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FAC3704 EXAM PACK 2022
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JeremiahCOURSE OUTLINE
HEAD OF DEPARTMENT:
CHARLES FORBES
ROELIEN ROELOFSE
LECTURER:
ROELIEN ROELOFSE
roelienr@ebs.co.za
MODULE:
FAC3704 EXAMSK
DATE:
2015
,Shop U21, Stoneridge Centre, 1 Stoneridge Drive, Greenstone Park, Edenvale, Johannesburg, 1610
Postnet Suite #448, Private Bag x10010, Edenvale, 1610 • www.ebs.co.za • Company Registration 2012/018470/0
, 1 2
QUESTION 1 (45 marks) (54 minutes)
6. The group’s investments are classified as FV THROUGH OCI financial assets. The fair value of
The following balances were taken from the accounting records of Bolt Limited, Nut Limited and Saw Limited INVESTMENTS FAIR VALUED THROUGH OCI financial assets are equal to the cost price thereof
for the year ended 31 December 2009: unless otherwise stated.
Bolt Nut Saw 7. The interest paid by Nut Limited, shown in the trial balance is in respect of the intercompany loan.
Limite Limite Limite
DEBITS d d d 8. Bolt Limited Group uses the partial goodwill method to recognise goodwill. At 31 December 2009, the
R R R value of goodwill was tested for impairment and it was found that goodwill was not impaired.
Land and buildings at carrying amount 980 000 970 000 847 160
Investments: 9. Assume that the South African tax rate is 28% and since 1 January 2007 has remained unchanged.
Nut Limited – Shares at fair value (cost R450 000) 600 000 - -
- Loan 300 000 - - REQUIRED
Saw Limited – shares at fair value (cost R300 000) - 330 000 -
Inventories 99 056 115 332 206 340 Prepare the pro forma consolidation journals for the Bolt Limited Group for the year ended 31 December
Cash and cash equivalents 145 000 32 000 20 000 2009.
Interest paid 67 500 30 000 -
Income tax expense 98 994 60 018 136 500 Note:
Dividends paid – 31 December 2009 50 000 85 000 32 500
2 340 550 1 622 350 1 242 500 - Journal narrations are required. No marks will be awarded if there are no journal narrations.
- All calculations must be shown.
CREDITS
Share capital: - Your answer must comply with the requirements of Generally Accepted Accounting Practice.
- 750 000 R1 ordinary shares 750 000 - - - Comparative figures are not required.
- 300 000 R1 ordinary shares - 300 000 -
- 150 000 R1 ordinary shares - - 150 000 - Round off all amounts to the nearest Rand.
Mark-to-market reserve 129 000 25 800 -
Retained earnings beginning of year 960 000 735 000 605 000
Loan from Bolt Limited - 300 000 -
Deferred tax 21 000 4 200 -
Gross profit 391 050 244 350 487 500
Interest received 30 000 - -
Dividends received 59 500 13 000 -
2 340 550 1 622 350 1 242 500
Additional Information
1. Bolt Limited acquired 70% of the issued share capital of Nut Limited on 1 January 2007. The retained
earnings of Nut Limited amounted to R270 000. The value of the assets and liabilities of Nut Limited
were assessed at the date of acquisition and it was determined that the fair value of inventories were
R85 000 higher than the cost price thereof.
2. During the previous financial year Nut Limited sold inventories to the value of R400 000 to Bolt Limited.
At the end of 31 December 2008 there was inventory that was purchased from Nut Limited of R65 000
on hand in the books of Bolt Limited. Nut Limited sold the inventory to Bolt Limited at 30% on the selling
price.
3. On 1 January 2009, Nut Limited acquired 40% of the issued share capital of Saw Limited. Saw Limited
had exercised significant influence over the financial and operating policies of Nut Limited since
1 January 2009.
4. Except for the above there were no unidentified assets, liabilities or contingent liabilities and the fair
value of all assets, liabilities and contingent liabilities were confirmed equal to the carrying amounts
thereof.
5. On 31 December 2009, Nut Limited had inventory on hand that was purchased from Saw Limited for
R45 000. Saw Limited makes a profit of 50% on the cost price of the inventory that is sold to Nut
Limited.
FAC3704 - MAY JUNE 2010 EXAM.docx FAC3704 - MAY JUNE 2010 EXAM.docx
, 3 4
QUESTION 2 (55 marks) (66 minutes)
Additional Information
The companies of NAS Limited Group specialises in the development and supplying of “Weather Message 1. Hardware Limited:
Switching Systems” to aviation authorities worldwide.
