Monday F5 F6

Tuesday F7 F8
Wednesday F5 F6
Thursday F7 F8
Friday F5 F6
Saturday F7 F8
Sunday Past Questions
The consolidated statement of financial position

1.3 Example: cancellation

Park Co regularly sells goods to its one subsidiary company, Suyin Co, which it has owned since Suyin
Co's incorporation. The statement of financial position of the two companies on 31 December 20X6 are
given below.

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 20X6

Park Co
$
Assets
Non-current assets
Property, plant and equipment 35,000
Investment in 40,000 $1 shares in S Co at cost 40,000
75,000
Current assets
Inventories 16,000
Trade receivables: Suyin Co 2,000
Other 6,000
Cash and cash equivalents 1,000
Total assets 100,000
Equity and liabilities
Equity
40,000 $1 ordinary shares -
70,000 $1 ordinary shares 70,000
Retained earnings 16,000
86,000
Current liabilities
Bank overdraft
Trade and other payables: Park Co
Other 14,000
Total equity and liabilities 100,000

Required
Prepare the consolidated statement of financial position of Park Co at 31 December 20X6.

Solution:

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 20X6

Park Co
$
Assets
Non-current assets
Property, plant and equipment 80,000
80,000
Current assets
Inventories 28,000
Trade receivables: 15,000
Cash and cash equivalents 1,000
Total assets 124,000
Equity and liabilities
Equity
70,000 $1 ordinary shares 70,000
Retained earnings 35,000
105,000
Current liabilities
Bank overdraft 3,000
Trade and other payables: 16,000
Total equity and liabilities 124,000

Question - Cancellation

The statements of financial position of Paula Co and of its subsidiary Shen Co have been made up to 30
June. Paula Co has owned all the ordinary shares and 40% of the loan stock of Shen Co since its
incorporation.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE

Paula Co
Assets $
Non-current assets
Property, plant and equipment 120,000
Investment in Shen Co, at cost
80,000 ordinary shares of $1 each 80,000
$20,000 of 12% loan stock in Shen Co 20,000
220,000

Current assets
Inventories 50,000
Trade receivables 40,000
Current account with Shen Co 18,000
Cash and cash equivalents 4,000
112,000
Total assets 332,000

Equity and liabilities

Equity
Ordinary shares of $1 each, fully paid 100,000
Retained earnings 95,000
195,000

Non-current liabilities
10% loan stock 75,000
12% loan stock

Current liabilities
Trade and other payables 47,000
Taxation 15,000
Current account with Paula Co
137,000
332,000
it has owned since Suyin
on 31 December 20X6 are

Suyin Co Consolidated
$

45,000 80,000

45,000 80,000

12,000 28,000
-
9,000 15,000
1,000
66,000 124,000

40,000
- 70,000
19,000 35,000
59,000 105,000

3,000 3,000
2,000
2,000 16,000
66,000 124,000

cember 20X6.
o have been made up to 30
of Shen Co since its

Shen Co
$

100,000

100,000

60,000
30,000

6,000
96,000
196,000

80,000
28,000
108,000
 50,000

16,000
10,000
12,000
88,000
196,000
Example 1 – Statement of profit and loss, and statement of financial position

You are the accountant of Trott Ltd, a business that buys and sells cricket equipment.
The trial balance at 31 December 2017 was as follows:

Equity share capital ($1)

Retained earnings at 1 January 2017
Revenue
Staff costs
Inventory at 1 January 2017
Purchases
Distribution costs
Administrative expenses
Loan interest
Investment income
Tax
Receivables and payables
Bank
Motor vehicles – cost
Buildings – cost
Motor vehicles – accumulated depreciation 1 January 2017
Buildings - accumulated depreciation 1 January 2017
Debentures (2020)

Additional information:
1. Trott has not made any additions or disposals of tangible non-current assets in the year. Its
depreciation policy is as follows:

Motor vehicles – 20% reducing balance

Buildings – 25 years straight line
The depreciation expense for the year is charged to cost of sales.

2. Inventory at the end of the year was valued as follows:

Cost ($) NRV ($)

Bats 2,500 4,000
Gloves 650 500
Pads 1,000 2,000
Total 4,150 6,500

3. Staff costs are to be apportioned equally across cost of sales, distribution costs and administrative expe
4. The balance of tax on the tax account represents the over/under provision for the prior year. An
estimate of $1,500 has been made for the tax payable at the year-end.

Prepare in a statement of profit or loss for the year-ended 31 December 2017 and a statemen

Solution:
Trott Ltd
 Profit or Loss Account For The Year Ended 31 December 2017

Revenue
Cost of Sales (W3)
Gross Profit
Distribution Cost
Administative Expenses

Earnings Before Interest and Tax

Loan Interest
Investment Income
Net Interest Inome
Profit Before Tax
Tax
Profit for the year

Example 3 – Statement of changes in equity (2)

Extracts from Ball’s nominal ledger for the year ended 31 December 2017 are as follows:

$'000
Profit for the year 421
Dividend (98)
323

During the year the following important events took place:

(i) Properties were revalued by $105,000 increase.
(ii) 200,000 equity shares of $1 were issued during the year at a 25c premium

The opening equity balances were as follows:

$
Issued capital 400,000
Share premium 50,000
Revaluation surplus 165,000
Retained earnings 310,000
925,000

Prepare the statement of changes in equity for the year-ended 31 December 2017.

