EXAMINATION (online)
ASSIGNMENT 1
Code: INS 4007
Lecturer’s Signature& full name
Program: VNU
Course Code: INS 4007
Course Title: FINANCIAL REPORT FORMULATION Nguyễn Thị Phương
Level: ……………………………………………………. Date: 13/08/2021
Time allowed: 5 days Department’s Signature & full
Due date: 11 am 21/08/2021 name
Nguyễn Thị Kim Oanh
Date: ………………………………
Instructions to students:
1. Closed/Opened book examination: Opened book
2. Submitted your project as a PDF file or image file
3. The file name is as follows: Student name_Student number_Course code
(Example: Nguyễn Văn A_19071122_INE1050.01)
This exam paper contains 07 pages, including the cover page.
1
Section A
1. Red Co acquired 80% of Blue Co’s 40,000 $1 ordinary share capital on 1 January 20X2 for a
consideration of $3.50 cash per share.
The fair value of the non-controlling interest was $30,000 and the fair value of the net assets
acquired was $125,000.
What should be recorded as goodwill on acquisition of Blue Co in the consolidated financial
statements? (mark 0.5)
2. Boggis Co had the following transactions during the year.
(a) Purchases from suppliers were $19,500, of which $2,550 was unpaid at the year end. Brought
forward payables were $1,000.
(b) Wages and salaries amounted to $10,500, of which $750 was unpaid at the year end. The
accounts for the previous year showed an accrual for wages and salaries of $1,500.
(c) Interest of $2,100 on a long-term loan was paid in the year.
(d) Sales revenue was $33,400, including $900 receivables at the year end. Brought forward
receivables were $400.
(e) Interest on cash deposits at the bank amounted to $75.
Calculate the cash flow from operating activities using the direct method (mark 0.5)
3. Apple Co owns 60% of Pear Co. Apple has receivables of $60,000 and Pear has receivables of
$40,000. Pear owes Apple $10,000. What are consolidated receivables? (mark 0.5)
4. Spring Co has held 100% of the equity share capital of Summer Co for many years. Cost of
sales for each entity for the year ended 31 December 20X8 was as follows.
$
Spring Co 200,000
Summer Co 160,000
2
During the year Spring Co sold goods costing $10,000 to Summer Co for $16,000. At the year
end, all these goods remained in inventory.
What figure should be shown as cost of sales in the consolidated statement of profit or loss of the
Spring Group for the year ended 31 December 20X8?
(mark 0.5)
Section B
1. Name and describe the three major categories of balance sheet accounts; search on the internet
and download 01 example of consolidated financial statement of a company in accordance with
IFRS (mark: 0.5)
For reporting purposes, management prefers higher profits; for tax purposes, lower taxable
income is desired. To meet these goals, firms often use different methods of depreciation for tax
and reporting purposes. Which depreciation method is best for reporting and which for tax
purposes? Why? (mark: 0.5)
2. Present your knowledge about IFRS and the adoption of IFRS in Vietnam (mark: 0.5)
3. Give four examples of inter-company income and expense transactions that will need to be
eliminated on consolidation and explain why each is necessary (mark: 0.5)
Section C
1. Statement of financial position of Anna Ltd and Peter Ltd at 31/12/2020 as following
ASSET Anna ($) Peter ($)
Non-current assets 200,000 90,000
Depreciation (60,000) (20,000)
Investment in Peter Ltd 100,000
Current assets
Inventories 90,000 25,000
Account receivables 75,000 30,000
3
Current account – Peter Ltd 9,000
Bank 12,000 8,000
Total asset 426,000 133,000
EQUITY AND LIABILITIES
$1 common shares 171,000 35,000
General reserve 15,000 12,000
Revaluation reserve 20,000
Retained earnings 90,000 50,000
Current liabilities
Account payable 120,000 22,000
Taxation payable 10,000 5,000
Current account – Anna Ltd 9,000
Total equity and liabilities 426,000 133,000
Statements of comprehensive income for the year ended 31 December 2020:
Anna ($) Peter ($)
Sales 180,000 115,000
Cost of sales 50,000 55,000
Gross profit 130,000 60,000
Expenses 60,000 40,000
Dividends received from 4,000
Peter
Profit before tax 74,000 20,000
Income tax expense 18,500 5,000
Surplus on revaluation 24,000
Total comprehensive 79,500 15,000
income
4
Anna Ltd acquired 70% of the shares in Peter Ltd on 1 January 2020 when Peter Ltd’s retained
earnings were $28,000 and the balance on Peter’s general reserve was $7,000. The fair value of
the non-controlling interest at the date was £30,000. Non-controlling interests are to be measured
using Method 2.
Common share of Peter at 31/12/2020 was the same as 1/1/2020.
On 31 December 2020 Anna revalued its non-current assets. The revaluation surplus of £24,000
was credited to the revaluation reserve.
During the year Anna sold Peter goods for $9,000 plus a markup of one-third. Half of these
goods were still in inventory at the end of the year. Goodwill suffered an impairment loss of
20%.
Required:
Prepare a consolidated statement of comprehensive income for the year ended 31/12/2020 and a
statement of financial position as at that date (mark: 2)
2. Johnny plc acquired 70% of the common shares of Julia plc on 1/1/20X0 and gained control.
At that date the statements of financial position of the two companies were as follows:
Johnny plc ($000) Julia plc ($000)
Asset
Non-current assets
Property, plant and equipment 240 120
Investment in Ball 160
Current assets 90 90
Total assets 490 210
Equity and Liability
Capital and reserves
Share capital 250 100
5
Share premium 40
Retained earnings 120 10
Current liabilities 120 60
Total equity and liabilities 490 210
Fair value of the property, plant and equipment in Julia at 1/1/20X0 was £150,000. The fair value
of the non-controlling interest in Julia at 1/1/20X0 was £55,000. The ‘fair value method’ should
be used to measure the non-controlling interest.
Required:
Prepare a consolidated statement of financial position for Johnny group as at 1 January 20X0
(mark: 2)
3. Blue plc is a Trading company. The following is its trial balance as at 31 December 20X0.
Dr $000 Cr$000
Ordinary share capital: £1 shares 200
Share premium 30
General reserve 26
Retained earnings as at 1 January 145
20X0
Inventory as at 1 January 20X0 76
Sales 960
Purchases 490
Administrative costs 10
Distribution costs 6
Plant and machinery – cost 240
Plant and machinery – provision for 49
depreciation
Returns outwards 25
Returns inwards 27
Carriage inwards 9
Warehouse wages 105
Salesmen’s salaries 60
Administrative wages and salaries 50
Hire of motor vehicles 29
Directors’ remuneration 30
Rent income 9
Trade receivables 306
6
Cash at bank 62
Trade payables 56
The following additional information is supplied:
(i) Depreciate plant and machinery 30% on straight-line basis.
(ii) Inventory at 31 December 20X0 is £90,000.
(iii) Accrue auditors’ remuneration £3,000.
(iv) Income tax for the year will be £30,000 payable October 20X1.
(v) It is estimated that 6/10 of the plant and machinery is used in connection with distribution,
with the remainder for administration. The motor vehicle costs should be allocated to
distribution.
Required:
Prepare a statement of income and statement of financial position in a form that complies with
IAS (mark 2)
