Answer EF7-FE9

using information below Excerpt from the statement of comprehensive income For the year ended December 31, 2012

Revenue $2,530

Cost of goods sold -$1,679

Gross profit $851

Operating costs -$62

Depreciation -$167

Loss on disposal -$14

Admin expense -$76

Investment income $0

Operating income $532

Interest expense -$180

Income before taxes $352

Income taxes -$183

Net income $169

Statements of financial position

As at December 31

2012 2011

Assets

Current assets

Cash and cash equivalents $197 $209

Accounts receivable and other receivables $164 $189

Prepaid expenses

Inventories $106 $102

$467 $500

Non-current assets

Land $1,500 $1,120

PP&E $693 $404

$2,193 $1,524

Total assets $2,660 $2,024

Liabilities Current liabilities

Bank overdraft $0

Accounts payable and other payables $71 $78

Income taxes payable $83 $74

$154 $152

Non-current liability

Bonds payable $1,000 $850

Total liabilities $1,154 $1,002

Shareholders' equity

Common shares $878 $800

Contributed surplus $80 $80

Accumulated other comprehensive income $380 $0

Retained earnings $168 $142

$1,506 $1,022

Total liabilities and shareholders' equity $2,660 $2,024

1. non-current assets property, plant and equipment had the following transactions:

i) During the year, a piece of equipment that had originally cost $120,000 and had a net book value of $24 was sold.

ii) Land was revalued at $1,500 on January 1, 2012.

2. The company paid dividends of $143 during the year.

3. Assume all bonds were issued at par. Report interest expense and interest revenue as an operating activity, while dividends paid are reported as a financing activity. Using indirect method

FE7

Net cash generated from operating activities will be

a) 390

b) 373

c) 395

d) 380

FE8

Cash generated from investing activities will be

a) 470

b) 480

c) -470

d) -480

FE9

Cash generated from financing activities will be

a) -85

b) 85

c) -143

d) 150

FE10

Year-end information related to the building is as follows:

Building $200,000

Accumulated depreciation ($50,000)

Additional information was gathered by Diana on the future cash flows and fair values of each asset:

Undiscounted future cash flows from building $140,000

Value in use $130,000

Fair value $135,000

Costs of disposal ($4,000)

Which of the following best describes possible source of cash (inflow) for the year?

a) Impairment loss is $19,000

b) Impairment loss is $23,000

c) Impairment loss is $21,500

d) None of the above

FE11

Acquisition differential amortization schedule

Dec. 31, 2012 2013-2016 2017 Dec. 31, 2017

Inventory $ 75,000 $ 75,000

P&E 200,000 100,000 $ 25,000 $ 75,000

LTD 100,000 40,000 10,000 50,000

Goodwill 625,000 625,000

$ 1,000,000 $ 215,000 $ 35,000 $ 750,000

ATP (75%) $ 750,000 $ 161,250 $ 26,250 $ 562,500

NCI (25%) 250,000 53,750 8,750 187,500

What is the amount by which consolidated pre-tax profits will change as a result of the amortization of the acquisition differential in the year 2013?

a) $35,000 decrease

b) $110,000 increase

c) $110,000 decrease

d) $90,000 increase