Solution:

Issued Share
capital premium
Opening Balance 400,000 50,000
Profit for the year
Dividend
Properties revalued
Equity 200,000 50,000
Closing Balance 600,000 100,000

Example 1 – Revaluation increase

Panama bought an item of property, plant and equipment for $80 million on 1 January 2012. The asset ha
zero residual value and was to be depreciated over its estimated useful life of 20 years.
On 1 January 2015 the asset was revalued to its fair value of $95 million.

Calculate the amounts to shown in the financial statements of Panama for the year-ended 31
December 2015.

Solution:
$'000 $'000
PPE @ Cost 1/1/2012 80,000
Useful Life 20 Years
Annual Depreciation 4,000
Accum Dep. 31/12/2014 (3 Years) (12,000)
NBV 1/1/2015 68,000
Revaluation surplus 1/1/2015 27,000
Revalued amount 1/1/2015 95,000
Remaining useful Life 17 Years
New annual depreciable value 5,588
Depreciation 31/12/2015 (5,588)
NBV 31/12/2015 89,412
Realised gain on revaluation 1,588
 cricket equipment.

W1
$ $
5,000 SFP
5,835 SFP
66,980 IS
5,400 IS
3,930 IS
38,760 IS
3,130 IS
3,790 IS W2
200 IS
250 IS
200 SFP/IS
9,290 2,360 SFP
3,125 SFP
5,000 SFP W3
12,000 SFP
1,000 SFP
2,400 SFP
1,000 SFP

urrent assets in the year. Its

W4

stribution costs and administrative expense.

r provision for the prior year. An

31 December 2017 and a statement of financial position at that date.

Trott Ltd
ded 31 December 2017 Statement of Financial Position as at

$ $
66,980 Non-Current Assets:
(41,770) Motor Vehicles
25,210 Building
(4,930) Total Non-current Assets
(5,590) Current Assets:
(10,520) Inventory
14,690 Receivables
(200) Bank
250 Total Current Assets
50 Total Assets
14,740
(1,700) Liabilities and Owners Equitty
13,040 Non-Current Liability
Debentures (2020)
Current Liabilities
Payables
Tax payable
Total Current Libilities
Total Libilities

Owners Equity:
Equity share capital ($1)
Retained earnings:
Opening
Profit for the year
Total Retained Earnings
Total Equity

Total Libilities and Equity

er 2017 are as follows:

5c premium
nded 31 December 2017.

Revaluation Retained
Total
surplus earnings
165,000 310,000 925,000
421,000 421,000
(98,000) (98,000)
105,000 105,000
250,000
270,000 633,000 1,603,000

million on 1 January 2012. The asset had

seful life of 20 years.

s of Panama for the year-ended 31

Dr Accum Dep 12,000

Dr Asset Cost 15,000
Revaluation suprlus 27,000

SPL
SFP
SPL/OCI 25,412
Workings:

Depreciation:
Motor V. Buildings Total
Cost 5,000 12,000
Accum Dep 1/1/2017 (1,000) (2,400) (3,400)
NBV 1/1/2017 4,000 9,600 13,600
Annual depreciation (800) (480) (1,280)
NBV 31/1/2017 3,200 9,120 12,320

Closing Inventory:
Bats 2,500
Gloves 500
Pads 1,000
Total 4,000

Cost apportionment
COS DistributionAdmin
Opening Inventory 3,930
Purchases 38,760
Depreciation 1,280
Closing Inventory (4,000)
Total 39,970 - -
From TB 3,130 3,790
Staf Costs (1/3) 1,800 1,800 1,800
Balance 41,770 4,930 5,590

Tax:

B/F 200 SPL 1700

C/F 1500

1,700 1,700
B/F 1500
 nt of Financial Position as at 31 December 2017

$ $
ent Assets:
3,200
9,120
-current Assets 12,320

4,000
9,290
3,125
rrent Assets 16,415
28,735

and Owners Equitty

ent Liability
1,000

2,360
1,500
rent Libilities 3,860
4,860

are capital ($1) 5,000

5,835
13,040
ained Earnings 18,875
23,875

bilities and Equity 28,735

-
TANGIBLE NON-CURRENT ASSETS

Section A

24) Foster Co has built a new factory incurring the following costs:
$'000
Land 1,200
Materials 2,400
Labour 3,000
Architect's fees 25
Surveyor's fees 15
Site overheads 300
Apportioned administrative overheads 150
Testing of fire alarms 10
Business rates for first year 12
Total 7,112

What will be the total amount capitalised in respect of the factory?

A $6,112,000
B $6,950,000
C $7,112,000
D $7,100,000

25) Carriageways Co had the following bank loans outstanding during the whole of 20X8 which form the
company's general borrowings for the year:

$'m
9% loan repayable 20X9 15.00 Weighted
11% loan repayable 20Y2 24.00 10.23%
39.00
Carriageways Co began construction of a qualifying asset on 1 April 20X8 and withdrew funds of $6 million
on that date to fund construction. On 1 August 20X8 an additional $2 million was withdrawn for the same
purpose.
Calculate the borrowing costs which can be capitalised in respect of this project for the year ended
31 December 20X8.

A $549,333
B $411,999
C $750,000
D $350,000
20X8 which form the

Borrowing cost
6,000,000 1-Apr 9 460,385
2,000,000 1-Aug 5 85,256
545,641

rew funds of $6 million

ithdrawn for the same

the year ended