Hello. The question is on the AFA Sem sheet and its question 1. The excel sheet is the solution. I just need to see where I went wrong in the question.. I think I went wrong with the Financial Asset I am not sure. This is the way the teacher said it is to be done but I did it her way and it is $250,000 short on the assets part.

Step 1: Determine Group Structure A Adrian $22,500,000/$30,000,000 75.00% NCI Own $7,500,000/$30,000,000 25.00% D Step 2: Determine Subsidiaries Net Asset Date of Acquisition October 1st, 2012 Pre Share Capital Retained Earnings F.V Adjustments $30,000,000 -$9,000,000 -$4,500,000 $16,500,000 ($6,000,000) Date of Balance Sheet March 31st, 2013 Post $30,000,000 $6,000,000 $15,000,000 $36,000,000 $12,000,000 ($3,000,000) April 1st,2012 $6,000,000 ($15,000,000) October 1st,2012 Mar 31st,2013 Step 3: Determine Goodwill Consideration : Share Exchange 10% Loan Note [($22,500,000/5) x2] x $2 ($22,500,000/1000) x $100 $18,000,000 $2,250,000 $20,250,000 DR Investment CR Share Capital CR Share Premium CR 10% Loan Note $20,250,000 $9,000,000 x $1 $9,000,000 x $1 $2,250,000 $20,250,000 NCI $7,500,000 x $1.20 $9,000,000 Value of Sub Net Asset on Date of Acquisition Goodwill ($16,500,000) $12,750,000 Step 4: NCI @ACQ Share of Post Gain on Investment Depn (Over) $9,000,000 (25% of 15,000,000) $3,750,000 ($4,800,000-$5,850,000) x 25% $262,500 ($4,500,000/3) x 6/12 x 25% $187,500 $13,200,000 Step 5: Retained Earnings Per Question Pre Post Share of Post (75% x $15,000,000) Loss on Investment ($11,250,000-$10,650,000) Gain on Investment ($4,800,000-$5,850,000)x.75 Unrealized profit Depn (Over) ($4,500,000/3) x 6/12 x 75% Adrian $39,900,000 $11,250,000 ($600,000) $787,500 ($900,000) $562,500 $51,000,000 Dale $6,000,000 ($9,000,000) $15,000,000 Adrian Conolidated Balance Sheet as at March 31st, 2013 A D Adj Property, Plant & Equipment $71,100,000 $38,250,000 -$4,500,000 + $750,000 $20,250,000 $20,250,000 Investment in S B/S $105,600,000 Goodwill Fiancial Asset Inventory Trade Recievables Owed by Dale Bank $12,750,000 $11,500,000 $4,800,000 -$600,000 +$1,050,000+ $900,000 $17,650,000 $30,600,000 $12,600,000 +$900,000 44,100,000 $16,650,000 $13,500,000 $30,150,000 $5,550,000 $4,200,000 ($1,350,000) $3,150,000 $3,150,000 $212,050,000 Share Capital Share Premium Retained Earnings NCI 10% Loan Note Trade Payables Owed by Adrian Bank Overdraft $60,000,000 + $9,000,000 $9,000,000 $12,000,000 + $2,250,000 $26,400,000 $15,300,000 $4,200,000 -$4,200,000 13,650,000 $69,000,000 $9,000,000 $51,000,000 $13,200,000 $14,250,000 $41,700,000 $13,650,000 $211,800,000 UNIVERSITY OF TECHNOLOGY, JAMAICA COLLEGE: Business and Management DEPARTMENT: Business Administration PROJECT Module Name: Module Code: Due Date: Advanced Financial Accounting ACC4002 Friday, November 25, 2016 @ 4pm INSTRUCTIONS: This is a group assignment. Groups must consist of a minimum of four (4) students and a maximum of five (5) students. This assignment must be typewritten. If it is not typed you will get 0%. This assignment is worth 10% of your overall grade. No late assignment will be accepted. Any evidence of duplicate work will attract a grade of 0%. 1 QUESTION 1 On 1 October 2012, Adrian acquired 75% of Dale's equity shares by means of a share exchange of two new shares in Adrian for every five acquired shares in Dale. In addition, Adrian issued to the shareholders of Dale's a $100 10% loan note for every 1,000 shares it acquired in Dale. Adrian has not recorded any of the purchase consideration, although it does have other 10% loan notes already in issue. The market value of Adrian's shares at 1 October 2012 was $2 each. The summarised statements of financial position of the two companies as at 31 March 2013 are: Adrian Dale Assets $'000 $'000 Non-current assets Property, plant and equipment 71,100 38,250 Financial asset: equity investments (notes (i) and (iv)) 11,250 4,800 ------- ------- 82,350 43,050 Current assets Inventory (note (ii)) 30,600 12,600 Trade receivables (note (iii)) 22,200 13,500 Bank 3,150 nil ------- ------- Total assets 138,300 69,150 ------- ------- Equity and liabilities Equity Equity shares of $1 each 60,000 30,000 Retained earnings/(losses) - at 1 April 2012 28,800 (6,000) - for year ended 31 March 2013 11,100 12,,000 ------- ------- 99,900 36,000 Non-current liabilities 10% loan notes 12,000 nil Current liabilities Trade payables (note (iii)) 26,400 19,500 Bank overdraft nil 13,650 ------- ------- Total equity and liabilities 138,300 69,150 ------- ------- The following information is relevant: 2 (i) At the date of acquisition, Dale produced a draft statement of profit or loss which showed it had made a net loss after tax of $3 million at that date. Adrian accepted this figure as the basis for calculating the pre- and post-acquisition split of Dale's profit for the year ended 31 March 2013. Also at the date of acquisition, Adrian conducted a fair value exercise on Dale's net assets which were equal to their carrying amounts (including Dale's financial asset equity investments) with the exception of an item of plant which had a fair value of $4.5 million below its carrying amount. The plant had a remaining economic life of three years at 1 October 2012. Adrian's policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose, a share price for Dale of $120 each is representative of the fair value of the shares held by the non-controlling interest. (ii) Each month since acquisition, Adrian's sales to Dale were consistently $69 million. Adrian had marked these up by 15% on cost. Dale had one month's supply ($69 million) of these goods in inventory at 31 March 2013. Adrian's normal mark-up (to third party customers) is 40%. (iii) Dale's current account balance with Adrian at 31 March 2013 was $42 million, which did not agree with Adrian's equivalent receivable due to a payment of $1,350,000 made by Dale on 28 March 2013, which was not received by Adrian until 3 April 2013. (iv) The financial asset equity investments of Adrian and Dale are carried at their fair values as at 1 April 2012. As at 31 March 2013, these had fair values of $1065 million and $585 million respectively. (v) There were no impairment losses within the group during the year ended 31 March 2013. Required: Prepare the consolidated statement of financial position for Adrian as at 31 March 2013. (24 marks) QUESTION 2 3 In the following situations decide whether there are any indications that an asset has been impaired. a) b) c) Fun Co has just prepared its budgets. These indicate that there is a significant decline in the budgeted net cash flows of the budgeted operating profit from one machine. One of Ward Co's machines caught fire. The machine was salvaged but its production capacity has reduced. Sun Co is in the business of manufacturing solar water panels. There is a strong possibility that the government has plans to make installations of solar water heaters compulsory for all residential and commercial premises. (6 marks) QUESTION 3 a) Apricot Co owns 75% of the shares of Kiwi Co. However, they have no dealings with one another. Would Apricot Co have to disclose any information in its financial statements? (5 marks) b) State briefly the objectives of consolidated financial statements. (5 marks) QUESTION 4 A new Academy school has been opened in an area of high social deprivation, replacing a school which was closed as a result of poor academic performance. The new school is funded directly by central government and some critics claim that too much money has been spent on it. Required: In what ways would you expect the Department of Education to monitor the performance of this school? (5 marks) QUESTION 5 4 a) What is the accounting objective of IAS 19 (Revised) in dealing with retirement benefit plans? b) What is the difference between 'funding' and 'charging' in relation to retirement benefit plans? c) There are two general types of pension plans. What are they and how do they differ? d) List and briefly describe the six basic components of net periodic pension cost. Explain how one should determine the service cost component, the interest cost component, and the expected return on plan assets component of the net periodic pension cost. e) Explain how the matching principle applies to pension accounting. f) What makes a pension plan's obligation increase or decrease from one period to the next? g) What makes a pension plan's assets increase or decrease from one period to the next? h) List some of the assumptions that are made in order to account for pensions. 5