Question 3 (a) Kumasinad, a government business enterprise, acquired 42% of the voting right of Kuma Ltd. The remaining investors cach holds 4% of the voting rights of Kumu Lid. A shareholder agreement grants Kumasi Lid the right to appoint, remove and determine the renumeration of management responsible for the key business decisions of Kuma Ltd. To change this agreemom, a two-third majority vote of the shareholders is required Required: In accordance with IFRS 10; Consolidated Financial Statements, discuss whether Kumasi Ltd control Kuma Lid (5 marks) ( On I Amust 2018 Charlie Lid whose finctional currency is the cedi, bought a property in Morocco for DH40 million. The property had a 20-year useful economic life with no residual value estimated On 31 July 2019. the property was revalued to DH45 million Exchange rates were: 1 January 2018 GHSL DH 1.32 1 August 2018 GHSIDH 1.25 HEAD, EXAMINATION UNIT 31 July 2019 GHS1 = DH 1.125 DeL: REGISTRY Required: UNIVERSITY OF EDUCATION, INNEBA In accordance with IAS 21: The Effects of Changes in Foreign Exchange Rates and IAS 16: Property. Plant & Equipment, how much should be recognized in Statement of Profit or Loss and Other Comprehensive Income for year ended 31 July 20197 (5 marks) (c) When the price paid is less than the actual value of the company's net tangible assets, negative Goodwill results Required: In accordance with IFRS 3: Business Combinations, () Identify three (3) factors that account for a negative Goodwill Indicate the accounting treatment when negative goodwill occurs in the preparation of (3 marks) consolidated financial statements. (2 marks) Total: 15 marks Page 4 of 5 Question 3 (a) Kumasinad, a government business enterprise, acquired 42% of the voting right of Kuma Ltd. The remaining investors cach holds 4% of the voting rights of Kumu Lid. A shareholder agreement grants Kumasi Lid the right to appoint, remove and determine the renumeration of management responsible for the key business decisions of Kuma Ltd. To change this agreemom, a two-third majority vote of the shareholders is required Required: In accordance with IFRS 10; Consolidated Financial Statements, discuss whether Kumasi Ltd control Kuma Lid (5 marks) ( On I Amust 2018 Charlie Lid whose finctional currency is the cedi, bought a property in Morocco for DH40 million. The property had a 20-year useful economic life with no residual value estimated On 31 July 2019. the property was revalued to DH45 million Exchange rates were: 1 January 2018 GHSL DH 1.32 1 August 2018 GHSIDH 1.25 HEAD, EXAMINATION UNIT 31 July 2019 GHS1 = DH 1.125 DeL: REGISTRY Required: UNIVERSITY OF EDUCATION, INNEBA In accordance with IAS 21: The Effects of Changes in Foreign Exchange Rates and IAS 16: Property. Plant & Equipment, how much should be recognized in Statement of Profit or Loss and Other Comprehensive Income for year ended 31 July 20197 (5 marks) (c) When the price paid is less than the actual value of the company's net tangible assets, negative Goodwill results Required: In accordance with IFRS 3: Business Combinations, () Identify three (3) factors that account for a negative Goodwill Indicate the accounting treatment when negative goodwill occurs in the preparation of (3 marks) consolidated financial statements. (2 marks) Total: 15 marks Page 4 of 5
