Solution Far450 - Jun 2014
Short Description
SUGGESTED SOLUTION FAR 450 JUNE 2014...
Description
SUGGESTED SOLUTION FAR 450 JUNE 2014 QUESTION 1 a.
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Relationship Relationship remains the same but controlling interest increased from 70% to 90% and hence NCI decreased from 30% to 10%. Increase in controlling interest is treated as a transaction transaction between euit! owners. owners. "s such gain#loss in reduction of NCI is ta$en to euit! through CI. &he additional acuisition acuisition will not alter the goodwill computed on the first acuisition. Consolidate in C'() and NCI % based on 10%.
b. Goodwill
NCI
GR
)*
Do!" #$d %&0'( 1 a+,i)i*io Consideration transferred NCI *30% + ,-/ ( of net asset 1#1#013 'C R) ther component of euit! 2and #a!/ai !+$a) Gai3lo)) 2d a+,i)i*io Consideration transferred 0% + 300# + + , ( of net asset 31#1#013 'C R) R) ther component of euit! 2and
300 1,0.,
300 1,9 13 -
*,-/ 2&.
9-
300 1 1 0% + ,
*109/ 13
4ain Cod #$d Consideration Consideration transferred NC NCI *0% + -3/ 2ess5 ( of net asset 1#1#013 'C R) ther component of euit! 6rand Goodwill
1,0.,
71 .19 , 1 11
*-3/ 0.
1
*109/
.-
NCI
GR
R*aid !oi* Ta #$d 6al c#f "cuisition cost 6argain purchase i8idend recei8able or! *1 + 90%/ Cod *7 + 0%/ :rp4I& Cod #$d 6al c#f )re :R) *plant/ 8er dep. "mortisation;brand Do!" #$d 6al c#f )re
33 *0./ 7.13. .*0.1/
*,/ *3/ 0.*./ 3.,
0%
7.0
1 *1,9/ 7
30%
1.-
)ost other comp of euit! or! *1 < 13/ + 30% Cod * < 1/ + 0% CSOF
1. 11.1
0%
70%
.3
0.,
5&.2
Co)olida*d S*a*6* o Fia+ial o)i*io o Ta #$d G!o a) a* 71 D+6b! 2017 R=mill A))*) )ropert!> plant and euipment 10,, ? - < 3 ? 0.1>0,7.Intangible assets; 6rand 11 < . . 4oodwill -0.Current assets E,i*" ad liabili*i) rdinar! shares Retained profit ther components of euit!
11- < ? 1.1 < 0.1
-0 ? , 30 ? 3. ? ? 7 ? 13
Non controlling interest Non current liabilities Current liabilities
1>1-, 2821 , -7. 1-. 11-.1
393 ? 0. < 13. < .- < 3.9
,370. 2821
QUESTION 2a
R=million )rofit before ta+ation 4w impairment epreciation "ssociate@s profit Increase in trade recei8ables Increase in in8entories Increase in trade pa!ables Ca)$ /!a*d !o6 o!a*io) 9o!:i/) C& *30 ? 107./ NCI *110+%/ ( of N" 4oodwill
6al b#d "c
3 1 -0 *90/ *7./ *10/
, .5
137. 7. *110/ Goodwill 300 I6ai!6* 6al c#d
15 3,0
2b. Ro)ll #$d G!o Co)olida*d S*a*6* o Ca)$ Flow) o! "a! dd 71 D+6b! 2017 R;000 ?,>00/? *3->000 + ,#1/; 3>000 *3>000 ? 19>00/ ? *1>000 + ,#1/ ;3>000 ?10< 30 *1>00 ?9>000/ ? *->-00 + ,#1/ < *100 o8er dep./
Impairment goodwill 6argain purchase Income from other in8estment 'hare of profit. in associate )rofit before ta+ &a+ation )rofit for the !ear
1>00 ? *1>00 + ,#1/ *>00 < 00 dep/ + 30% *>,00 ? ,>70/ ? *3>900 + ,#1/
O*$! +o6!$)i= i+o6 'urplus on fair 8alue of non depreciable asset &otal comprehensi8e income for the !ear !oi* o! *$ "a! a**!ib*abl *o ? wners of parent NCI ; &weet - ine
R;00 *,->70/ AAAAAAAAA -,>30 *3>-00/ *10/ >-90 1>700 1>90 ,->,90 *1,>,0/ 728040
