Question ! 32 Marks (58 Minutes) The following represents the abridged financial statements of Plate Lid and its subsidiary Spoon Lad: STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2017 Plate Lid Spoon Ltd NS NS 100 000 ASSETS Property, plant & equipment Investment in Summer Ltd: 37 500 shares at cost Trade receivables Inventories Bank Total assets 300 000 75 000 87 500 30 000 7 500 500 000 25 500 28 500 5 000 159 000 EQUITY AND LIABILITIES Share capital: 100 000/50 000 shares) Retained earnings Trade and other payables Total equity and liabilities TOO 000 357 300 42 500 500 000 50 000 84 000 25 000 159 000 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017 Plate Ltd Spoon Ltd NS NS Revenue 172 500 75 000 Cost of sales (87000) (24 000 Gross profit 115 500 51 000 Other income 3 000 Dividends received from S Lid 2 250 117 750 54 000 Other expenses (78000) (28 000) Profit before tax 39 750 26 000 Income tax expense (13750) (8 600) PROFIT FOR THE YEAR 26 000 17 400 Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE YEAR 26 000 17 400 Retained earnings Plate Ltd Spoon Ltd NS NS 337 500 69 600 Balances 1 January 2017 Changes in equity for 2017 Total comprehensive income for the year Other comprehensive income for the year Ordinary dividend Balance at 31 December 2017 26 000 17 400 (6 000) 357 500 (3 000) 84 000 NOTES Plate Lid acquired the interest in Spoon Ltd on January 2014 for N$ 75 000 when the equity of Spoon Lid was as follows: Share capital NS 50 000 Retained earings NS 20 000 Plate Ltd elected to measure the non-controlling interests in the acquiree at their fair value of N$ 25000 at acquisition date. . On acquisition date, Plate Ltd valued the plant of Spoon Ltd, with a carrying amount of NS 40 000, at N$ 50 000. This revaluation was not recorded in the books of Spoon Ltd. The remaining useful life of this plant was 5 years on acquisition date. . On 1 July 2017, the plant above was sold by Spoon 1.Ad for NS 15 000, You may ignore taxation implications throughout Required: IFRS: 6 Prepare the following for Plate Ltd Group for the year ended 31 December 2017 in accordance with a) Proforma journals) necessary to effect the consolidation with regards to the plant transaction ONLY. Journal narrations are not required. b) Statement of Financial Position c) Statement of Profit or Loss and other Comprehensive Income Note: Include all calculations 20 6 Question 2 30 Maries (54 minutes) Harambee Lad, a company based in Katutuna acquired some properties to cushion itself against the current harsh economic environment. The details of the properties are as follows: Property Property I consisting of land and buildings was acquired at a cost of NS 1 500 000 on 1 January 2017 with the intention to earn rentals on it. Lawyer's fees and transfer duties amounted to NS 300 000 During June 2017, the company replaced some interior walls at a cost of NS 200 000. The fair value of the original walls that were replaced was determined at NS 50 000 at that date. The fair value of the property at 31 December 2017 was NS 1 850 000. The decline was attributable to the worsening economic conditions . Property 2 Property 2 was bought on 1 January 2016 at a cost of NS 3 000 000 (Land: S1 500 000 and building: NS 1 500 000). This property was initially being leased to a tenant but however on July 2017, Harambee Lid moved its manufacturing operations into property 2. The details of property 2 areas follows: NS Fair value 31 December 2016 Land Buildings 1 800 000 1 700 000 Fair value 1 July 2017 Land Buildings 1 875 000 1 850 000 Fair value 31 December 2017 Land Buildings 1 975 000 2 000 000 The estimated remaining useful life of the building was 40 years on 1 July 2017 Additional notes Harambee (Pty) Lid uses the fair value model for investment property, . It is the policy of the company to revalue property, plant and equipment to net replacement value annually at reporting date. Assume that fair value on 31 December 2017 was the same as net replacement value on that date. The year end of the company is 31 December You may ignore taxation throughout Required: *) Prepare the journal entries in respect of Property for the reporting period ended 31 December 2017 Journal arrations are not required b) Prepare the journal entries in respect of Property 2 for the reporting period ended 31 December 2017. 