PRACTICAL ACCOUNTING ACCOUNTING II ADVANCED FINANCIA FIN ANCIAL L ACCOUNTI ACCO UNTING NG II
PREWEEK PREW EEK 1
1. Whitne Whitney y Limited Limited lost $150 $150 on a hedging hedging and had a corresp correspondi onding ng gain on the hedged hedged item of $100. The effectiveness range for these associated transactions is: A. 100% - 150% . 0% - 15% !. "0% - #0% . % - 150% ". A transaction transaction gain or loss at the settleme settlement nt date: date: A. A change in the e&change rate '(oted )y a foreign e&change trader. trader. . *ynonymo(s *ynonymo(s +ith the transaction transaction of foreign foreign c(rrency financial financial statement statements s into peso. !. The difference difference )et+een )et+een the recorded recorded peso amo(nt of an acco(nts acco(nts receiva)le receiva)le denominated denominated in a foreign c(rrency and the amo(nt of pesos received. . The difference difference )et+een )et+een the )(ying )(ying and selling selling rate '(oted )y a foreign foreign e&change trader trader at the settlement date. #. ,f the the .*. .*. doll dollar ar is the the c(rr c(rren ency cy in +hic +hich h the the fore foreig ign n affi affililiat ate es s )oo/ )oo/s s and and reco record rds s are are maintained and the .*. dollar is also the f(nctional c(rrency A. The translation method sho(ld )e (sed for restatement. . The remeas(rem remeas(rement ent method method sho(ld sho(ld )e (sed for restatemen restatement. t. !. ither ither translation translation or remeas(rement remeas(rement co(ld co(ld )e (sed for restatement. restatement. . 2o restat restateme ement nt is re'(i re'(ired. red. 3. An entity entity has a s()sidiary s()sidiary that operates operates in a co(ntry co(ntry +here the e&change e&change rate fl(ct(at fl(ct(ates es +ildly +ildly and there there are season seasonal al variati variations ons in the income and e&pendi e&pendit(r t(re e patter patterns. ns. Which Which of the follo+ing rates of e&change +o(ld pro)a)ly )e (sed to translate the foreign s()sidiarys income statement4 A. ear-end spot rate. . Averag Average e for for the the year year.. !. Averag Average e of the '(arter '(arter-end -end rates rates.. . Average Average rates for each each individ(al individ(al month month of the the year. year. 5. 6n 6cto)er 6cto)er 1 "007 "007 8ild !o. a .*. company company p(rchased p(rchased machine machinery ry from 9r(nd 9r(nd a 9erman 9erman company +ith payment d(e on April 1 "010. ,f 8ilds "007 operating income incl(ded no foreign c(rrency transaction gain or loss the transaction co(ld have A. een denominated in foreign c(rrency (ro;. . een een denomin denominate ated d in .*. .*. dollars. dollars. !. !a(sed a foreign foreign c(rrency gain gain to )e reported as a contra acco(nt acco(nt against against machinery machinery.. . !a(sed a foreign foreign c(rrency translati translation on gain to )e reported reported in other comprehensive comprehensive income. income. . Averag Average e e&chan e&change ge rates are (sed (sed to translate translate certain certain items from foreign foreign financ financial ial stateme statements nts into
. Which of the the follo+ing follo+ing hedging hedging strategies strategies +o(ld +o(ld a )(siness )(siness most li/ely li/ely (se4 A. An importer +ill +ant to hedge his foreign denominated acco(nts receiva)le and +ill p(rchase for+ard contracts to hedge an e&posed net asset position. . An importer importer +ill +ant to hedge his foreign foreign denominated denominated acco(nts acco(nts paya)le paya)le and +ill p(rchase p(rchase for+ard contracts to hedge an e&posed net lia)ility position. !. An e&por e&porte terr +ill +ill +ant +ant to hedg hedge e his his forei foreign gn denom denomin inat ated ed acco acco(nt (nts s recei receiva va)l )le e and and +ill +ill p(rchase for+ard contracts to hedge an e&posed net lia)ility position. 2nd
semester AY 2015-2016 2015-201 6
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. An e&porter +ill +ant to hedge his foreign denominated acco(nts paya)le and +ill p(rchase for+ard contracts to hedge an e&posed net lia)ility position. ?. A .*. company sells merchandise to a foreign company denominated in the foreign c(rrency. Which of the follo+ing statements is tr(e4 A. ,f the foreign c(rrency appreciates a foreign e&change gain +ill res(lt. . ,f the foreign c(rrency depreciates a foreign e&change gain +ill res(lt. !. 2o foreign e&change gain or loss +ill res(lt. . ,f the foreign c(rrency appreciates a foreign e&change loss +ill res(lt. 7. What is the type of financial ris/ involved +hen entities have o(tstanding p(rchase commitments4 A.
