AYB340_Final_Exam_S1204_Paper
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340
Subject
Accounting
Date
Apr 3, 2024
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1
QUESTION 1
Part A
On 1 July 2018, Kiwi Ltd purchased 40% of the shares of Fruit Ltd at a cost of $240,000. Kiwi
Ltd does not control Fruit Ltd but does have significant influence. The carrying amounts of Fruit
Ltd’s net assets (at fair value) at date of acquisition were as follows:
Equity
1/7/2018
Share capital 430,000
Asset Revaluation Surplus
20,000
Retained earnings
110,000
The following information relates to Fruit Ltd for 30/6/19 and 30/6/20:
30/6/19
30/6/20
Profit/loss after tax
260,000
140,000
Dividend paid -
50,000
Asset Revaluation Surplus
20,000
24,000
Required
Prepare the journal entries required by Kiwi Ltd relating to its Investment in Fruit Ltd and subsequent transactions for the period from 1 July 2018 to 30 June 2020. Kiwi Ltd is not
a parent entity. (12 marks)
Answer for (a) Workings:
Question 1 continued overleaf
AYB340T1.201
cont/...
3
Question 1 continued
Date
Details
Dr
Cr
End of Part A
Question 1 continued overleaf
AYB340T1.201
cont/...
3
Question 1 continued
Part B
Kiwi continues to hold a 40% shareholding in Fruit Ltd.
Profit after tax for Fruit Ltd in the year ended 30 June 2021 is $80,000. In this year, Kiwi Ltd sold inventory to Fruit Ltd and recorded a profit before tax of $14,000. At
30 June 2021, the inventory is unsold by Fruit Ltd.
In addition, Fruit Ltd sold machinery to Kiwi Ltd for $25,000 on 1 July, 2020. The machinery
cost Fruit Ltd $16,000. Kiwi applies 10% pa straight-line depreciation method.
There were no dividends paid and no asset revaluations in this year.
Required
Calculate Kiwi Ltd’s share of profit for 30 June 2021. In addition, prepare the journal entries
that would be required in the accounting records of Kiwi Ltd for the year ended 30 June 2021. (6 marks)
Answer for (b) Workings:
Date
Details
Dr
Cr
End of Part B
Question 1 continued overleaf
AYB340T1.201
cont/...
3
Question 1 continued
Part C
Describe in words how goodwill is accounted for using the equity method of accounting. How
does this differ to accounting for goodwill using the consolidation method of accounting?
(2 marks)
Answer for (c) End of Part C
End of Question 1
(Total Marks for Question 1: 20 Marks)
AYB340T1.201
cont/...
3
QUESTION 2
Part A
Kowloon Ltd operates in several segments. Data on these segments as at 30 June 2020 can be seen below. Having performed the initial analysis required under AASB 8, the accountant of Kowloon Ltd believes there are 4 reportable segments: A, B, E, and F.
Operating segments
Segment A
Segment B
Segment C
Segment D
Segment E
Segment F
Intra-group
Total
Segment revenues:
Revenue from external sales 800
760
400 100
1 000
2 500
0
5 560
Revenue from transactions with other segments
255
100
0
185 85
1 500
-2 125
0
Total segment sales revenue
1 055
860
400
285
1 085
4 000
-2 125
5 560
Other segment revenues
225
100
0
50
0
0
0
375
Total revenue
1 280
960
400
335
1 085
4 000
-2 125
5 935
Test 1(a): Sales revenue analysis
15.9%
11.9%
5.0%
4.2%
13.5%
49.6%
Segment profit/loss
438
137
53
-79
72
687
-15
1 293
Test 1(b): Segment result analysis
31.6 %
9.9%
3.8%
5.7 %
5.2 %
49.5 %
Unallocated revenue
1,425
Unallocated expenses
-625
Profit before income tax
2,093
Income tax expense
-143
Profit (loss) for period
1,950
Segment assets
1 650
1 400
550
600
1 250
3 000
8 450
Unallocated assets
350
Test 1(c): Asset analysis
19.5%
16.6%
6.5%
7.1%
14.8%
35.5%
Total Assets
8 800
Segment liabilities
1 000
950
175
400
650
2 500
5 675
Unallocated liabilities
1 250
Total liabilities
6 925
Question 2 continued overleaf
AYB340T1.201
cont/...
3
Question 2 continued
Required:
(a)
Do you agree with the accountant, that the reportable segments are A, B, E, and F? Why/Why not? Justify your answer, using the calculations above, and any additional calculations that may be required.
(10 marks)
Answer for Question 2 - Part A:
End of Part A
Question 2 continued overleaf
AYB340T1.201
cont/...
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intragroup transfers of inventory.
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Рее
Cee
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£
£
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50,000
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220,000
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Financial Accounting II / © ICCG / Page 46
Question 1
The following figures were extracted from head office books of the HPD Co.,
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Head Office
Durban
Branch
Prieska
Branch
Cash at bank (Dr)
Branch account Durban (Dr)
Branch account Prieska (Dr)
Creditors
Debtors
Furniture and fittings at cost
Head office account (Cr)
Land and buildings at cost
Vehicles at cost
10 000
3 000
2 000
4 800
4 800
4 600
2 000
1 000
7 000
6 000
4 000
1 500
1 500
2 000
4 600
4 900
12 000
4 000
1 000
Depreciation provision
Furniture and fittings
1 000
400
300
Vehicles
2 000
400
Owner's capital
50 000
Stock at 31 December
Administration expenses
Gross profit
4 000
3 000
5 800
10 000
2 000
3 000
7 600
30 000
31 000
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Required
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Q11
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Select one:
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b. R54 000
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Q9
Molokomme Limited acquired all the assets and liabilities of Mashiane Limited at 1 January 2016 for R195 000. The statement of financial position for Mashiane Limited was presented as follows at acquisition date:
Mashiane Limited
Statement of financial position as at 1 January 2016
R'000
Assets
Property, plant and equipment
70
Inventory
60
Accounts receivable
40
Total assets
170
Capital and reserves
Share capital
80
Retained earnings
70
Shareholders’ equity
150
Accounts payables
20
Total equity and liabilities
170
Molokomme Limited considered the fair values of the assets and liabilities of Mashiane Limited to be equal to their carrying amounts in the statement of financial position of Mashiane Limited at that date except for property, plant…
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