Exam (elaborations)
FAC3704 EXAM PACK 2023.
- Course
- Group Financial Reporting
- Institution
- University Of South Africa
FAC3704 EXAM PACK 2023.
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FAC3704 EXAM PACK2023
ADMIN
[COMPANY NAME] [Company address]
,LATEST QUESTIONS
AND ANSWERS
,QUESTION 1
The following balances appeared in the trial balances of the individual companies in the TWP
Group for the year ended 31 December 2014:
, 1 905 394 1 126 510 751 896
Revenue 513
950 170
000 319
710 252
000 477
350 000
000
215 000 - -
Other income 22
- 450 15 000
175 750 - 2 300
Property, plant and equipment
Fair value adjustments
Investments: W Limited(before tax) – other investments (2014 –
at fair value 92 000 - --
SoCI) P Limited at fair value 121 000
500 - 1 800 -
C Limited 50 000 20 000
- 40 000 ordinary shares at fair value
Debits 250 000 82 000 2 000
- 10 000 preference shares at fair value
Other investments - at fair value 50 000 19 000 12 000
Trade and other receivables 6 500 5 000 9 000
Inventories 430 000 350 000 150 000
Ordinary dividends paid - 31 December 2014 188 500 70 900 62 850
Cost of sales 98 224 85 358 39 046
Other expenses 1 905 394 1 126 510 751 896
Income tax expense
Additional information
The directors of the TWP Limited Group decided to expand the company’s operations and the details of
the acquisitions follow hereunder.
1. W Limited
On 1 January 2011 T Limited acquired 166 000 of the ordinary shares of W Limited for R210 000. On
that date the retained earnings of W Limited amounted to R40 000 and the mark-to-market
reserve
relating to other investments amounted to R3 855. There were no other reserves on that date.
On the acquisition date of W Limited, no unidentified assets, liabilities or contingent liabilities
existed and the fair value of all the assets, liabilities and contingent liabilities were confirmed to be
equal to the carrying amounts thereof.
2. P Limited
W Limited acquired 75% of the ordinary share capital in P Limited on 1
January 2014 for R175 000.
At the date of acquisition of P Limited a portion of land that was stated in the records of P
Limited at R322 000 was valued by a sworn appraiser by R10 000 more. The revaluation was
not recorded in the records of P Limited. This was the only item in the records of P Limited
that had a fair value that was not equal to its carrying amount at the date of acquisition. At this
date, no unidentified assets, liabilities or contingent liabilities existed.
3. Q Limited
On 1 January 2013, T Limited acquired 40% of the issued share capital of Q Limited when the
retained earnings of RaspC Limited amounted to R20 000. The cost price of the investment in
RaspC Limited amounted to R92 000. On the same date T Limited acquired a
20% interest in the 10% non-redeemable preference share capital of RaspC Limited for R10 000.
Since that date T Limited has exercised significant influence over the financial and operating
policy decisions of Q Limited.
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