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. 8in(s the intercompany gain considered reali=ed in the c(rrent period. 1>.When preparing consolidated financial statement +or/ papers (nreali=ed intercompany gains as a res(lt of e'(ipment or inventory sales )y affiliates are allocated proportionately )y percent of o+nership )et+een parent and s()sidiary only +hen the selling affiliate is A. The parent and the s()sidiary is less than +holly o+ned. . A +holly o+ned s()sidiary. !. The s()sidiary and the s()sidiary is less than +holly o+ned. . The parent of a +holly o+ned s()sidiary. 1?.Le+is !ompany o+ns ?0 percent of Tomassini !orporations stoc/. o( are told that Tomassini has sold e'(ipment to Le+is and that the follo+ing eliminating entry is needed to prepare consolidated statement for "007: '(ipment "0000 9ain on *ale of '(ipment 30000 epreciation &pense 5000 Acc(m(lated epreciation 50000 Which of the follo+ing is incorrect4 A. The parent paid < 30000 in e&cess of the s()sidiarys carrying amo(nt to ac'(ire the asset. . @rom a consolidated vie+point depreciation e&pense as Le+is recorded it is overstated. !. The asset transfer occ(rred in "007 )efore the end of the year. . !onsolidated net income +ill )e red(ced )y < 30000 +hen this entry is (sed as an eliminating entry. 17.Why does the intercompany sale of a )(ilding re'(ire s()se'(ent ad(stments to depreciation e&pense4 A. eca(se the )(yer is (sing a different depreciation method. . eca(se the )(yer has changed the estimated (sef(l life. !. eca(se immediately after the sale the )alance in acc(m(lated depreciation on the )(yers )oo/s is =ero. . eca(se the )oo/ val(e of the )(ilding is the same for the seller and the )(yer. "0.When an intercompany gain on sale of land is finally reali=ed )y sale of the land to an o(tsider the consolidated gain on sale +ill e'(al: A. The s(m of the recorded gain on sale to the o(tsider and the deferred gain. . The difference )et+een the recorded gain on sale to the o(tsider and the deferred gain. !. The deferred gain. . The gain recorded )y the affiliate that resold the asset to the o(tsider.
