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PRACTICE QUESTIONS
QUESTION 17.1
LAYLA LTD ISABEL LTD
(a)
(b)
(c)
Sales revenue
Cost of sales
Inventory
Dr
Cr
Cr
50 000
Dr
Cr
750
Dr
Dr
Cr
12 600
5 400
Accumulated depreciation
Depreciation expense
Retained earnings (1/7/12)
Dr
Cr
Cr
1 350
Dr
Dr
Cr
270
135
Sales revenue
Cost of sales
Inventory
Dr
Cr
Cr
18 000
Dr
Cr
600
47 500
2 500
750
18 000
900
450
405
16 000
2 000
600
(e)
(f)
(g)
Dr
Dr
Dr
Cr
Cr
1 400
600
3 000
Dr
Cr
150
Dividend payable
Dividend declared
Dr
Cr
5 000
Dividend revenue
Dividend receivable
Dr
Cr
5 000
Debentures
Debentures in Layla Ltd
Dr
Cr
40 000
Interest revenue
Interest expense
(15% x $40 000 x )
Dr
Cr
4 500
Interest payable
Interest receivable
(15% x $40 000 x )
Dr
Cr
1 500
Dr
Dr
Cr
700
300
4 500
500
150
5 000
5 000
40 000
4 500
1 500
1 000
QUESTION 17.8
SUMMER LTD KEIRA LTD
At 1 July 2010:
Net fair value of identifiable assets
and liabilities of Keira Ltd
Consideration transferred
Goodwill
=
=
=
Dr
Cr
Cr
Cr
20 000
Depreciation expense
Retained earnings (1/7/11)
Accumulated depreciation
Dr
Dr
Cr
400
400
Dr
Cr
Cr
240
Dr
Cr
1 500
Dr
Dr
Dr
Cr
4 000
44 000
12 000
Dr
Dr
Dr
Cr
13 100
44 000
2 900
Goodwill
Business combination valuation reserve
18 000
600
1 400
800
120
120
1 500
2. Pre-acquisition entries
At 1/7/10:
Retained earnings (1/7/10)
Share capital
Business combination valuation reserve
Shares in Keira Ltd
60 000
At 30/6/12:
Retained earnings (1/7/11)*
Share capital
Business combination valuation reserve
Shares in Keira Ltd
60 000
Dr
Cr
Cr
17 000
Dr
Cr
60
Dr
Dr
Cr
280
120
Dr
Cr
Cr
10 000
Dr
Cr
150
Dr
Cr
50
Dr
Cr
15
Machinery
Retained earnings (1/7/11)
Deferred tax liability
Dr
Cr
Cr
500
Depreciation expense
Retained earnings (1/7/11)
Accumulated Depreciation
Dr
Dr
Cr
50
25
Dr
Cr
Cr
23
Dr
Cr
Cr
6 000
Dr
Cr
300
16 800
200
60
400
9 500
500
150
50
15
350
150
75
15
8
5 000
1 000
300
Summer
Ltd
43 000
20 600
Keira
Ltd
52 000
30 900
3 200
5 300
1 200
6 000
2 700
2 600
30 300
12 700
6 000
42 200
9 800
10 000
5 000
9 500
1 000
500
--
13 700
7 400
10 300
4 700
22 300
11 590
Profit
Retained earnings
(1/7/11)
6 300
32 000
5 600
21 000
Retained earnings
(30/6/12)
Share capital
BCVR
38 300
26 600
64 000
--
44 000
--
102 300
70 600
114 383
21 400
-
17 000
-
38 400
487
21 400
123 700
17 000
87 600
Sales revenue
Cost of sales
Selling expenses
Admin expenses
Depreciation
Total equity
Current liabilities
Deferred tax liability
Total liabilities
Total equity and
liabilities
1
6
5
7
Adjustments
Dr
Cr
17 000
16 800
400
400
50
50
Group
3
4
78 000
34 300
9 200
8 000
4 200
55700
22 300
-
10 000
6 000
9 500
5 000
5
7
4
5
120
15
120
60
150
15
300
1
3
5
6
7
1
2
4
6
400
13 100
280
25
120
350
8
1
6
6
10 710
39 673
50 383
2
2
1
6
44 000
2 900
240