The company supplies satellite units and specialised computer equipment to the aviation sector.
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2009
On 1 July 2006, NAS Limited acquired 200 000 shares in Hardware Limited to obtain a significant
influence over the financial and operating policy decisions of Hardware Limited. The total consideration
Note NAS Space Hardware was paid in cash and amounted to R280 000. At acquisition the equity in Hardware Limited consisted of
Limited Limited Limited the following:
R R R
ASSETS R
Non-current assets Share capital – 500 000 R1 ordinary shares 500 000
Property, plant and equipment 1 584 240 700 000 1 215 000 Retained earnings 150 000
Intangible assets 550 000 460 000 -
Investments 3 1 384 000 - - NAS Limited acquired a further 100 000 shares from the non-controlling shareholders on 1 January
Current assets 2009. A cash consideration of R260 000 was paid for the shares. On 1 January 2009 the previously
Inventory 90 000 75 000 85 000 held investment was fairly valued at R490 000.
Trade receivables and cash and cash equivalents 1 159 360 700 000 380 000
Total assets 4 767 600 1 935 000 1 680 000 On the above acquisition dates there were no unidentified assets, liabilities or contingent liabilities and
EQUITY AND LIABILITIES the fair value of all assets, liabilities and contingent liabilities were confirmed to be equal to the carrying
Equity attributable to equity holders amount thereof.
Share capital: - 1 000 000 R1 ordinary shares 1 000 000 - -
- 533 500 R1 ordinary shares - 533 500 - The income and expenses of the entity were earned throughout the year.
- 500 000 R1 ordinary shares - - 500 000
Share premium 400 500 On 2 January 2009, Hardware Limited sold a satellite to NAS Limited at a profit margin of 25% on cost.
Retained earnings 3 055 700 990 580 1 052 300 Included in the property, plant and equipment of NAS Limited is R250 000 in respect of the cost of the
Mark-to-market reserve 68 800 - - asset. The NAS Limited Group depreciates their assets over their expected useful lives of 5 years. The
Total liabilities satellite was brought into use on the above selling date.
Non-current liabilities
Deferred tax on mark-to-market reserve 11 200 - - 2. Space Limited:
Current liabilities
Accounts payables 631 900 10 420 127 700 The company develops software systems which convert day-to-day weather data to hands-on useable
Total equity and liabilities 4 767 600 1 935 000 1 680 000 information for different aviation authorities.
EXTRACTS FROM THE STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED On 1 December 2006 NAS Limited acquired a 60% interest in Space Limited. NAS Limited paid
30 JUNE 2009 R230 000 in cash for this investment. On 1 December 2006 the equity of Space Limited consisted of
the following:
NAS Space Hardware
Limited Limited Limited R
R R R Share capital – 400 000 R1 ordinary shares 400 000
Gross profit 2 044 000 1 156 000 1 120 000 Retained earnings 100 000
Other expenses -300 000 -267 000 -180 000
Profit before tax 1 744 000 889 000 940 000 On the above acquisition date there were no unidentified assets, liabilities or contingent liabilities and
Income tax expense -488 300 -248 920 -263 200 the fair value of all assets, liabilities and contingent liabilities were confirmed to be equal to the carrying
amount thereof.
PROFIT FOR THE YEAR 1 255 700 640 080 676 800
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1 255 700 640 080 676 800 On 1 March 2009 Space Limited had a rights issue on 1 share for every 2 shares held at a price of R4
per share. The parent company took up all their rights but the non-controlling interest took up none of
EXTRACTS FROM THE STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2009 their rights. An additional 13 500 shares resulting from the rights of the non-controlling interest were
also taken up by the parent company.
NAS Space Hardware
Limited Limited Limited The income and expenses of the entity were earned evenly throughout the year.
Retained earnings R R R
Balance at 1 July 2009 1 800 000 350 500 375 500 NAS Limited sold inventory to Space Limited at a profit margin of 20% on the selling price. On 30 June
Total comprehensive income for the year 1 255 700 640 080 676 800 2009 inventory of R35 000 was included in the closing inventory of Space Limited.
Balance at 30 June 2010 3 055 700 990 580 1 052 300
FAC3704 - MAY JUNE 2010 EXAM.docx FAC3704 - MAY JUNE 2010 EXAM.docx
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