PROBLEM SOLVING: For items 21 to 28, use the following information: 2nd
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6n Can(ary 1 "013 300 Acco(nts receiva)le #3"00 7100 ,nventories ""700 1100 '(ipment net 1>7000 30000 000 < 11"00 Total assets Acco(nts paya)le onds paya)le 10% 6rdinary share <10 par *hare premi(m Betained earnings Total liabilities a! e"#ities
<
<
3000 100000 100000 15000 3?000 ">000
<
00
<
50000 15000 31000 11"00
At the date of ac'(isition all assets and lia)ilities of *()sidiary !ompany have a )oo/ val(e appro&imately e'(al to their respective mar/et val(es e&cept the follo+ing as determined )y appraisals as follo+s: ,nventories @,@6 method; < 1>100 '(ipment net E 3 years remaining life 3?000
. < "5"00
"".!omp(te the non-controlling interests on Can(ary 1 "013: A. < 1000 . < 11"00 !. < 11?00
. < 1#070
"#.!omp(te the consolidated retained earnings on Can(ary 1 "013: A. < 3?000 . < 5"100 !. < ?3700
. < ?7000
"3.Ass(ming that on ecem)er #1 "013 the follo+ing res(lts +ere given: ividend paid 2et ,ncome
. < 1"530
".!omp(te the non-controlling interest on ecem)er #1 "013: A. < 1000 . < 11130 !. < 1"010
. < 1"#00
">.!omp(te the profit for the period attri)(ta)le to e'(ity holders of parent on ecem)er #1 "013: A. < "00 . < #"070 !. < #">00 . < 33100 "?.!omp(te the consolidated net income on ecem)er #1 "013: A. < "00 . < #"070 !. < #">00
. < 33100
"7.An entity p(rchases plant from a foreign s(pplier for # million )aht on Can(ary #1 "013 +hen the e&change rate +as " )aht F <1. At the entitys year-end of 8arch #1 "013 the amo(nt has not )een paid. The closing rate +as 1.5 )aht F <1. The entitys f(nctional c(rrency is the peso. Which of the follo+ing statement is correct4 A. !ost of plant < " million e&change loss < 0.5 million trade paya)le < 1.5 million. . !ost of plant < 1.5 million e&change loss < 0. million trade paya)le < " million. 2nd
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!. !ost of plant < 1.5 million e&change loss < 0.5 million trade paya)le < " million. . !ost of plant < " million e&change loss < 0.5 million trade paya)le < " million. #0.An entity ac'(ired all the share capital of a foreign entity at a consideration of 7 million )aht on C(ne #0 "013. The fair val(e of the net assets of the foreign entity at that date +as million )aht. The f(nctional c(rrency of the entity is the peso. Then financial year-end of the entity is ecem)er #1 "013. The e&change rates at C(ne #0 "013 and ecem)er #1 "013 +ere 1.5 )aht F <1 and " )aht F <1 respectively. What fig(re for good+ill sho(ld )e incl(ded in the financial statements for the year ended ecem)er #1 "0134 A. < "000000 . 1500000 )aht !. < 1500000 . < #000000 Items 31 – 32 are based on the following information:
6n ecem)er #1 "013 Bodolfo !ompany enters into a for+ard contract to spec(lative p(rposes to ac'(ire 100000 8e&ican 2e+ < ".3" #1.The ecem)er #1 "013 profit or loss statement foreign e&change gain or loss on for+ard contract amo(nted to: A. < 1000 loss . < 1000 gain !. < 5000 gain . < 5000 loss #".6n 8arch 1 "015 foreign e&change gain or loss on for+ard contract amo(nted to: A. < 5000 loss . < 5000 gain !. < "000 gain . < "000 loss Items 33 – 34 are based on the following information:
