IFRS 10,IFRS 3 ,IAS 28 Question 1 On 1 January 2019 Detergent company acquired 75 of Latrine companys equity shares by means of an exchange of 2 shares in Detergent for every 3 shares acquired in Latrine On that date, further consideration was also issued to the shareholders of Latrine in the form of $100 8 loan notes for every 100 shares acquired in Latrine None of the purchase consideration nor the outstanding interest on the loan notes at 31 March 2019 has yet been recorded by Detergent At date of acquisition the share price of Detergent and Latrines share is N$3,20 and N$1,80 respectively The summarized statements of financial position of the two companies as at 31 March 2019 are Assets Non Current assets PPE (note 1) Investment in (Amerson Ltd) (note 4) Current assets Inventory (note 3) Trade receivables bank Total assets Equity and Liabilities Equity Equity shares of $1 each Retained earnings (01 April 2018) ( 31 March 2019) Non Current liabilities 8 loan notes Current liabilities Total equity and liabilities The following information is relevant Note 1 N$000 75 200 4 500 79 700 35 300 19 400 14 700 1 200 115 000 50 000 20 000 16 000 86000 29 000 5 000 24 000 115 000 N$000 31 500 31 500 31 900 18 800 12 500 600 63 400 20 000 19 000 8 000 47 000 16 400 Nil 16 400 63 400 At the date of acquisitionthe fair values of Latrines assets were equal to their carrying amounts However Latrine operates amine which requires to be decommissioned in five years time No provisions have been made for these decommissioning costs by Latrine The present value (discount factor 8 ) of the decommissioning is estimated at N$4m and will be paid five years from the date of acquisition (the end of the mines life) Note 2 Detergents policy is to value NCI at fair value at the date of acquisition Latrines share price at that date can be deemed to be representative of the fair value of the shares held by the NCI Note 3 The inventory of Latrine Company includes goods bought from Latrine for N$2 1m Detergent applies a consistent mark up on sales of 40 when arriving at its selling prices On 28 March 2019 Detergent dispatched goods to Latrine with a selling price of $700 000 These were not received by Latrine until after year end and so have not been included in the above inventory at 31 March 2019 At 31 March 2019 Detergents records showed a receivable due from Latrine of N$3m, this differed to the equivalent payable in Latrines records due to the goods in transit Note 4 The investment in Amery Ltd represents 30 of its voting share capital and Detergent uses equity accounting to account for this investment Amery Ltds profit for the year ended 31 March 2019 was N$6m and Amery Ltd paid a total dividend of N$2m during 31 March 2019 Detergent has recorded its share of dividend rereceived from Amery in investment income (and cash) Note 5 All profits and losses accrued evenly throughout the year Note 6 There were no impairment losses within the group for the year ended 31 March 2019 Required 1 1 Prepare the consolidated statement of financial position as at 31 March 2019 25 QUESTION 2 Mumbai Indians Ltd (MI) specializes in providing advice to the customers on financial accounting, taxation, corporate finance and cost accounting matters Rojaston Royals (RR) is a relevant company to the MI group Additional information Note 1 During 2015 MI acquired 60 000 shares in RR At the acquisition date the retained earnings in RR amounted to N$40 000 The share capital in RR amounted to 200 000ordinary shares a value of N$200 000, which has not changed subsequent to acquisition date The consideration transferred consisted of the following Cash to the amount of N$50 000 payable immediately Transfers of one of MIs accounting software to the previous Shareholder of RR Carrying amount N$20 000 and Fair value N$28 000 at acquisition date Transfer of the license to operate the accounting software to the value pf N$12 000 to the previous Shareholders Transaction costs and administration costs relating to the acquisition date are N$4000 payable in cash at acquisition date All the identifiable assets acquired and liabilities assumed of RR were shown at their acquisition date fair value and there were no unrecognized contingent liabilities Note 2 During 2018 RR started selling inventories to MI at a profit of 30 on cost Included in MIs inventory at 31 Dec 2018 and 31 Dec 2019 was N$150 000 AND N$80 000 respectively in respect of such inventories at cost to MI Total sales of inventories for the year between MI and RR amounted to N$250 000 Note 3 Assume a tax rate of 25 75 Note 4 Investments in shares in the separate financial statements of MI are carried at cost Note 5 The following information pertains to both MI RR Retained earnings losses balance 01 Jan 2016 01 Jan 2017 01 Jan 2018 Retained earnings opening(01 01 17) Profit for the period Dividend paid Retained earnings closing (31 12 19) MI 150 000 100 000 120 000 150 000 100 000 (40 0000 210 000 RR 46 000 51 000 63 000 80 000 40 000 (10 000) 