300 728740 ->391 ,>, 92 90 728040
&otal comprehensi8e income attributable to wners of parent NCI *,, ? *300+,0%/ # ? 90
7>01>3, 728740 ,
9o!:i/) NCI ? Tw* #$d %91( )rofit for the !ear rd di8 from ine 6hd :R) ; closing stoc$ opening stoc$ -
*>000 + -%/
Impairment
10>9-0 *10/ *10/ 30 1080 + ,0%
,>7 *,/ 48224
10 + ,0%
@i #$d %92( )rofit for the !ear *->000 + ,#1 + ,9%/
0
7b. S:" #$d G!o S*a*6* o C$a/) i E,i*" o! *$ "a! dd 71 D+6b! 2017 R*aid !oi* NCI R;9-, 91 92 "cuisition of subsidiar! >7-0 &CI >3, )rofit for the !ear ->3rdinar! di8idend *1>0/ 97 *310/ 6alance c#f 7&827 148&7 132 B 6a!:)
%91( R*aid !oi* b3 S:" #$d Retained profit b#f :R) < machiner! epreciation
9>90 *00/ 100
*m ;1.m/ *0.m # !rs/
Tw* #$d Retained profit b#f 2ess pre-acquisition profit 2ess :R) opening stoc$ A) #$d%A))o+ia*( Retained profit b#f 2ess pre-acquisition profit 2ess depreciation
>-0 *>00/ *30/ 28410 0' ,>70 *>100/ *00/ 282&0 70'
9>0
1>,,-
-1 118&0&
%92( NCI b3 Tw* #$d ( at d.o.a *1#1#010/
7>000
Retained profit *from 1#1#010 till 1#1#013/ Consideration transferred ; ine
%97( O!dia!" di=idd &weet ine
>,10 + ,0% 10>000 + ,0%
9-, *,>000/ 784
0 + ,0% 0 -00 + 1% 90 710
QUESTION 4A a. ffer 1 ffer
6efore disposal #10 0% 0%
isposal 7# + 0% 70% ,# + 0% ,0%
"fter disposal 10% *simple in8estment/ ,0% *associate/
'now! should accept offer in order to e+ert significant influence b. &he group ')2 will consolidate the results of the operation of Dinter 6hd up to date when control is lost ie 1 Eul! 013. 'ubseuent to that date it will be euit! accounted for and disclosed as share of associate profit. In the group statement of financial position> the in8estment will be accounted for using the euit! method. &he shares retained will be remeasured at fair 8alue on the date when control is lost. c. O! 2 R; 6illio
R; 6illio 1.-
'ales )roceed (air 8alue of remaining shares on d.o.d
, + 3.9
Net assets at disposal date rdinar! shares Retained profits b#f Current !ear profit
1.31. 10
1 0 + -#1 10 3 + 0%
4ain on disposal
-
*/ 7.2
QUESTION 4# &he 3 elements of control under =(R' 10 are ; )ower o8er the in8estee ; B+posure> or rights> to 8ariable returns from its in8ol8ement with the in8estee ; &he abilit! to use its power to affect the returns. "lthough Radon owns -0% of the 8oting rights> it ma! not gi8e power to Radon due to the terms of contractual agreement. &he shareholder agreement shows that Neon and Radon are each responsible to direct the rele8ant acti8ities of Fena 6hd. In this case> each in8estor needs to determine whether it is directing the acti8ities that most significantl! affect the in8estee@s returns. "ccordingl! each in8estor needs to e8aluate whether de8eloping the product or the manufacturing G mar$eting of the product is the acti8it! that has the greatest effect on the in8estee@s returns. In ma$ing such e8aluation> the in8estors should consider the purpose and design of the entit! Fena 6hd.
7
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