6n ecem)er #1 "013 ,ndo !ompany the parent of the 100% o+ned Capanese s()sidiary e&pected the yen to +ea/en )y the end of "015. Accordingly ,ndo !ompany the parent contacted +ith a foreign e&change trader on ecem)er #1 "013 to sell "#00000 yens the s()sidiarys net asset position at that date; in #5 days at the for+ard rate of < 0.3#5. The follo+ing direct e&change rates are as follo+s: 1"G#1G13 1"G#1G15 *pot rate < 0.330 < 0.300 @or+ard rate < 0.3#5 < 0.300 The Can(ary 1 "015 )alance of the translation reserve c(m(lative; de)it amo(nted to < 1"7000 and translation reserve loss for "015 of < 100000. ##.The ecem)er #1 "015 foreign e&change gain or loss on for+ard contract to )e charged to and amo(nted to: A. < ?0500 gain E e'(ityG6!, . < ?0500 gain E earnings !. < ?0500 loss E e'(ityG6!, . < 7"000 gain E e'(ityG6!, #3.The ecem)er #1 "015 translation reserve )alance c(m(lative translation ad(stment; amo(nted to: A. < 13?500 de)it . < ""7500 de)it !. < #07500 de)it . < 13?500 credit Items 35 – 38 are based on the following information:
6n Can(ary 1 "011 entities A and each ac'(ired #0 percent of the ordinary shares that carry voting rights at a general meeting of shareholders of ntity H for < 100000. The p(rchase price is e'(al to the fair val(e of #0 percent of entity Hs identifia)le assets less percent of its identifia)le lia)ilities. ntity A and immediately agreed to share control over entity H. @or the year ended ecem)er #1 "011 entity H recogni=ed a loss of < 00000. ntities A and have no constr(ctive or legal o)ligation in respect of their ointly controlled entitys loss and have made no payments on its )ehalf. ntity H recogni=ed profit for the year ended ecem)er #1 "01" of < ?00000. There is p()lished price '(otation for ntity H. 2nd
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#5.sing the e'(ity method at ecem)er #1 "011 ntities A and each recogni=es their share of the losses of the ointly controlled entity amo(nted to: A. < -0. < 0000 !. < 100000 . < 1?0000 #.At ecem)er #1 "011 entities A and m(st each report their investment in entity H a oint controlled entity; amo(nted to: A. < -0. < 0000 !. < 100000 . < 1?0000 #>.At ecem)er #1 "01" entities A and each recogni=es their share of profit of the ointly controlled entity amo(nted to: A. < 10000 . < 100000 !. < 0000 . < -0#?.At ecem)er #1 "01" entities A and m(st each report their investment in entity H a ointly controlled entity; amo(nted to: A. < 10000 . < 100000 !. < 0000 . < -0Items 39 – 42 are based on the following information:
6n Can(ary 1 "013 9eorge @atima ,nc. paid < 1000 cash to ac'(ire a p(t foreign e&change option for 1000000 Thailand )aht +ith an e&piration date of ecem)er #1 "013. The option hedges "013s forecasted e&porting sales of 1000000 )aht. 9eorge @atimas fiscal year ends C(ne #0. ,ncl(de the time val(e element in assessing hedge effectiveness or non-split acco(nting is (sed. 1G1G"013 G#0G"013 1"G#1G"013 *pot rate mar/et price; < 1."0 < 1.1" < 1.15 *tri/e price e&ercise price; < 1.17 < 1.17 < 1.17 @air val(e of p(t option at G#0G13 < ?1000 #7.What is the intrinsic val(e ,I; and time val(e TI; option on Can(ary 1 "0134 ,ntrinsic Ial(e Time Ial(e A. < 1000 < -0. < -0< 1000 !. < 10000 < 000 . < 000 < 10000 30.The foreign e&change gain or loss on option contract on C(ne #0 "013 sho(ld )e: A. < 5000 loss E c(rrent earnings . < 5000 gain E 6!, !. < 5000 loss E 6!, . < 0 gain E 6!, 31.The