FINANCIAL ACCOUNTING

ASSIGNMENT 02 The information below represents the trial balances of Burgers-Eat Ltd and its subsidiary, Travelwell Ltd, as at 31 August 2020: Burgers-Eat Ltd R (1 200 000) (570 100) (275 000) (330 600) (456 000) (624 500) Travelwell Ltd R (650 000) (341 260) (175 000) (205 650) (314 700) (273 400) 1 194 000 685 950 Share capital - ordinary shares...... Retained earnings - 1 September 2019. Revaluation surplus....... Accumulated depreciation - plant and machinery. Trade and other payables...... Long-term borrowings...... Loan from Burgers-Eat Ltd. Land and buildings....... Plant and machinery. Investment in Travelwell Ltd (cost equals fair value). Loan to Travelwell Ltd....... Trade and other receivables. Bank......... Inventory... Sales...... Income: services rendered. Income : other..... Interest income. Cost of sales...... Taxation for the year... Interest paid...... Other expenses.. Dividends paid.... 1 400 000 725 000 805 000 273 400 77 330 165 100 275 000 (2 405 000) (130 800) (76 100) 1 350 000 325 870 123 500 144 470 45 000 (450 000) (1 714 000) (100 400) (22 800) 320 440 236 550 41 300 1 456 000 555 300 116 100 Additional information 1. Burgers-Eat Ltd is a company that owns restaurants and petrol stations. The company noted a significant growth in number of people at the restaurants along the highways over weekends and major public holidays. The company decided to acquire Travelwell Ltd, a long-distance bus company, on 1 June 2018. Therefore, 80% of the fair value of the assets and liabilities were acquired on that date. 2. On the date of acquisition, the retained earnings of Travelwell Ltd amounted to R185 500. The carrying amounts of all assets and liabilities were deemed equal to their fair values on this date. Land was revalued on 27 August 2020, according to the policy of the group to revalue land every three years. This was recorded. The carrying amount of land and buildings was R1 159 000 before the revaluation of the land. The issued share capital of both companies remained unchanged since acquisition. Assume each ordinary share carries one vote and that voting rights alone determine control. The group's policy is to disclose goodwill at cost less impairment in the consolidated financial statements. Goodwill was not impaired in the current year. 3. Since acquisition date, Travelwell Ltd purchased all its food sold to customers on tour, from Burgers-Eat Ltd at cost price plus 25%. On 31 August 2019 this inventory on hand in Travelwell Ltd amounted to R110 000. At year-end Travelwell Ltd had inventory worth R37 500 on hand, purchased from Burgers-Eat Ltd. Intragroup sales for the year amounted to R280 000. 4. The interest paid relate to the loan between Burgers-Eat Ltd and Travelwell Ltd. 5. Travelwell Ltd declared a dividend amounting to R95 500 on 25 August 2020. The transaction was erroneously omitted in both companies' accounting records. 6. You can assume that the profit after tax for the current financial year amounted to R232 910 for Travelwell Ltd. Part B Prepare the consolidated statement of profit or loss and other comprehensive income of the Burgers-Eat Ltd Group for the year ended 31 August 2020. 19 [19] Please note: Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). Show all calculations and round all amounts to the nearest Rand. Ignore the taxation effect of unrealised profits and/or losses, as well as capital gains tax. Notes to the consolidated statements are not required. ASSIGNMENT 02 The information below represents the trial balances of Burgers-Eat Ltd and its subsidiary, Travelwell Ltd, as at 31 August 2020: Burgers-Eat Ltd R (1 200 000) (570 100) (275 000) (330 600) (456 000) (624 500) Travelwell Ltd R (650 000) (341 260) (175 000) (205 650) (314 700) (273 400) 1 194 000 685 950 Share capital - ordinary shares...... Retained earnings - 1 September 2019. Revaluation surplus....... Accumulated depreciation - plant and machinery. Trade and other payables...... Long-term borrowings...... Loan from Burgers-Eat Ltd. Land and buildings....... Plant and machinery. Investment in Travelwell Ltd (cost equals fair value). Loan to Travelwell Ltd....... Trade and other receivables. Bank......... Inventory... Sales...... Income: services rendered. Income : other..... Interest income. Cost of sales...... Taxation for the year... Interest paid...... Other expenses.. Dividends paid.... 1 400 000 725 000 805 000 273 400 77 330 165 100 275 000 (2 405 000) (130 800) (76 100) 1 350 000 325 870 123 500 144 470 45 000 (450 000) (1 714 000) (100 400) (22 800) 320 440 236 550 41 300 1 456 000 555 300 116 100 Additional information 1. Burgers-Eat Ltd is a company that owns restaurants and petrol stations. The company noted a significant growth in number of people at the restaurants along the highways over weekends and major public holidays. The company decided to acquire Travelwell Ltd, a long-distance bus company, on 1 June 2018. Therefore, 80% of the fair value of the assets and liabilities were acquired on that date. 2. On the date of acquisition, the retained earnings of Travelwell Ltd amounted to R185 500. The carrying amounts of all assets and liabilities were deemed equal to their fair values on this date. Land was revalued on 27 August 2020, according to the policy of the group to revalue land every three years. This was recorded. The carrying amount of land and buildings was R1 159 000 before the revaluation of the land. The issued share capital of both companies remained unchanged since acquisition. Assume each ordinary share carries one vote and that voting rights alone determine control. The group's policy is to disclose goodwill at cost less impairment in the consolidated financial statements. Goodwill was not impaired in the current year. 3. Since acquisition date, Travelwell Ltd purchased all its food sold to customers on tour, from Burgers-Eat Ltd at cost price plus 25%. On 31 August 2019 this inventory on hand in Travelwell Ltd amounted to R110 000. At year-end Travelwell Ltd had inventory worth R37 500 on hand, purchased from Burgers-Eat Ltd. Intragroup sales for the year amounted to R280 000. 4. The interest paid relate to the loan between Burgers-Eat Ltd and Travelwell Ltd. 5. Travelwell Ltd declared a dividend amounting to R95 500 on 25 August 2020. The transaction was erroneously omitted in both companies' accounting records. 6. You can assume that the profit after tax for the current financial year amounted to R232 910 for Travelwell Ltd. Part B Prepare the consolidated statement of profit or loss and other comprehensive income of the Burgers-Eat Ltd Group for the year ended 31 August 2020. 19 [19] Please note: Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). Show all calculations and round all amounts to the nearest Rand. Ignore the taxation effect of unrealised profits and/or losses, as well as capital gains tax. Notes to the consolidated statements are not required