110 000 Required 2 1 Provide all proforma Journal entries to prepare the Consolidated annul financial 15 statements of the MI group for year ended 31 Dec 2019 2 2 Calculate the amount at which the investment in associate should appear in the 5 Consolidated statement of financial position at 31 Dec 2019 Journal entries should be prepared as far as the information permits 17 15 FINANCIAL ACCOUNTING 3A Assig U IFRS 10 FRS JAS Quest Only 2019 Detergent company squid 79 of Luc y 's shoes mens of an exchange of share interent for every share acquired in Latrine dal further en h ed to the shurchild of the forma louse for every 1 shares in Late None of the purchas e date of acquisition the share price of Destand Latest 20 1 0 Thursdagsfest lnyment in Ladete Tetaluri Equitysef Sleach Remed cam Ol April 2015 1 March 2019 2 BB 3333 Thurmat are Al the date of the soft w However Latrine peamine which is to be don provisions rebende for these ing to the carrying e ari The y ilpad discount for from the date of qui the doming is estimat t he end of the by the NCL Detropolitve N e w that date can be done of the other Note The memory of Latin Computy includes good be from fir opliesc marke sales of 40eigin Os Mac 2019 Derendipunched to w i m Detergent e The of Al 31 March 2019 Deterg's code showed offered to the l ines other The L Amy e quit t ing to act for this investment Amy 2019 was stand Amerypadal vided of N has recorded its ware of d rive Ameri Notes All es w ay they e Deere 's proforthe year g Manche c a 17 15 FINANCIAL ACCOUNTING 3A Assig h All e mytheshow they There w a s within the group for the year anded 31 March 2008 Required 1 Prepare the code of March 2012 M QUESTION ans La M in viding the c cong , berpote finance and cost counting Royalisay to the MI ase DISMER M athew Remed to NS0000 The pain RR de 200 000 value of NS2000, p The tradidering Cash to the amount of NSS payable immediately Transion of of Mis www Shade Carrying N20 000 und NS2000 T ref the literate the other the Transactions and d e corating to the acquisition daten Alhedefle d is RR were shown the airala matham deos Nate During RR swelling M e Included in the 2018 and 1 301 NSIS AND NO pechy respect of each inves t ML Totales of the your between RR 2000 Note 4 Irish in the facil i The following for pris to both MARR 01 2017 In 2015 Retained 1 17 Remed engaging 31 12 19 17 15 FINANCIAL ACCOUNTING 3A Assig R ounted to N25000 cari Investments in shares in the financiamento Notes The following information pertains to both MIRRR Retained a balance Remington Pait for the period 1 17 Retained uncing 1 13 19) 2 1 c Provide all of com of the M our custoppe the Code e di 2019 Cerddon official De 2019 17 15 FINANCIAL ACCOUNTING 3A Assig U IFRS 10 FRS JAS Quest Only 2019 Detergent company squid 79 of Luc y 's shoes mens of an exchange of share interent for every share acquired in Latrine dal further en h ed to the shurchild of the forma louse for every 1 shares in Late None of the purchas e date of acquisition the share price of Destand Latest 20 1 0 Thursdagsfest lnyment in Ladete Tetaluri Equitysef Sleach Remed cam Ol April 2015 1 March 2019 2 BB 3333 Thurmat are Al the date of the soft w However Latrine peamine which is to be don provisions rebende for these ing to the carrying e ari The y ilpad discount for from the date of qui the doming is estimat t he end of the by the NCL Detropolitve N e w that date can be done of the other Note The memory of Latin Computy includes good be from fir opliesc marke sales of 40eigin Os Mac 2019 Derendipunched to w i m Detergent e The of Al 31 March 2019 Deterg's code showed offered to the l ines other The L Amy e quit t ing to act for this investment Amy 2019 was stand Amerypadal vided of N has recorded its ware of d rive Ameri Notes All es w ay they e Deere 's proforthe year g Manche c a 17 15 FINANCIAL ACCOUNTING 3A Assig h All e mytheshow they There w a s within the group for the year anded 31 March 2008 Required 1 Prepare the code of March 2012 M QUESTION ans La M in viding the c cong , berpote finance and cost counting Royalisay to the MI ase DISMER M athew Remed to NS0000 The pain RR de 200 000 value of NS2000, p The tradidering Cash to the amount of NSS payable immediately Transion of of Mis www Shade Carrying N20 000 und NS2000 T ref the literate the other the Transactions and d e corating to the acquisition daten Alhedefle d is RR were shown the airala matham deos Nate During RR swelling M e Included in the 2018 and 1 301 NSIS AND NO pechy respect of each inves t ML Totales of the your between RR 2000 Note 4 Irish in the facil i The following for pris to both MARR 01 2017 In 2015 Retained 1 17 Remed engaging 31 12 19 17 15 FINANCIAL ACCOUNTING 3A Assig R ounted to N25000 cari Investments in shares in the financiamento Notes The following information pertains to both MIRRR Retained a balance Remington Pait for the period 1 17 Retained uncing 1 13 19) 2 1 c Provide all of com of the M our custoppe the Code e di 2019 Cerddon official De 2019