C(ne #0 "013 foreign e&change gain or loss to )e recogni=ed in c(rrent earnings if =ero e&port sales for "013: A. < -0. < "000 !. < #7000 . < 5000 3".The C(ne #0 "013 foreign e&change gain or loss to )e recogni=ed in c(rrent earnings if e&port sales of 1000000 )aht E all occ(rred in ecem)er "013: A. < -0. < "000 !. < #7000 . < 5000 3#.verest !ompany has historically reported )ad de)t e&pense of 5% of sales in each '(arter. @or the c(rrent year the company follo+ed the same proced(re in the three '(arters of the year. Jo+ever in the fo(rth '(arter the company in cons(ltation +ith its a(ditor determined that )ad de)t e&pense for the entire year sho(ld )e < 350000. *ales in each '(arter of the year +ere as follo+s: first '(arter < "000000K second '(arter < 1500000K third '(arter < "500000K fo(rth '(arter < 3000000. Jo+ m(ch )ad de)t e&pense sho(ld )e recogni=ed for the fo(rth '(arter4 A. < "00000 . < 150000 !. < #00000 . < 300000 33.!olt !ompany has fo(r man(fact(ring divisions each of +hich has )een determined to )e a reporta)le segment. !ommon costs are appropriately allocated on the )asis of each divisions 2nd
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sales in relation to !olts aggregate sales. !olts elta division acco(nted for 30% of !olts total sales in the c(rrent year. @or the c(rrent year ended ecem)er #1 elta had sales of < ?000000 and tracea)le costs of < 3?00000. ,n the c(rrent year !olt inc(rred costs of < ?00000 that +ere not directly tracea)le to any of the divisions. ,n addition !olt inc(rred interest e&pense of < 30000. ,n reporting s(pplementary segment information ho+ m(ch sho(ld )e sho+n as eltas profit for the c(rrent year4 A. < #"00000 . < #000000 !. < "??0000 . < ""3000 Items 45 – 50 are based on the following information:
6n ecem)er 1 "013 6ptim(m !ompany paid cash to p(rchase 70 day at the moneyM call option for 500000 Thailand )aht. The options p(rpose is to protect an e&posed lia)ility of 500000 Thailand )aht relating to an inventory p(rchase receive on ecem)er 1 "013 and to )e paid on 8arch 1 "015. 1"G01G"013 1"G#1G"013 0#G01G"015 *pot rate mar/et price; < 1."0 < 1."? < 1."> *tri/e price e&ercise price; < 1."0 < 1."0 < 1."0 @air val(e of call option < #000 < 3"000 < #5000 35.What is the intrinsic val(e ,I; and time val(e TI; of option on ecem)er #1 "0134 ,ntrinsic Ial(e Time Ial(e A. < 30000 < "000 . < "000 < 30000 !. < 3"000 < -0. < -0< 3"000 3.What is the intrinsic val(e ,I; and time val(e TI; of option on 8arch 1 "0154 ,ntrinsic Ial(e Time Ial(e A. < 3"000 < -0. < 30000 < "000 !. < #5000 < -0. < -0< #5000 3>.The foreign e&change gain or loss on option contract hedging instr(ment; on ecem)er #1 "013 if changes in the time val(e +ill )e incl(ded from the assessment of hedge effectiveness non-split acco(nting; sho(ld )e A. < 1000 loss . < 1000 gain !. < #7000 gain . < 30000 gain 3?.The foreign e&change gain or loss on option contract hedging instr(ment; on ecem)er #1 "013 if changes in the time val(e +ill )e e&cl(ded from the assessment of hedge effectiveness split acco(nting; sho(ld )e A. < 1000 loss . < 1000 gain !. < #7000 gain . < 30000 gain 37.The foreign e&change gain or loss on option contract hedging instr(ment; on ecem)er #1 "013 if changes in the intrinsic val(e +ill )e e&cl(ded from the assessment of hedge effectiveness split acco(nting; sho(ld )e A. < 1000 loss . < 1000 gain !. < #7000 gain . < 30000 gain 50.The ecem)er #1 "013 foreign e&change gain or loss amo(nted to: A. < -0. < 1000 gain !. < 1000 loss