10 Journal warrations are not required c) With regards to Property 1 & 2 disclose the necessary reconciliations for the properties between the carrying amount at the beginning and end of the reporting period in the notes to the financial statements of Harambee Ltd as at 31 December 2017 11 Question 3 25 Marks (45 Minutes) Marathon Limited (Marathon) has three divisions: a chocolate manufacturing division, a packaging division and a sweets manufacturing division. On 1 April 2016, the directors of Marathon decided to sell the sweets division as it was not in line with the core activities of the company. The decision was announced to the employees and the public on June 2016. The net assets of the sweets division as at 31 December 2016 were N$ 16 000 000 broken down as follows: Assets Land & buildings Furniture & fittings Plant Motor vehicles Total NS 15 000 000 1 000 000 2 000 000 2 000 000 20 000 000 Liabilities NS 4 000 000 Hire purchase agreements On 10 May 2017, the board signed an agreement with Spangles Limited to sell the sweets division for NS 20 000 000. The net assets of the sweets division at this date were NS 18 000 000 (NS 23 000 000 assets and N$ 5 000 000 libilities). Marathon incurred redundancy costs of NS 1 000 000, which had been expected from the date the decision to sell the division was made. The redundancies are not reflected in the statement of profit or loss and other comprehensive income below. The sale was completed on 1 July 2017 and the sweets division did not trade between 10 May 2017 and 1 July 2017. The results of the sweets manufacturing division for 2017 and 2016 are 2017 NS 000 2016 NS 000 Turnover Cost of sales Gross profit Operating expenses Net profit before taxation Taxation Net profit after taxation 40 000 (10 000) 30 000 (22 000) 8000 (3 000) 5 000 65 000 (17000) 48000 (33 000) IS 000 (5000) 10 000 Required: a) Prepare extracts from the financial statements of Marathon (including notes) for the year ended 31 December 2017 in accordance with IFRS 5 only to account for all the above information. Comparatives are required 19 5 b) Describe how the disclosures relating to discontinued operations may help investors and lenders make decisions based on financial statements 6 Question 4 13 Marks (23 Minutes) Shikongo Limited's partial statement of comprehensive income for the year ended 30 June 2017 was as follows: 2016 NS NS Net profit and total comprehensive income for the period 500 000 Shikongo Limited's capital structure at 1 July 2015 was as follows: 2017 470 000 Issued share capital Ordinary shares of NS I each 1 000 000 10% cumulative redeemable preference shares (issued at par and redeemable at par 200 000 On 1 January 2017 the company had a rights issue of one ordinary share for every five ordinary shares held at 200 cents per share for cash. The closing market price on the last day to register for rights was 250 cents per share Dividends declared by Shikongo during each of the years ended 31 December were as follows: 2017 NS 20 000 60 000 2016 NS 20 000 40 000 Preference dividend Ordinary dividend Required: Disclose basic earnings per share and dividends per share for Shikongo Limited for the year ended 30 June 2017 in accordance with IFRS. Notes and comparatives are required 13 Note: Show all workings THE END 6 Question ! 32 Marks (58 Minutes) The following represents the abridged financial statements of Plate Lid and its subsidiary Spoon Lad: STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2017 Plate Lid Spoon Ltd NS NS 100 000 ASSETS Property, plant & equipment Investment in Summer Ltd: 37 500 shares at cost Trade receivables Inventories Bank Total assets 300 000 75 000 87 500 30 000 7 500 500 000 25 500 28 500 5 000 159 000 EQUITY AND LIABILITIES Share capital: 100 000/50 000 shares) Retained earnings Trade and other payables Total equity and liabilities TOO 000 357 300 42 500 500 000 50 000 84 000 25 000 159 000 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017 Plate Ltd Spoon Ltd NS NS Revenue 172 500 75 000 Cost of sales (87000) (24 000 Gross profit 115 500 51 000 Other income 3 000 Dividends received from S Lid 2 250 117 750 54 000 Other expenses (78000) (28 000) Profit before tax 39 750 26 000 Income tax expense (13750) (8 600) PROFIT FOR THE YEAR 26 000 17 400 Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE YEAR 26 000 17 400 Retained earnings Plate Ltd Spoon Ltd NS NS 337 500 69 600 Balances 1 January 2017 Changes in equity for 2017 Total comprehensive income for the year Other comprehensive income for the year Ordinary dividend Balance at 31 December 2017 26 000 17 400 (6 000) 357 500 (3 000) 84 000 NOTES Plate Lid acquired the interest in Spoon Ltd on January 2014 for N$ 75 000 when the equity of Spoon Lid was as follows: Share capital NS 50 000 Retained earings NS 20 000 Plate Ltd elected to measure the non-controlling interests in the acquiree at their fair value of N$ 25000 at acquisition date. . On acquisition date, Plate Ltd valued the plant of Spoon Ltd, with a carrying amount of NS 40 000, at N$ 50 000. This revaluation was not recorded in the books of Spoon Ltd. The remaining useful life of this plant was 5 years on acquisition date. . On 1 July 2017, the plant above was sold by Spoon 1.Ad for NS 15 000, You may ignore taxation implications throughout Required: IFRS: 6 Prepare the following for Plate Ltd Group for the year ended 31 December 2017 in accordance with a) Proforma journals) necessary to effect the consolidation with regards to the plant transaction ONLY. Journal narrations are not required. b) Statement of Financial Position c) Statement of Profit or Loss and other Comprehensive Income Note: Include all calculations 20 6 Question 2 30 Maries (54 minutes) Harambee Lad, a company based in Katutuna acquired some properties to cushion itself against the current harsh economic