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IFRS 10,IFRS 3 ,IAS 28 Question 1 On 1 January 2019 Detergent company acquired 75% of Latrine companys equity shares by means of an exchange

IFRS 10,IFRS 3 ,IAS 28

Question 1

On 1 January 2019 Detergent company acquired 75% of Latrine companys equity shares by means of an exchange of 2 shares in Detergent for every 3 shares acquired in Latrine. On that date, further consideration was also issued to the shareholders of Latrine in the form of $100 8% loan notes for every 100 shares acquired in Latrine. None of the purchase consideration nor the outstanding interest on the loan notes at 31 March 2019 has yet been recorded by Detergent. At date of acquisition the share price of Detergent and Latrines share is N$3,20 and N$1,80 respectively.

The summarized statements of financial position of the two companies as at 31 March 2019 are:

Assets

Non-Current assets

PPE (note 1)

Investment in (Amerson Ltd) (note 4)

Current assets

Inventory (note 3) Trade receivables bank

Total assets

Equity and Liabilities Equity

Equity shares of $1 each

Retained earnings (01 April 2018) (@31 March 2019)

Non-Current liabilities

8 % loan notes

Current liabilities

Total equity and liabilities

The following information is relevant:

Note 1

N$000

75 200 4 500 79 700

35 300

19 400 14 700 1 200 115 000

50 000 20 000 16 000

86000 29 000

5 000 24 000 115 000

N$000 31 500

31 500 31 900

18 800 12 500 600 63 400

20 000 19 000 8 000 47 000

16 400

Nil 16 400 63 400

At the date of acquisitionthe fair values of Latrines assets were equal to their carrying amounts. However Latrine operates amine which requires to be decommissioned in five years time. No provisions have been made for these decommissioning costs by Latrine. The present value

(discount factor 8%) of the decommissioning is estimated at N$4m and will be paid five years from the date of acquisition (the end of the mines life).

Note 2

Detergents policy is to value NCI at fair value at the date of acquisition. Latrines share price at that date can be deemed to be representative of the fair value of the shares held by the NCI.

Note 3

The inventory of Latrine Company includes goods bought from Latrine for N$2.1m. Detergent applies a consistent mark up on sales of 40% when arriving at its selling prices.

