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QUESTION 3 (CONSOLIDATED STATEMENT OF CASHFLOW: IAS7) (35 Marks) The following draft group financial statements relate to the Water group Lid. Consolidated Statement of financial

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QUESTION 3 (CONSOLIDATED STATEMENT OF CASHFLOW: IAS7) (35 Marks) The following draft group financial statements relate to the Water group Lid. Consolidated Statement of financial position as at 30 November 2019 NSm 2018 NSm ASSETS Non-Current Assets Property plant and equipment Investment property goodwill Other intangible assets Investment in associate Investments in equity instruments 616 327 8 48 85 54 94 490 254 6 68 72 90 399 105 62 232 1015 384 128 113 143 874 Current assets inventories Trade receivables Cash and cash equivalents Total Assets Equity and liabilities Equity attributable to owners of the parent: Share capital Retained earnings Other components of cquity Non-controlling interest Total equity Non-Current Liabilities Long term liabilities Long term provisions: pensions and obligation Deferred tax 656 290 351 15 55 711 619 275 324 20 36 655 127 67 25 35 134 71 22 41 Page 13 of 20 Current liabilities Trade payables Current tax payable 177 144 33 85 55 30 Water Group Consolidated Statement of Profit or Loss and other comprehensive income for year ended 30 November 2019 N$ m Revenue 432 Cost of sales (317) Gross profit 115 Other income 25 Distribution costs (55) Administrative costs (36) Finance costs (6) Gains on property 10,5 Share of profit of associate 6 Profit before tax 59 Income tax expense (11) Profit for the year 48 Other comprehensive income after tax (items that will not be reclassified through profit or loss) Gain on investment in equity instruments 2 Losses on property revaluation (7) Remeasurement losses on defined benefit pensions plans (6) Other comprehensive income (11) Total comprehensive income 37 Profit attributable to : Owners of the parent 38 Non-controlling interest 10 48 Water Group Ltd Statement of changes in equity for the year ended 30 November 2019 Na Share capital Retained Investment Revaluation Total carnings in equity surplus instruments PPE 324 4 16 619 Total equity 275 36 Balance 01/12/18 Share capital dividends 15 15 (5) LS 15 15 2 2 20 acquisitions Total comprehensive income Income for the 32 2 (7) 10 37 290 351 6 9 55 711 Balance 30/11/19 The following information relates to the financial statements of the Water group Note: On 1 December 2017, Water acquired 8% of the ordinary shares of Tiger Lad. Water Lad bad treated this as an investment in equity instruments in the financial statements to 30 November 2018 with changes in fair value taken to profit or loss for the year. There were no changes in for value in the year to 30 November 2018. On January 2019. Water Lad acquired a further 52% of the ordinary shares of Tigers and gained control of the company. The consideration for the acquisition was as follows consideration N5m 1 December 2017 1 January 2019 60 34 At Januar 019. the fair value of the 8% holding in Tiger he Water Lad at the time of the business combination was N$5 million and the fair value of the non-controlling interest in Tiger Page 15 of 20 Lid was N$20 million. The purchase consideration at 1 January 2019 comprised cash of Nis million and shares of NS15 million The fair value of the identifiable net assets of Tigers, excluding deferred tax assets and liabilities, at the date of acquisition comprised the following Property plant and equipment NSIS Intangible assets NS1 Trade receivables N55 m Cash and cash equivalence The tax base of the identifiable net assets of Tigers was N540 millionat January 2019. The tax rate of Tigers is 30% Note 2: On 30 September 2019, Tigers made a rights issue on a 1 for 4 basis. The issue was fully subscribed and raised NSS million in cash. Note 3: Water Ltd purchased a rescarch project from a 3 party including certain patents on 1 December 2018 for N$8 million and recognized it as an intangible asset. During the year, Water Lad incurred further costs which included N$2m ce completing the rescarch plase NS14m in de cloping the product for sale and NSI m for the initial marketing costs. There were no other additions to intangible assets in the period other than those on the acquisition of Tigers Lad. Note 4: Water Ltd operates a defined benefit pension scheme. The current service costs for the year ended 30 September 2019 are NS10 million. Water Ltd enhanced the benefits on 1 December 2018. The total cost of the enhancement is N$2 million, the net interest on net plan assets was N38 million for the year and Water Lad recognizes re-measurement gains and losses in accordance with LAS 19. Note 5: Water owns an investment property. During the year, part of the heating system of the property, which had a carrying amount of NSO, 5 million, was replaced by a system which cost Nim. Water uses the fair value model for measuring investment property. Note 6: Water had exchanged surplus land with a carrying amount of NSIOm for cash of NS1Sm and a plant valued at NS4m. The transaction has commercial substance. Depreciation for the period for property plant and equipment was NS27m. Page 16 of 20 Note 7: Goodwill relating to all subsidiaries had been impairment tested in the year to 30 November 2019 and any impairment accounted for. The goodwill impairment related to those related to those subsidiaries which were 100% owned Note 8: Deferred tax of N$1 million arose in the year on the gains ce investments in equity instruments where the irrevocable election was made to take changes in fair value through other comprehensive income. Note : The associate did not pay any dividends in the year. Ignore deferred taxation other than where it is mentioned in the question Required: 3.4 Prepare a consolidated statement of cash flows for the Water group using the 35 indirect method under IAS 7 Statements of Cash flows

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