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FAC3762 ASSIGNMENT 1 2020
- Institution
- University Of South Africa (Unisa)
Detaile Assignment with Notes and Calculation
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FAC3762 ASSIGNMENT 1 OF 2020REMEMBER TO CHANGE THE WORDING, THE INTRODUCTORY PART
MARKED IN RED AND LITTLE FORMATING CHANGES TO AVOID PLAGIARISM
CHARGES.
(a) From: Financial advisor < financialadvisor@gz.com
Sent: 24 October 1919
To: Accountant (Bonang Ltd Group) accountant@bonanggroup.co.za
Subject: Accounting Treatment of Kganya Ltd in the CFS
The investment in Kganya Ltd will be treated as an investment in associate since
Bonang Ltd began exercising significant influence in Kganya Ltd since the
acquisition of a 40% interest on 1 January 2017 and the relationship is neither a
subsidiary nor a joint arrangement. This significant influence derives from Bonang
Ltd`s ability to significantly affect the financial and operating policy decisions of
Kganya Ltd.
This investment in an associate must be accounted for in accordance with the
equity method in the consolidated financial statements, except when:
The exception in IAS 27 allowing a parent that also has an investment in an
associate not to prepare consolidated financial statements, applies; or
All four conditions in IAS 13(c) apply, namely:
The investor is a wholly-owned subsidiary of another entity, or the investor is
a partially-owned subsidiary of another entity and the non-controlling
shareholders have no objection against not applying the equity method; and
The debt and equity instruments of the investor are not traded in a public
market; and
The investor is not in the process of filing its financial statements with a
securities commission in order to issue the instruments in a public market;
and
The ultimate or any intermediate parent of the investor prepares consolidated
financial statements.
If the investment in an associate is held directly or indirectly by a venture capital
organisation, a mutual fund, a unit trust or similar entity, the entity may elect to
measure the investment at fair value through profit or loss in accordance with
IFRS 9 Financial Instruments. When the entity has an investment in an
associate, a portion of which is held by a venture capital organisation, mutual
fund, unit trust or similar entity, this treatment still applies, regardless of whether
this entity exercises’ significant influence over that portion of the investment. If
the entity makes this election, the equity method must still be applied by the entity
to the remaining portion of the investment not held by a venture capital
organisation or similar entity.
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