QUESTION 2: (35 MARKS) Topwood Ltd is a 40-year-old company producing furniture. 22 years ago, it acquired a 100% interest in Fleetwood Ltd. In 2011, it acquired a 40% interest in Landscapes Ltd and on 1 April 2013, it acquired a 75% interest in Garden Furniture Ltd. The draft consolidated accounts for the Topwood Group are as follows: Income statement for the year ended 31 March 2014 Rs'000 Sales 10,000 (3.000) 7,000 600 Cost of sales Gross profit Other income (income from long term investments) Selling and distribution expenses Administration expenses Finance cost Share of profits from associates net of tax Profit before tax Income tax expense Profit for year Attributable to Minority interest Attributable to owners of the parent (1,000) (1,545) (450) 1,050 5,655 (1,620) 4,035 300 3,735 Consolidated statement of financial position as at 31 March 2014 ASSETS 2014 2013 Non-current assets Rs'000 Rs'000 11,625 7,500 300 3,300 1,230 3,000 1,230 11,730 16,455 Property, plant and equipment Goodwill Investment in associates Other investments Total non-current assets Current assets Inventories Trade receivables Cash at bank and in hand Total current assets Total assets 5,925 5,550 3,000 3,825 13,545 25,020 5,460 12,285 24,015 41,475 6,000 6,285 7,500 19,785 19,785 EQUITY AND LIABILITIES Equity attributable to owners of the Parent Issued share capital (R$25) 11,820 Share premium 8,649 Retained profit 10,335 30,804 Non controlling interest 345 Total equity 31,149 Non-current liabilities Loans 4,380 Finance lease obligations 2,130 Total non-current liabilities 6,510 Current liabilities Trade payables Finance lease obligations 720 Taxation payable 1,476 120 Accrued interest and finance charges Total current liabilities 3,816 41,475 Total equity and liabilities 1,500 510 2,010 1,500 840 600 690 90 2,220 24,015 *Inclusive of Rs2,550,000 acquired under finance leases. 3. An item of machinery was sold during the year ended 31 March 2014 for Rs1,500,000. Required: (1) Prepare the consolidated statement of cash flows for the year ended 31 March 2014. (30 marks) (2) Analyse the consolidated statement of cash flows in (1), highlighting the key features of each category of cash flows. (5 marks) Notes to the accounts: 1. The consideration relating to the 75% interest acquired in Garden Furniture Ltd was settled by an issue of 10,560 shares in Topwood deemed to be worth Rs 825,000 with the balance paid in cash. Rs'000 495 96 Fair value of net assets acquired PPE (Machinery) Stocks Trade debtors Cash in hand Trade creditors Income tax 84 336 (204) (51) 756 Minority Interest (189) 567 300 Goodwill Cost of investment 867 2. Notes on Property, plant and Equipment Cost Buildings Total Machinery Rs'000 Rs'000 Rs'000 18,750 22,950 6,300 4,200 6,300 (1,500) 9,000 (1,500) 27,750 18,750 At 1 April 2013 Additions Disposals At 31 March 2014 Depreciation At 1 April 2013 Charge for year Disposals 15,450 12,150 375 975 3,300 600 (300) 3,600 (300) 16,125 12,525 Carrying Amount At 1 April 2013 900 7,500 6,600 6,225 5,400 11,625 At 31 March 2014 *Inclusive of Rs2,550,000 acquired under finance leases. 3. An item of machinery was sold during the year ended 31 March 2014 for Rs1,500,000. Required: (1) Prepare the consolidated statement of cash flows for the year ended 31 March 2014. (30 marks) (2) Analyse the consolidated statement of cash flows in (1), highlighting the key features of each category of cash flows