PRACTICAL ACCOUNTING II ADVANCED FINANCIAL ACCOUNTING II
. < 30000 gain
$UI%%ER 1
ANSWER KE& 1' D (' C )' D 2nd
11' B 1(' C 1)' D
semester AY 2015-2016
(1' C ((' C ()' A Page 7 of 13
)1' B )(' B ))' A
*1' A *(' A *)' B KTTegio
*' D +' B ,' D -' B .' A /' A 10' D
1*' C 1+' A 1,' C 1-' C 1.' D 1/' C (0' A
(*' C (+' B (,' C (-' B (.' C (/' C )0' C
)*' A )+' C ),' A )-' A ).' A )/' B *0' B
**' C *+' A *,' C *-' C *.' D */' A +0' C
BUSINESS COMBINATION STOCK AC$UISITION
1. 6n Can(ary 1 "015 Bogers ,nc. sold e'(ipment costing < "?00000 +ith acc(m(lated depreciation of < 1?0000 to !ooper !orp. +holly o+ned s()sidiary for < 1500000. Bogers had o+ned the e'(ipment for si& years and +as depreciating the e'(ipment (sing the straightline method over ten years +ith no salvage val(e. !ooper +ill contin(e to (se the straight-line method over the remaining fo(r years of the e'(ipments economic life. ,n consolidated statements at ecem)er #1 "015 the cost and acc(m(lated depreciation respectively sho(ld )e A. < "?00000 and < 1?0000 !. < "?00000 and < "055000 . < 1500000 and < #>5000 . < "?00000 and < 170000
2nd
ost
2,800,000
Accumulated depreciation:
1,680,000
semester AY 2015-2016
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Depreciation – 2015 (1,500,000/4years) !5,000 "iecemeal reali#ation (80,000/4years) ($5,000) !otal "##umulated de$re#iation
280,000 1,9%0,000 &'(
". ,n "01" instein ,nc. p(rchase land from its >0%-o+ned s()sidiary for < 1"5000. The s()sidiary originally paid < ?0000 for the land several years earlier. ,n "013 instein ,nc. needed to raise some cash and sold the land to an (nrelated third party for < 115000. What amo(nt of gain or loss on the sale of the land sho(ld )e reported in the consolidated income statement in "01" and "0134 "01" "013 "01" "013 A. < 35000 gain < #5000 gain !. < -0< 10000 loss . < 35000 gain < 10000 loss . < -0< #5000 gain onsolidated In#ome )tatement – 2012 onsolidated In#ome )tatement – 2014 &115,000 – 80,000(
*0* 35,000 gain &'(
#. ar/ ,nc. o+ns >0% of Light !o.s common stoc/. 6n Can(ary " "013 ar/ ,nc. sold to Light !o. some e'(ipment for < 70000. The e'(ipment had a carrying amo(nt of < 0000. Light is depreciating the ac'(ired e'(ipment over a fifteen-year remaining (sef(l life )y the straight-line method. The net ad(stments to calc(late "013 and "015 consolidated net income +o(ld )e an increase decrease; of "013 "015 "013 "015 A. < "?000; < "000 !. < "000 < -0. < "3000; < -0. < 000; < "3000 %nreali#ed &ain on sale o' euipment ($0,000 – 60,000) "iecemeal reali#ation – 2014 +nrealied -ain on sale of e.ui$ment /ie#emeal realiation – 2015
0,000 (2,000) 28,000 2,000 &"(
3. l(e ,nc. o+ns >0% of 9reen !o.s o(tstanding common stoc/. l(e ,nc. reports cost of goods sold in "013 of < ?50000 +hile 9reen !o. reports < 5"0000. (ring "013 l(e ,nc. sells inventory costing < 100000 to 9reen !o. for 1"5000. 30% of these goods are not resold )y 9reen !o. (ntil the follo+ing year. What is the amo(nt of cost of goods sold +ill )e reported in the consolidated income statement4 A. < 1#75000 . < 1"55000 !. < 1#0000 . < 1"#5000 ost o' *oods sold – +lue ncost o' *oods sold – &reen ncntercompany sales – 2015 %nreali#ed "ro'it on .ndin* nentory onsolidated ost of -oods )old