On 28 March 2019 Detergent dispatched goods to Latrine with a selling price of $700 000. These were not received by Latrine until after year end and so have not been included in the above inventory at 31 March 2019.

At 31 March 2019 Detergents records showed a receivable due from Latrine of N$3m, this differed to the equivalent payable in Latrines records due to the goods in transit.

Note 4

The investment in Amery Ltd represents 30% of its voting share capital and Detergent uses equity accounting to account for this investment. Amery Ltds profit for the year ended 31 March 2019 was N$6m and Amery Ltd paid a total dividend of N$2m during 31 March 2019. Detergent has recorded its share of dividend rereceived from Amery in investment income (and cash).

Note 5

All profits and losses accrued evenly throughout the year

Note 6

There were no impairment losses within the group for the year ended 31 March 2019.

Required:

1.1 Prepare the consolidated statement of financial position as at 31 March 2019 25

QUESTION 2

Mumbai Indians Ltd (MI) specializes in providing advice to the customers on financial accounting, taxation, corporate finance and cost accounting matters.

Rojaston Royals (RR) is a relevant company to the MI group. Additional information:

Note 1

During 2015 MI acquired 60 000 shares in RR. At the acquisition date the retained earnings in RR amounted to N$40 000. The share capital in RR amounted to 200 000ordinary shares @ a value of N$200 000, which has not changed subsequent to acquisition date. The consideration transferred consisted of the following:

Cash to the amount of N$50 000 payable immediately

Transfers of one of MIs accounting software to the previous Shareholder of RR.

Carrying amount N$20 000 and Fair value N$28 000 at acquisition date

Transfer of the license to operate the accounting software to the value pf N$12 000 to the

previous Shareholders.

Transaction costs and administration costs relating to the acquisition date are N$4000

payable in cash at acquisition date.

All the identifiable assets acquired and liabilities assumed of RR were shown at their acquisition date fair value and there were no unrecognized contingent liabilities.

Note 2

During 2018 RR started selling inventories to MI at a profit of 30% on cost. Included in MIs inventory at 31 Dec 2018 and 31 Dec 2019 was N$150 000 AND N$80 000 respectively in respect of such inventories at cost to MI. Total sales of inventories for the year between MI and RR amounted to N$250 000.

Note 3

Assume a tax rate of 25.75%

Note 4

Investments in shares in the separate financial statements of MI are

carried at cost.

Note 5

The following information pertains to both MI &RR

Retained earnings/losses balance 01 Jan 2016

01 Jan 2017

01 Jan 2018

Retained earnings opening(01-01-17) Profit for the period

Dividend paid

Retained earnings closing (31-12-19)

150 000 100 000 120 000 150 000 100 000

(40 0000 210 000

46 000 51 000 63 000 80 000 40 000 (10 000)

110 000

Required:

2.1 Provide all proforma Journal entries to prepare the Consolidated annul financial 15

statements of the MI group for year ended 31 Dec 2019

2.2 Calculate the amount at which the investment in associate should appear in the 5

Consolidated statement of financial position at 31 Dec 2019.