23
1 400
1 500
600
150
1
1
1
6
64 000
--
38 887
153 270
Machinery
Accumulated
depreciation
Inventory
Shares in Keira Ltd
Receivables
Deferred tax asset
Plant (net)
Goodwill
Total assets
Summer
Ltd
38 000
Keira
Ltd
71 500
(12 200)
(22 300)
19 000
16 400
60 000
5 500
5 400
8 300
6 300
8 000
123 700
7 400
87 600
6
1
5
Adjustments
Dr
Cr
500
18 000
500
20 000
800
50
75
200
1 000
60 000
3
5
7
60
150
300
1 500
117 113
15
Group
91 500
1
5
1
6
3
7
2
(15 325)
34 200
-13 800
12 195
15 400
1 500
153 270
117 113
QUESTION 17.14
MONIQUE LTD MADELEINE LTD
At 1 July 2011:
Net fair value of identifiable assets
and liabilities of Madaleine Ltd
Consideration transferred
Goodwill
=
=
=
Dr
Cr
Cr
6 000
1 800
4 200
1.
Business combination valuation entries
At 1 July 2011:
Accumulated depreciation -vehicles
Motor vehicles
Deferred tax liability
Business combination valuation reserve
Dr
Cr
Cr
Cr
3 000
Dr
Dr
Cr
Cr
6 000
2 000
Goodwill
Business combination valuation reserve
Dr
Cr
5 500
Inventory
Deferred tax liability
Business combination valuation reserve
Dr
Cr
Cr
5 900
2 000
300
700
2 400
5 600
5 500
1 770
4 130
Dr
Dr
Cr
Dr
Cr
125
625
Dr
Dr
Cr
Cr
6 000
2 000
Depreciation expense
Retained earnings (1/7/12)
Accumulated depreciation F&F
Dr
Dr
Cr
1 000
1 000
Dr
Cr
Cr
600
Dr
Cr
5 500
Dr
Dr
Dr
Dr
Dr
Cr
21 000
80 000
16 000
4 200
16 000
Dr
Dr
Dr
Dr
Cr
29 400
80 000
16 000
11 800
Dr
Cr
700
Goodwill
Business combination valuation reserve
225
175
700
2 400
5 600
2 000
300
300
5 500
2. Pre-acquisition entries
At 1 July 2011:
Retained earnings (1/7/11)
Share capital
General reserve
Asset revaluation surplus
Business combination valuation reserve
Shares in Madaleine Ltd
137 200
At 30 June 2013:
Retained earnings (1/7/12)*
Share capital
General reserve
Business combination valuation reserve
Shares in Madaleine Ltd
137 200
700
Dr
Cr
2 000
Dividend payable
Final dividend declared
Dr
Cr
3 000
Dividend revenue
Dividend receivable (Other assets)
Dr
Cr
3 000
Dr
Dr
Cr
140
60
Sales revenue
Cost of sales
Inventory
Dr
Cr
Cr
15 000
Dr
Cr
300
Dr
Dr
Cr
700
300
Dr
Cr
Cr
150
Dr
Dr
Cr
30
15
Dr
Cr
10 000
2 000
4. Dividend declared
3 000
3 000
200
14 000
1 000
300
1 000
8. Depreciation
100
50
45
9. Advances
Advance from Monique Ltd
Advance to Madaleine Ltd
10 000
10
Sales revenue
Other income
Monique Madaleine
Ltd
Ltd
85 000
65 000
23 000
22 000
108 000
65 000
87 000
53 500
Other expenses
22 000
27 000
87 000
21 000
7 200
80 500
6 500
2 000
Profit
Retained earnings
(1/7/12)
13 800
16 000
4 500
29 500
-29 800
4 000
10 000
14 000
15 800
-34 000
2 000
3 000
5 000
29 000
170 000
41 000
--
80 000
22 000
--
226 800
120 000
131 000
--
Cost of sales
Dividend paid
Dividend declared
Retrained earnings
(30/6/13)
Share capital
General reserve
Business comb.