850,000 520,000 (125,000) 10,000 1,255,000 &(
5. The *l(m)er !ompanys statement of financial position on ecem)er #1 "013 is as follo+s: Assets Lia)ilities and *hareholders '(ity !ash < "00000 !(rrent lia)ilities < 00000 Acco(nts Beceiva)le 300000 Long-term de)t 1000000 ,nventories 1000000 6rdinary *hare <" par "00000 << 1?00000 *hare premi(m 300000 DDDDDDDDD Betained earnings 1"00000 Total < #300000 Total < #300000 6n ecem)er #1 "01" the 5% of the o(tstanding ordinary shares of *l(m)er for < #000000 cash. 6n that date the fair mar/et val(e of *l(m)ers inventories +as < 700000 and fair val(e of *l(m)ers property plant and e'(ipment +as < "000000. The fair val(es of all assets and lia)ilities of *l(m)er +ere e'(al to their )oo/ val(es. 2nd
semester AY 2015-2016
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As a res(lt of the ac'(isition of *l(m)er )y 50000 !. < 1"00000 . < 1000000 . < 15"5000 Acuisition cost ess: A (2,$00,000 3 !5) &oodill – partial ess: ontrol premium &oodill /o control premium Diide y &oodill – 'ull Add: ontrol premium -oodwill – with #ontrol $remium &full(
,000,000 2,1!5,000 825,000 00,000 525,000 !5 !00,000 00,000 1,000,000 &(
. The statement of financial position of o) !ompany as of ecem)er #1 "01# is as follo+s: Assets
Liabilities a! S2a3e2ol!e3s4 E"#it5
!ash Acco(nts receiva)le ,nventories
< 1>5000 "50000 >"5000 750000 DDDDDDDD
!(rrent lia)ilities 8ortgage paya)le 6rdinary share capital *hare premi(m Acc(m(lated profits
(61006000
< "50000 350000 "00000 300000 ?00000 (61006000
6n ecem)er #1 "01# the Taylor ,nc. )o(ght all of the o(tstanding shares of o) !ompany for < 1?00000 cash. 6n the date of ac'(isition the fair mar/et val(e of o)s inventories +as < >5000 +hile the fair val(e of o)s property plant and e'(ipment +as < 1100000. The fair val(e of all other assets and lia)ilities of o) +ere e'(al to their )oo/ val(es. ,n addition not incl(ded a)ove +ere costs in-process research and development of o) !ompany amo(nting to < 100000. 9ood+ill amo(nted to: A. < 300000 . < #00000
!. < "00000
Acuisition cost A (included t7e inprocess researc7 and deelopment ) -oodwill
. < -0-
1,800,000 1,600,000 200,000 &(
>. !ondensed *tatement of @inancial 5000 < 5000 2onc(rrent assets "5000 3"5000 Total Assets 700000 370000 Lia)ilities 6rdinary shares < "# par *hare premi(m Acc(m(lated profits losses; Total Lia)ilities and *J
5000 537>00 #5#00 "50000 700000
#5000 "7>00 "?#00 1#0000 370000
6n Can(ary 1 "013 olce ,nc. iss(ed #0000 shares +ith mar/et val(e of < "5 per share for the assets and lia)ilities of 9alve= ,nc. olce ,nc. also paid < 1"5000 cash. The )oo/ val(e reflects the fair val(e of the assets and lia)ilities e&cept that the nonc(rrent assets of 9alve= 2nd
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,nc. have a fair val(e of < #0000 and the nonc(rrent assets of olce ,nc. are overstated )y < #0000. !ontingent consideration +hich is determina)le is e'(al to < 15000. olce paid for the share iss(ance costs only amo(nting to < >3000 and inc(rred other ac'(isition costs amo(nting to < 17000. As a res(lt of ac'(iring the net assets of 9alve= ,nc. comp(te for the total lia)ilities in the )oo/s of olce. A. < 100000 . < 115000 !. < 1#3000 . < 5000 iailities – Dolce iailities – &ale# ontin*ent consideration %npaid ot7er acuisition costs !otal liabilities