Journal entries should be prepared as far as the information permits

17:15 FINANCIAL ACCOUNTING 3A Assig... U IFRS 10.FRS JAS Quest Only 2019 Detergent company squid 79% of Luc y 's shoes mens of an exchange of share interent for every share acquired in Latrine dal further en h ed to the shurchild of the forma louse for every 1 shares in Late None of the purchas e date of acquisition the share price of Destand Latest 20 1 0 Thursdagsfest lnyment in Ladete Tetaluri Equitysef Sleach Remed cam Ol April 2015 1 March 2019 2. BB 3333 Thurmat are Al the date of the soft w However Latrine peamine which is to be don provisions rebende for these ing to the carrying e ari. The y ilpad discount for from the date of qui the doming is estimat t he end of the by the NCL Detropolitve N e w that date can be done of the other Note The memory of Latin Computy includes good be from fir opliesc marke sales of 40eigin Os Mac 2019 Derendipunched to w i m . Detergent e The of Al 31 March 2019 Deterg's code showed offered to the l ines other The L Amy e quit t ing to act for this investment Amy 2019 was stand Amerypadal vided of N has recorded its ware of d rive Ameri Notes All es w ay they e Deere 's proforthe year g Manche c a 17:15 FINANCIAL ACCOUNTING 3A Assig... h All e mytheshow they There w a s within the group for the year anded 31 March 2008 Required 1. Prepare the code of March 2012 M QUESTION ans La M in viding the c cong , berpote finance and cost counting Royalisay to the MI ase DISMER M athew Remed to NS0000. The pain RR de 200 000 value of NS2000, p . The tradidering Cash to the amount of NSS payable immediately Transion of of Mis www Shade Carrying N20 000 und NS2000 T ref the literate the other the Transactions and d e corating to the acquisition daten Alhedefle d is RR were shown the airala matham deos Nate During RR swelling M e Included in the 2018 and 1 301 NSIS AND NO pechy respect of each inves t ML Totales of the your between RR 2000 Note 4 Irish in the facil i The following for pris to both MARR 01 2017 In 2015 Retained 1.17 Remed engaging 31-12-19 17:15 FINANCIAL ACCOUNTING 3A Assig... R ounted to N25000 cari Investments in shares in the financiamento Notes The following information pertains to both MIRRR Retained a balance Remington Pait for the period 1-17 Retained uncing 1.13.19) 2.1 c Provide all of com of the M our custoppe the Code e di 2019 Cerddon official De 2019 17:15 FINANCIAL ACCOUNTING 3A Assig... U IFRS 10.FRS JAS Quest Only 2019 Detergent company squid 79% of Luc y 's shoes mens of an exchange of share interent for every share acquired in Latrine dal further en h ed to the shurchild of the forma louse for every 1 shares in Late None of the purchas e date of acquisition the share price of Destand Latest 20 1 0 Thursdagsfest lnyment in Ladete Tetaluri Equitysef Sleach Remed cam Ol April 2015 1 March 2019 2. BB 3333 Thurmat are Al the date of the soft w However Latrine peamine which is to be don provisions rebende for these ing to the carrying e ari. The y ilpad discount for from the date of qui the doming is estimat t he end of the by the NCL Detropolitve N e w that date can be done of the other Note The memory of Latin Computy includes good be from fir opliesc marke sales of 40eigin Os Mac 2019 Derendipunched to w i m . Detergent e The of Al 31 March 2019 Deterg's code showed offered to the l ines other The L Amy e quit t ing to act for this investment Amy 2019 was stand Amerypadal vided of N has recorded its ware of d rive Ameri Notes All es w ay they e Deere 's proforthe year g Manche c a 17:15 FINANCIAL ACCOUNTING 3A Assig... h All e mytheshow they There w a s within the group for the year anded 31 March 2008 Required 1. Prepare the code of March 2012 M QUESTION ans La M in viding the c cong , berpote finance and cost counting Royalisay to the MI ase DISMER M athew Remed to NS0000. The pain RR de 200 000 value of NS2000, p . The tradidering Cash to the amount of NSS payable immediately Transion of of Mis www Shade Carrying N20 000 und NS2000 T ref the literate the other the Transactions and d e corating to the acquisition daten Alhedefle d is RR were shown the airala matham deos Nate During RR swelling M e Included in the 2018 and 1 301 NSIS AND NO pechy respect of each inves t ML Totales of the your between RR 2000 Note 4 Irish in the facil i The following for pris to both MARR 01 2017 In 2015 Retained 1.17 Remed engaging 31-12-19 17:15 FINANCIAL ACCOUNTING 3A Assig... R ounted to N25000 cari Investments in shares in the financiamento Notes The following information pertains to both MIRRR Retained a balance Remington Pait for the period 1-17 Retained uncing 1.13.19) 2.1 c Provide all of com of the M our custoppe the Code e di 2019 Cerddon official De 2019