valuation reserve
Total equity
Debentures
Def. tax liability
Dividend payable
Current tax liability
Other payables
Advance from
Madaleine Ltd
Total liabilities
Total equity and
liabilities
10 000
8 000
34 800
--
3 000
2 500
10 100
10 000
172 800
399 600
25 600
156 600
6
3
4
1
1
1
Adjustments
Dr
Cr
15 000
2 000
3 000
125
625
1 000
200
14 000
100
Group
135 000
40 000
5
6
8
5
8
60
30
225
300
300
1
1
6
1
1
2
5
7
8
2
175
1 000
29 400
140
700
15
700
300
50
1
8
700
2 000
3 000
3
4
2
2
2
80 000
16 000
11 800
1
4
600
3 000
10 000
5 600
5 500
700
1
1
2
2 400 1
175 000
104 300
50 650
154 950
20 050
8 465
11 585
14 420
-26 005
4 000
10 000
14 000
12 005
170 000
47 000
--
229 005
120 000
1 800
10 000
10 500
44 900
-187 200
416 205
11
Monique
Ltd
Shares in Madaleine
Ltd
Land
Motor vehicles
Accumulated
depreciation
Furniture & fittings
Accumulated
depreciation
Inventory
Deferred tax asset
Advance to
Madaleine Ltd
Other assets
Goodwill
Total assets
Madaleine
Ltd
137 200
--
-28 000
(4 000)
24 480
22 000
(2 000)
34 000
(2 000)
37 300
(6 000)
171 580
16 200
70 320
7 400
10 000
8 620
-399 600
Group
Adjustments
Dr
Cr
137 200
--
24 480
50 000
(6 000)
1
1
8
2 000
6 000
150
1 000
2 000
7
1
72 300
(3 850)
6
7
300
300
1 000
45
6
8
240 900
24 155
--
10 000
--
3 100
-156 600
3 000
8 720
5 500
416 205
5 500
189 620
189 620
12
MONIQUE LTD
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for financial year ended 30 June 2013
Revenues:
Sales revenue
Other
Expenses:
Cost of sales
Other
Profit before income tax
Income tax expense
Profit for the period
Comprehensive income for the period
$135 000
40 000
104 300
50 650
$175 000
154 950
20 050
8 465
$11 585
$11 585
MONIQUE LTD
Consolidated Statement of Changes in Equity
for financial year ended 30 June 2013
Comprehensive income for the period
Retained earnings:
Balance at 1 July 2012
Profit for the period
Dividend paid
Dividend declared
Balance at 30 June 2013
Share capital:
Balance at 1 July 2012
Balance at 30 June 2013
General reserve:
Balance at 1 July 2012
Balance at 30 June 2013
$11 585
$14 420
11 585
(4 000)
(10 000)
$12 005
$170 000
$170 000
$47 000
$47 000
13
MONIQUE LTD
Consolidated Statement of Financial Position
as at 30 June 2013
ASSETS
Current Assets
Inventories
Non-current Assets
Property, plant and equipment
Land
Furniture and fittings
Accumulated depreciation
Motor vehicles
Accumulated depreciation
Other assets
Goodwill
Tax assets: Deferred tax asset
Total Non-current Assets
Total Assets
EQUITY AND LIABILITIES
Equity
Share capital
General reserve
Retained earnings
Total Equity
Current Liabilities
Dividend payable
Current tax liabilities
Other payables
Total Current Liabilities
Non-current Liabilities:
Deferred tax liabilities
Interest-bearing liabilities: Debentures
Total Non-current Liabilities
Total Liabilities
Total Equity and Liabilities
$240 900
$24 480
$72 300
(3 850)
50 000
(6 000)
68 450
44 000
136 930
8 720
5 500
24 155
175 305
$416 205
$170 000
47 000
12 005
$229 005
10 000
10 500
44 900
65 400
1 800
120 000
121 800
$187 200
$416 205
14