SUGGESTED SOLUTION SUGGESTED SOLUTION FAR 450 JUNE 2014 FAR 450 JUNE 2014 QUESTION 1 QUESTION 1 a.
a. -- RelationsRelationship remains the same hip remains the same but controlling interest increased from 70% to 90%but controlling interest increased from 70% to 90% and hence NCI decreased from 30% to
and hence NCI decreased from 30% to 10%.10%. -- Increase in Increase in controllingcontrolling interest is treated as a transactio
interest is treated as a transaction between euit! own between euit! owners. ners. "s such gain#loss in"s such gain#loss in reduction of NCI is ta$en to euit! through CI.
reduction of NCI is ta$en to euit! through CI.
-- &he additional acuisiti&he additional acuisition will not on will not alter the goodwill computed on the firstalter the goodwill computed on the first acuisition.
acuisition.
-- Consolidate in C'() and NCI % based on 10%.Consolidate in C'() and NCI % based on 10%.
b. b.
G
Gooooddwwiillll NNCCI I GGRR Do!"
Do!" #$d #$d %&0'( %&0'( 11)*)* a+,i)i*io a+,i)i*io C
Coonnssiiddeerraattiioon n ttrraannssffeerrrreedd 330000 N NCCI I **3300% % + + ,,--/ / 11,,00..,, 11,,00..,, ( of net asset 1#1#013 ( of net asset 1#1#013 ''CC 330000 R R)) 11,,99
tthheer r ccoommppoonneennt t oof f eeuuiitt!! 1133 2
2aanndd -- **,,--//
#
#aa!!//aaii !!++$$aa)) 22&&.. Gai3lo)) 2d a+,i)i*io
Gai3lo)) 2d a+,i)i*io C
Coonnssiiddeerraattiioon n ttrraannssffeerrrreedd 99- -0% + 300# + + , 0% + 300# + + , ( of net asset 31#1#013 ( of net asset 31#1#013 ''CC 330000 R R)) 11
tthheer r ccoommppoonneennt t oof f eeuuiitt!! 11 2 2aanndd - - 00% % + + ,, **110099// **110099// 4 4aaiinn 1133 Cod #$d Cod #$d Considera
Consideration tion transferred transferred 7171 N
NCCII **00%%++ --33// ..-- ..- -2ess5 ( of net asset 1#1#013
2ess5 ( of net asset 1#1#013
''CC 1199
R)
R) ,,
tthheer r ccoommppoonneennt t oof f eeuuiitt!! 11 6 6rraanndd 1111 **--33// G Gooooddwwiillll 00.. 1 1
R*aid !oi* Ta #$d 6al c#f 33 "cuisition cost *0./ 6argain purchase 7.-i8idend recei8able or! *1 + 90%/ Cod *7 + 0%/ 13. .-:rp4I& *0.1/ Cod #$d 6al c#f )re *,/ :R) *plant/ *3/ 8er dep. 0.- "mortisation;brand *./ 3., 0% 7.0 0% .3 Do!" #$d 6al c#f 1 )re *1,9/ 7 30% 1.- 70% 0.,
)ost other comp of euit! or! *1 < 13/ + 30% Cod * < 1/ + 0%
1.
CSOF 11.1 5&.2
Co)olida*d S*a*6* o Fia+ial o)i*io o Ta #$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 11- < ? 1.1 < 0.1 1>1-, 2821 E,i*" ad liabili*i)
rdinar! shares -0 ? , ,
Retained profit -7.
ther components of euit! 30 ? 3. ? ? 7 ? 13 1-.
Non controlling interest 11-.1
Noncurrent liabilities
,-Current liabilities 393 ? 0. < 13. < .- < 3.9 370. 2821
QUESTION 2a
)rofit before ta+ation
R=million
3
4wimpairment 1
epreciation -0
"ssociate@s profit *90/
Increase in trade recei8ables *7./
Increase in in8entories *10/
Increase in trade pa!ables
,
Ca)$ /!a*d !o6 o!a*io)
.5
9o!:i/) C& *30 ? 107./ 137. NCI *110+%/ 7. ( of N" *110/ 4oodwill Goodwill 6al b#d 300 I6ai!6* 15 "c 6al c#d 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;<6illio R;<6illio Ca)$ low) !o6 i=)*i/ a+*i=i*i)
"cuisition of associate *0/
"cuisition of propert!> plant and euipment "cuisition of subsidiar! *30 < 10/
*11/ *0/
i8idend recei8ed from associate -
Net cash used in in8esting acti8ities
*10/Ca)$ low) !o6 ia+i/ a+*i=i*i) i8idend paid to NCI
)roceeds of share issue
*13/ . Repa!ment of borrowing *1310 < 10/ */
Net cash used in financing acti8ities
*,./E OSC >S
6al b#d 1110 ep -0 6al c#d
900?10
1110 6al b#d 70
"c6alsam -0 6al c#d 17 "c6alsam 107.
