QUESTION 2 (39 marks) Roundworm Ltd is a group of companies with a 31 December year-end. The Roundworm group financial statements for the years 20.21 and 20.22 are given below: Roundworm Group Ltd Consolidated statement of comprehensive income for the year ended 31 December 20.22 (Extract) Revenue Cost of sales Gross profit Operating expenses Finance costs Share of profits from associate Profit before tax Taxation Other comprehensive income: Gain on revaluation of PPE Profit attributable to: Non-controlling interests - Parent shareholders R 600 000 000 (300 000 000) 300 000 000 (150 000 000) (44 000 000) 17 000 000 123 000 000 (35 000 000) 88 000 000 15 000 000 103 000 000 10 000 000 78 000 000 Total comprehensible income attributable to: - Non-controlling interest - Parent shareholders 88 000 000 12 000 000 91 000 000 103 000 000 Page 5 of 9 Roundworm Group Ltd Consolidated statement of financial position as at 31 December 20.21 and 20.22 (Extract) ASSETS 20.22 R 20.21 R Non-Current Assets - Property, plant and equipment 240 000 000 280 000 000 - Investments in associates Goodwill 80 000 000 25 000 000 345 000 000 70 000 000 19 000 000 369 000 000 Current Assets - Inventory - 105 000 000 - Receivables 120 000 000 - Cash and cash equivalents 30 000 000 255 000 000 90 000 000 100 000 000 75 000 000 265 000 000 TOTAL ASSETS 600 000 000 634 000 000 EQUITY AND LIABILITIES Equity - Share capital 100 000 000 100 000 000 - Retained earnings 194 000 000 142 000 000 - Revaluation reserve 103 000 000 90 000 000 - Non-controlling reserve 72 000 000 Total Equity 469 000 000 40 000 000 372 000 000 Non-current Liabilities - 12% debentures 90 000 000 Deferred taxation 30 000 000 24 000 000 Total Non-current Liabilities 30 000 000 114 000 000 Current Liabilities - Trade payables 65 000 000 55 000 000 Page 6 of 9 - Taxation - Bank overdraft Total Current Liabilities Total Liabilities 10 000 000 26 000 000 101 000 000 131 000 000 8 000 000 85 000 000 148 000 000 262 000 000 TOTAL EQUITY AND LIABILITIES 600 000 000 634 000 000 Additional information: 1. Acquisition of subsidiary During the year ended 31 December 20.22, Roundworm purchased 80% of the issued equity share capital of Chong Ltd for R100 000 000, payable in cash. The net assets of Chong at the date of acquisition were assessed at fair value as follows: Property, plant and equipment Inventory Receivables Bank and cash Trade payables Taxation R 60 000 000 30 000 000 25 000 000 10 000 000 (15 000 000) (5 000 000) 105 000 000 It is group policy to measure NCI at the proportionate share of the fair value of net assets at acquisition. 2. Goodwill Goodwill suffered an impairment during the year. 3. Property, plant and equipment The only disposal in the year was of land with a carrying value of R90 million. The profit on disposal of R10m is included within operating expenses. Depreciation of Page 7 of 9 R58m was charged on PPE in the year. REQUIRED: QUESTION 2 Marks Prepare the Consolidated Statement of Cash Flows for Ringworm Group for the year ended 31 December 20.22 using the direct method. 39 Show your workings using T-accounts. Total marks for question 2 39 Your answer should comply with the requirements of International Financial Reporting Standards (IFRS's). Page 8 of 9