Ltd
purchased a 75% interest in Gammis Ltd to accomplish its growth strategy.
The following balances were extracted from the statements of changes in equity of Muccro Ltd and
Gammis Ltd as at 28 February 2018:
Muccro Gammis
Ltd Ltd
R R
Share capital
- Ordinary shares (500 000 and 305 000 shares respectively) .................. 1 750 000 1 220 000
Revaluation surplus: Land.......................................................................... 435 000 125 000
Retained earnings at the beginning of the year .......................................... 2 780 300 790 500
Profit for the year ....................................................................................... 575 250 390 030
Additional information
1. Muccro Ltd acquired its interest in the ordinary shares of Gammis Ltd on 1 June 2016. On this
date, Gammis Ltd had retained earnings amounting to R586 970. Assume each ordinary share
carries one vote and that voting rights alone determine control. The carrying amounts of the assets
and liabilities of Gammis Ltd were deemed equal to the fair values thereof at acquisition.
The issued share capital of both companies remained unchanged since acquisition.
2. On 28 February 2018, Gammis Ltd declared a dividend of 35 cents per ordinary share. The
dividends are payable on 31 May 2018. The secretary of the company could not complete the
administrative paperwork on time and this led to both Muccro Ltd and Gammis Ltd being unable
to make provision for the dividends in the accounting records at the end of the financial year.
3. The land of Gammis Ltd was revalued for the first time in the current year.
4. Included in the assets of Gammis Ltd, is office furniture purchased from Muccro Ltd on
1 October 2017. The carrying amount of the office furniture is R220 312 as at 28 February 2018.
The office furniture had a carrying value of R255 000 in the records of Muccro Ltd when
Gammis Ltd bought it for R235 000 from Muccro Ltd.
It is the policy of the group to provide for depreciation on the office furniture at 15% per annum on
the straight line method.
5. Since acquisition, Gammis Ltd sold inventory to Muccro Ltd at cost plus 20%. Inventory purchased
from Gammis Ltd during the year amounted to R80 000, of which R30 000 will still be delivered to
Muccro Ltd on 28 February 2018. Ownership has already passed to Muccro Ltd. Inventory
balances on hand were as follows at year end:
2018 2017
Muccro Ltd ........................................................................................... R24 000 R45 000
Gammis Ltd ......................................................................................... R27 000 R30 000
[TURN OVER]
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