Cat Bact 312 June 2018
December 13, 2022 | Author: Anonymous | Category: N/A
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EGERTON
UNIVERSITY
UNIVERSITY EXAMINATIONS BACT 312: ADVANCED FINANCIAL ACCOUNTING II CONTINUOUS ASSESSMENT TEST CONTINUOUS JUNE 2018
QUESTION ONE
(20 MARKS
The draft balance sheet of Aberdare Limited, Batian Limited and Elgon Limited as at 31 March 1999 are as follows: Baa!"# $%##& a$ a& 31 Ma'"% 1 A L&)* B L&)* S%* +,,-! S%*
E L&)* S%* +,,-!
1,2! ( (!
+,,-! 92! ")!
"!! *
2,12!
1,+"!
"!!
(2! +! ! 1,1!
(1! )(! 9! 1,!(!
21! 39! "! "!!
39! (!
3! 2!
21! 1!
3!! "3 "3! ()! 2,)"!
2)! +)! 39! 2,!+!
2!! (2! 2! 9!
+!! * 1,9"! 2,)"!
)!! 2+! 1,3!! 2,!+!
)!! * (! 9!
PPE #n$estments in s%bsidiaries &cost' %rrent assets #n$entories Trade recei$ables ash %rrent liabilities Trade -a.ables Ta/ation Pro-osed di$idends 0et c%rrent assets #ss%ed share ca-ital rdinar. shares of h1! 4e$al%ation reser$e 4etained earnings
A)),&,-!a ,!.-'+a&,-!:
1
All the shares shares in all all the com-ani com-anies es ran5 ran5 e6%all e6%all. . for for $oti $oting ng -%r-o -%r-oses ses Page 1 of 4
2
3
( )
A Ltd Ltd -%rch -%rchase ased d 3! milli million on ordin ordinar. ar. shar shares es in B Ltd Ltd on on 1 A-ri A-rill 199!, 199!, when when the bala balance nce of retained earnings in B Ltd was h!! million n 1 A-ril 199!, the fair $al%es of the identifiable net assets of B Ltd were a--ro/imatel. the same as boo5 $al%es B. 31 March 1999, some of the fi/ed assets of B Ltd had de-reciated significantl. in $al%e: the directors commissioned 7-town Estate Agents to re$al%e the fi/ed assets, which res%lted in the reser$e stated in the acco%nts The re$al%ation had been incor-orated in the acco%nts as at 31 March 199 B Ltd Ltd ac6%i ac6%ire red d 3! milli million on shar shares es in E Ltd Ltd on 3! e-t e-tem embe berr 199 199 n this this date date,, the fair fair $al%e of the fi/ed assets in E Ltd was h +! million in e/cess of boo5 $al%e and the fair $al%e of stoc5 was h2! million in e/cess of boo5 $al%e #n addition, E Ltd -ossessed -atent rights of fair $al%e h1! million on 3! e-tember 199: howe$er, these were not carried in the boo5s of E Ltd E Ltd de-reciates fi/ed assets at 1!8 -er ann%m and intangible assets at 2!8 -er ann%m &both fig%res being red%ced -ro-ortionatel. for a -eriod which is less than a .ear' !8 of the stoc5 in hand on 3! e-tember 199 in E Ltd had been sold b. 31 March 1999 Between 3! e-tember 199 and 31 March 1999, E Ltd s sales to A Ltd and B Ltd were h2(! million and h1+! million res-ecti$el. All these goods had been resold b. the two com-anies b%t at 31 March 1999, A Ltd and B Ltd owed E Ltd h 3+ million million and h32 million million res-ecti$el. res-ecti$el. E Ltds net -rofit for the .ear, after ta/ b%t before di$idends, was h2(! h2( ! million this -rofit accr%ed e$enl. o$er the .ear 0eithe 0eitherr A Ltd Ltd nor B Ltd Ltd as as acco%nt acco%nted ed for for di$i di$iden dends ds rece recei$a i$able ble The gro%gro%- acco% acco%nti nting ng -olic. -olic. in in relati relation on to goodwi goodwill ll is to recogn recognise ise it it as an inta intangi ngible ble asset asset and im-air it a rate of 333338 -er .ear, with a -ro-ortionate charge for a -eriod of less than one .ear Minorit. interest is recorded as its -ro-ortion of the fair $al%es of the net assets ass ets of the s%bsid s%bsidiar iar.: .: di$ide di$idends nds d%e to minori minorit. t. int intere erest st are carrie carried d within within c%rren c%rrentt liabilities
R#/,'#):
The consolidated balance sheet of Aberdare Limited and its s%bsidiaries as at 31 March 1999 in accordance with with the #nternational Acco%nting tandard 1 -resentation of financial statements &4e$ised 2!!(' QUESTION TO
(20 MARKS
Matati;o Ltd has been o-erating -rofitabl. %ntil three .ears ago when it started e/-eriencing financial -roblems This res%lted in the b%siness inc%rring hea$. trading losses The directors of the com-an., who are also the main sta5eholders, consider %nderta5ing either an internal or an e/tern e/t ernal al recons reconstr% tr%cti ction on Based Based on -rofes -rofessi sional onal ad$ice, ad$ice, the direct directors ors o-ted o-ted for an int intern ernal al reconstr%ct recons tr%ction ion #t was antici-ated antici-ated that after reconstr%ction reconstr%ction,, the com-an. wo%ld ma5e an ann%al -rofit before interest and ta/ of hs 3!! million The ta/ rate was e/-ected to be 3!8 The statement of financial -osition of the com-an. as at 31 st March 2!!, before reconstr%ction, was as follows:
Page 2 of 4
S&a&#+#!& -. .,!a!",a -$,&,-! A$ a& 31 Ma'"% 2008 A$$#&$
S%$ 000
S%$ 000
0on* c%rrent assets Land and b%ilding
"2!,!!!
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