Exam (elaborations)
FAC2602 ASSESSMENT 4 SEM 2 OF 2024 EXPECTED SOLUTIONS
- Institution
- University Of South Africa (Unisa)
THIS DOCUMENT CONTAINS FAC2602 ASSESSMENT 4 SEM 2 OF 2024 EXPECTED SOLUTIONS.USE IT CORRECTLY AS A GUIDE
[Show more]
Content preview
2.1. Accounting Treatment of Transactions Affecting Profit (20 marks)You need to:
Eliminate intercompany transactions affecting profit (such as sales and dividends).
Adjust for the impact of unrealized profits (e.g., in closing inventory).
Account for the depreciation of machinery sold by Credo Ltd to Crotia Ltd.
Transactions to Consider:
Inventory Purchase: Credo Ltd bought herbs and spices from Crotia Ltd at a markup. You
need to adjust for unrealized profit on the closing inventory of R75,000.
Machinery Purchase: Crotia Ltd bought machinery from Credo Ltd, with a profit element of
R650,000. This profit needs to be eliminated and adjusted for depreciation
Analysis of owners equity in Credo
AT SINCE
Total 60% 40%
Share capital 2,100,000.00 1,260,000.00 840,000.00
Retained Earnings 339,500.00 203,700.00 135,800.00
Revaluation surplus 375,000.00 225,000.00 150,000.00
2,814,500.00 1,688,700.00 1,125,800.00
Goodwill 261,300.00 261,300.00
Purchase consideration & NCI 3,075,800.00 1,950,000.00 1,125,800.00
, Since acquisition •
To beginning of current year 1,376,816.67 963,771.67 413,045.00
Retained earnings(2550000-760000) 201,400.00
Revaluation surplus -
Depreciation on -
Arrear pref dividend
Unrealised profit in opening
inventory (20,000.00)
Acc dpn on unrealised profit -
Revaluation surplus 0 -
Current year
PROFIT FOR THE YEAR 600,416.67 360,250.00 240,166.67
Profit for the year 1,245,000.00
Unrealised profit on sale of (650,000.00)
unrealised profit in dpn(180000-15000)*0.2 5,416.67
Dividend pref 59,500.00 35700 23,800.00
Dividend ordinary 135,000.00 81,000.00 54,000.00
a 1)
Dr Cr Nci
Share capital – ordinary shares 2,100,000.00
Retained earnings 339,500.00
Revaluation 375,000.00
Goodwill 261,300.00
Investment in G Ltd 1,950,000.00
Non-controlling interests 1,125,800.00
Elimination of owners' equity at acquisition
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller oscardiura. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R119,33. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
71498 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now