Re8aluation 0 Ca)$ 3252.5
Ca)$ 115
NCI I=ia))o.
6al b#d , 6al b#d Ca)$ 5
Ca)$ 17 "c6alsam 7. New asso. 0
6al c#d ,7 &CI 17. 'hare of pf. 90 6al c#d 3-0
QUESTION 7a
S:" #$d G!o
Co)olida*d S*a*6* o !oi* o! Lo)) o! *$ "a! dd 71 D+6b! 2017
R;<000 Re8enue *9>000 ?,>00/? *3->000 + ,#1/; 3>000 110>00 Cost of sales *3>000 ? 19>00/ ? *1>000 + ,#1/ ;3>000 ?10< 30 *,->70/ AAAAAAAAA 4ross profit -,>30 B+penses *1>00 ?9>000/ ? *->-00 + ,#1/ < *100 o8er dep./ *3>-00/ Impairment goodwill *10/ 6argain purchase >-90
Income from other in8estment 1>00 ? *1>00 + ,#1/ 1>700 'hare of profit. in associate *>00 < 00 dep/ + 30% 1>90
)rofit beforeta+ ,->,90
&a+ation *>,00 ? ,>70/ ? *3>900 + ,#1/ *1,>,0/
)rofit for the !ear 728040
O*$! +o6!$)i= i+o6
'urplus on fair 8alue of non depreciable asset 300
&otal comprehensi8e income for the !ear 728740
!oi* o! *$ "a! a**!ib*abl *o ?
wners of parent
->3- NCI ; &weet 91 ,>,
- ine 92 90
728040 &otal comprehensi8e income attributable to
wners of parent
7>01-NCI *,, ? *300+,0%/ #? 90 >3,
728740 ,
9o!:i/)
NCI ? Tw* #$d %91(
)rofit for the !ear 10>9-0
rd di8 from ine 6hd *10/
:R) ; closing stoc$ *>000 + -%/ *10/ - opening stoc$ 30 1080 + ,0% ,>7 Impairment 10 + ,0% *,/ 48224 @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* R;<000 NCI R;<000 6alance b#f 91 11>707 92 3>9-, "cuisition of subsidiar! >7-0 &CI >3,
)rofitfor the !ear
->3-rdinar!di8idend *1>0/ 97 *310/
6alance c#f 7&827 148&7
132 B 6a!:)
%91( R*aid !oi* b3
S:" #$d Retainedprofit b#f 9>90 :R) < machiner! *m ;1.m/ *00/ epreciation *0.m # !rs/ 100 9>0 Tw* #$d Retained profit b#f >-02ess pre-acquisition profit *>00/ 2ess :R) opening stoc$ *30/
28410 0'
1>,,-A) #$d%A))o+ia*(
Retained profit b#f ,>70
2ess pre-acquisition profit *>100/
2ess depreciation *00/
282&0 70' -1
118&0&
%92( NCI b3
Tw* #$d
(at d.o.a *1#1#010/ 7>000
Retained profit *from 1#1#010 till 1#1#013/ >,10 + ,0% 9-,
Consideration transferred ; ine 10>000 + ,0% *,>000/
784 %97( O!dia!" di=idd &weet 0 + ,0% 0 ine -00 + 1% 90 710 QUESTION 4A a.
6efore disposal isposal "fter disposal
ffer 1 #10 0% 7# + 0% 70% 10% *simple in8estment/
ffer 0% ,# + 0% ,0% ,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
'ales )roceed
1.-(air 8alue of remaining shares on d.o.d , + 3.9 1.-31. Net assets at disposal date
rdinar! shares 10
Retained profits b#f 1
Current !ear profit 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.