65,000 5,000 15,000 1$,000 134,000 &(
(c/ !orporation ac'(ired a >0% interest in Whistle !orporation on Can(ary 1 "01# +hen Whistles )oo/ val(es +ere e'(al to their fair val(es. (ring "01# (c/ sold merchandise that cost < >5000 to Whistle for < 110000. 6n ecem)er #1 "01# three-fo(rths of the merchandise ac'(ired from (c/ remained in Whistles inventory. *eparate incomes of (c/ and Whistle are as follo+s: (c/ Whistle *ales Beven(e < 150000 < "00000 !ost of 9oods *old 70000 >0000 6perating &penses 1"000 15000 *eparate ,ncomes < 3?000 < 115000 ?. What amo(nt of sales to )e reported in the consolidated income statement as of ecem)er #1 "01#4 A. < #50000 . < "30000 !. < "00000 . < 30000 9ales – Duc 9ales – ;7istle ntercompany sales onsolidated )ales
150,000 200,000 (110,000) 240,000 &(
7. What amo(nt of non-controlling interest income to )e reported in the consolidated financial statement as of ecem)er #1 "01#4 A. < #3500 !. < 0000 !. < "3000 . < 37500 9eparate ncome – ;7istle
115,000 20 34,500 &"(
10.What is the consolidated net income to )e reported in the consolidated financial statement as of ecem)er #1 "01#4 A. < 1#000 . < ??>50 !. < 1#>50 . < 1#>00 9eparate ncome – Duc 9eparate ncome – ;7istle %nreali#ed "ro'it on .ndin* nentories onsolidated et In#ome
48,000 115,000 (26,250) 13%,50 &(
semester AY 2015-2016
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*ome )alance sheet and income statement acco(nts of
S2al!a
< 30000 53500
< "0000 30000
?000 5000 "00000 100000 #00000 10>500
>0000 100000 10000 150000 100000
>5000 30000
?0000 "0000
ncome 9tatement
epreciation e&pense 2et ,ncome +alance 97eet
ividends receiva)le (ilding '(ipment E net ividends paya)le !apital stoc/ Betained earnings Additional information: Betained earnings Can(ary 1 "01# ividends
'etermine the amounts that would a$$ear in the #onsolidated finan#ial statements of /lasti# or$oration and )ubsidiar for ea#h of the following items: " -oodwill at 'e#ember 31, 2013 onsolidated de$re#iation e$enses for 2013 on*#ontrolling interest in#ome for 2013 ' onsolidated net in#ome for 2013 6 onsolidated retained earnings at 'e#ember 31, 2013 F on*#ontrolling interest at 'e#ember 31, 2013
A. Ac'(isition cost ,2A "00000O?0%; &cess of cost over )oo/ val(e ,nventory 1"500&?0%; '(ipment "5000&?0%; 9ood+ill E partial ,mpairment loss E "01"
"10000 10000; 50000 10000; "0000; "0000 10000;
-oodwill – $artial 12731713
10,000
. epreciation e&pense E
!. 2et ,ncome E *haldan Amorti=ation E e'(ipment Ad(sted 2et ,ncome on*#ontrolling interest in#ome 2nd
semester AY 2015-2016
30000 "0000 5000 %5,000
30000 5000; #5000 & "0% ,000 Page 12 of 13
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. 2et ,ncome E
53500 1000; 30000 5000;
onsolidated et In#ome
. B 1G1G10 B 1G1G1# ,ncrease in B Amorti=ation: ,nventory '(ipment @I ad(stment E <s
50000 ?0000 #0000
,mpairment loss E "01" Ad(stment in B
1"500; 15000; "500 & ?0% "000 10000; ?000;
Betained earnings E < )eg.
>5000 500 ?000; 30000;
etained earnings – /, end
@. 6rdinary shares Betained earnings namorti=ed )alance Total *J-* P@I I – $ro$ortionate basis
2nd
3,500
semester AY 2015-2016
93,500
150000 100000 5000 "55000 & "0% 51,000
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