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Note: All two questions of this problem are compulsory and MUST be attempted. Total 85 marks. ANSWERS WITHOUT CALCULATIONS ARE NOT ACCEPTED. Time Allocated to
Note: All two questions of this problem are compulsory and MUST be attempted. Total 85 marks. ANSWERS WITHOUT CALCULATIONS ARE NOT ACCEPTED. Time Allocated to Section B is 51 minute.
RooRoo Inc. acquired 60% of Graceveill's equity shares for $250,000 on 1 January 20X8. At the date of acquisition Graceveill had retained earnings of $180.000 and revaluation surplus of 4,000. On 31 December 20X8 RooRoo Inc. despatched goods which cost $70,000 to Graceveill, at an invoiced cost of $90,000. Graceveill received the goods on 2 January 20X9 and recorded the transaction then. The two companies' draft financial statements as at 31 December 20X8 are shown below. Graceveill has an internally-developed brand name - "goo' - which was valued at
$2000 at the date of acquisition. Required:
Prepare (1) a draft consolidated statement of profit or loss and other comprehensive income and (2) statement of
financial position. It is the group policy to value the non-controlling interest at acquisition at fair value. The fair
value of the non-controlling interest in Graceveill at the date of acquisition was $65,000.
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20X8
RooRoo Inc.
Graceveill
$'000
5 100,00
Revenue
Cost of sales
1 100,00 570,00
2 800,00
530,00 280,00
2300,00
1400.00
Gross profit
Other expenses. Profit before tax
900,00
250,00
Income tax expense
292,00
78,00 172,00
608,00
25,00
Profit for the year
Other comprehensive income: Gain on revaluation of property
Total comprehensive income for the year
STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8
RooRoo Inc.
$'000
633,00
172,00
Graceveill
$'000
Assets
Non-current assets
2 000,00
220,00
Property, plant and equipment
Investment in Graceveill
250,00
2 250,00
220,00
Current assets
Inventories
400,00
470,00
Trade receivables
Bank and cash
80,00
70,00
210,00
62,00
1080,00 3 330,00
212,00
Total assets
432,00
Equity and liabilities
quity
mare capital
-tained earnings
valuation surplus
1 800,00
100,00
450,00
230,00
25,00
12,00
2 275,00
rent liabilities
342,00
le payables
935,00
55,00
120,00
35,00
1055,00
equity and liabilities
3 330,00
90,00
432,00
2
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Financial Accounting
Authors: LibbyShort
7th Edition
78111021, 978-0078111020