environment. The details of the properties are as follows: Property Property I consisting of land and buildings was acquired at a cost of NS 1 500 000 on 1 January 2017 with the intention to earn rentals on it. Lawyer's fees and transfer duties amounted to NS 300 000 During June 2017, the company replaced some interior walls at a cost of NS 200 000. The fair value of the original walls that were replaced was determined at NS 50 000 at that date. The fair value of the property at 31 December 2017 was NS 1 850 000. The decline was attributable to the worsening economic conditions . Property 2 Property 2 was bought on 1 January 2016 at a cost of NS 3 000 000 (Land: S1 500 000 and building: NS 1 500 000). This property was initially being leased to a tenant but however on July 2017, Harambee Lid moved its manufacturing operations into property 2. The details of property 2 areas follows: NS Fair value 31 December 2016 Land Buildings 1 800 000 1 700 000 Fair value 1 July 2017 Land Buildings 1 875 000 1 850 000 Fair value 31 December 2017 Land Buildings 1 975 000 2 000 000 The estimated remaining useful life of the building was 40 years on 1 July 2017 Additional notes Harambee (Pty) Lid uses the fair value model for investment property, . It is the policy of the company to revalue property, plant and equipment to net replacement value annually at reporting date. Assume that fair value on 31 December 2017 was the same as net replacement value on that date. The year end of the company is 31 December You may ignore taxation throughout Required: *) Prepare the journal entries in respect of Property for the reporting period ended 31 December 2017 Journal arrations are not required b) Prepare the journal entries in respect of Property 2 for the reporting period ended 31 December 2017. 10 Journal warrations are not required c) With regards to Property 1 & 2 disclose the necessary reconciliations for the properties between the carrying amount at the beginning and end of the reporting period in the notes to the financial statements of Harambee Ltd as at 31 December 2017 11 Question 3 25 Marks (45 Minutes) Marathon Limited (Marathon) has three divisions: a chocolate manufacturing division, a packaging division and a sweets manufacturing division. On 1 April 2016, the directors of Marathon decided to sell the sweets division as it was not in line with the core activities of the company. The decision was announced to the employees and the public on June 2016. The net assets of the sweets division as at 31 December 2016 were N$ 16 000 000 broken down as follows: Assets Land & buildings Furniture & fittings Plant Motor vehicles Total NS 15 000 000 1 000 000 2 000 000 2 000 000 20 000 000 Liabilities NS 4 000 000 Hire purchase agreements On 10 May 2017, the board signed an agreement with Spangles Limited to sell the sweets division for NS 20 000 000. The net assets of the sweets division at this date were NS 18 000 000 (NS 23 000 000 assets and N$ 5 000 000 libilities). Marathon incurred redundancy costs of NS 1 000 000, which had been expected from the date the decision to sell the division was made. The redundancies are not reflected in the statement of profit or loss and other comprehensive income below. The sale was completed on 1 July 2017 and the sweets division did not trade between 10 May 2017 and 1 July 2017. The results of the sweets manufacturing division for 2017 and 2016 are 2017 NS 000 2016 NS 000 Turnover Cost of sales Gross profit Operating expenses Net profit before taxation Taxation Net profit after taxation 40 000 (10 000) 30 000 (22 000) 8000 (3 000) 5 000 65 000 (17000) 48000 (33 000) IS 000 (5000) 10 000 Required: a) Prepare extracts from the financial statements of Marathon (including notes) for the year ended 31 December 2017 in accordance with IFRS 5 only to account for all the above information. Comparatives are required 19 5 b) Describe how the disclosures relating to discontinued operations may help investors and lenders make decisions based on financial statements 6 Question 4 13 Marks (23 Minutes) Shikongo Limited's partial statement of comprehensive income for the year ended 30 June 2017 was as follows: 2016 NS NS Net profit and total comprehensive income for the period 500 000 Shikongo Limited's capital structure at 1 July 2015 was as follows: 2017 470 000 Issued share capital Ordinary shares of NS I each 1 000 000 10% cumulative redeemable preference shares (issued at par and redeemable at par 200 000 On 1 January 2017 the company had a rights issue of one ordinary share for every five ordinary shares held at 200 cents per share for cash. The closing market price on the last day to register for rights was 250 cents per share Dividends declared by Shikongo during each of the years ended 31 December were as follows: 2017 NS 20 000 60 000 2016 NS 20 000 40 000 Preference dividend Ordinary dividend Required: Disclose basic earnings per share and dividends per share for Shikongo Limited for the year ended 30 June 2017 in accordance with IFRS. Notes and comparatives are required 13 Note: Show all workings THE END 6