XRX-5 Please do not copy other answers. This is a different question. If copied from other answers I will downvote and report your account .

Q2.

Delta prepares financial statements to 30 September each year. The following exhibits, available on the left-hand side of the screen, provide information relevant to t 1. Share-based payment information on Delta's share-based payment scheme for senior executiv 2. Sale of two properties information on the sale of surplus properties. 3. Sale of two business units - information on the sale of two of Delta's business units. This information should be used to answer the question requirements within your chosen response On 1 October 20X3, Delta granted 3,000 share options to 50 senior executives. The options are due to vest on 30 September 20X6. In order to be entitled to exercise the options, the executives had to remain in employment until at least 30 September 20X6. On 1 October 20X3, Delta estimated that 10 executives would leave prior to 30 September 20X6. This estimate was confirmed when the financial statements for the year ended 30 September 20X4 were prepared. However, during the year ended 30 September 2005, the estimate of the total number of executives expected to leave before 30 September 20X6 was revised to 12. On 1 October 20X3, the fair value of a share option was $2-50. At 30 September 20X4 and 20x5, the fair value of the option was $2-00 and $2-80 respectively. On 1 April 20X5, because of disappointing financial results, Delta modified the terms of the arrangement with the senior executives by decreasing the exercise price. The results of this modification were to increase the fair value of a share option from $2-10 to $2.70. On 1 September 20X5, Delta decided to sell two properties which were surplus to requirements. Both properties were measured under the cost model. Property 1 Property 1 was available and advertised for immediate sale in its current condition. This property had a carrying amount of $50 million on 1 September 20X5. The property was being actively marketed at a realistic selling price of $60 million. The advertising agents have advised that a sale should be achievable within three months of 1 September 20X5. The agents will charge a commission of 5% of the selling price. Property 2 Property 2 required essential repair work to be undertaken on it prior to it being in a condition to be offered for sale. This work is planned for October 20X5 and is expected to cost $10 million. This property had a carrying amount of $40 million at 30 September 20X5. The selling agents have advised that once the work has been carried out, the property could realistically be sold for $45 million. The agents' commission will also be 5% of the selling price. Neither property 1 nor property 2 will be able to generate any income for Delta after 1 September 20x5, other than through sale. On 1 June 20x5 Delta sold two business units. The first unit was a business segment in its own right. Delta made a decision to withdraw from this particular business segment and concentrate on its 'core business. This segment generated post-tax profits of $5 million from 1 October 20x4 to 31 May 20X5. On 1 June 20x5, the net assets of the segment were $50 million. The sale proceeds were $54 million. The second sale was one of Delta's distribution centres as a result of a decision to rationalise the way in which Delta distributed its products. The net assets of the distribution centre were $10 million and it was sold for $12 million. The income tax rate applicable to Delta is 20%. (a) Using the information in Exhibit 1, explain and compute the amounts that would be recognised by Delta in its financial statements for the year ended 30 September 20X5 and state where in the financial statements they should be presented. (b) Using the information in Exhibits 2 and 3, explain how each event would be measured and recognised in Delta's financial statements for the year ended 30 September 20X5. Q2. Alpha currently has investments in two other entities, Beta (Note 1) and Gamma (Note 2). The draft statements of financial position of Alpha and Beta at 30 September 2018 were as follows: Alpha Beta $'000 $'000 Assets Non-current assets: Property, plant and equipment (Notes 1and 5) 775,000 380,000 Investments (Notes 1-3) 410,000 Nil 1,185,000 380,000 Current assets: Inventories (Note 4) 150,000 95,000 Trade receivables (Note 4) 100,000 80,000 Cash and cash equivalents 18,000 15,000 - 268,000 190,000 Total assets 1,453,000 570,000 Equity and liabilities Equity Share capital ($1 shares) 520,000 160,000 Retained earnings 693,000 200,000 Total equity 1,213,000 360,000 -- Non-current liabilities: Long-term borrowings 100,000 80,000 Deferred tax 60,000 45,000 - Total non-current liabilities 160,000 125,000 Current liabilities: Trade and other payables 60,000 55,000 Short-term borrowings 20,000 30,000 Total current liabilities 80,000 85,000 Total liabilities 240,000 210,000 Total equity and liabilities 1,453,000 570,000 Note 1 - Alpha's investment in Beta On 1 October 2011, Alpha acquired 120 million shares in Beta and gained control of Beta on that date. The acquisition was financed by a cash payment by Alpha of $144 discounting calculations is 10% and the relevant discount factor is 0.826. Alpha correctly accounted for the payments made to the former shareholders of Beta in its own financial statements. The cost of investment figure in the financial statements of Alpha was rounded to the nearest $ million. Alpha incurred due diligence costs of $1 million relating to the acquisition of Beta and included these costs in the carrying amount of its investment in Beta. On 1 October 2011, the individual financial statements of Beta showed retained earnings of $80 million. 4 The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 October 2011. The following matters emerged: - Property which had a carrying amount of $120 million (land component $40 million) had an estimated fair value of $160 million (land component $60 million). The buildings component of the property had an estimated remaining useful life of 40 years at 1 October 2011. - Plant and equipment having a carrying amount of $120 million had an estimated fair value of $130 million. The estimated remaining useful life of this plant at 1 October 2011 was two years. The fair value adjustments have not been reflected in the individual financial statements of Beta. In the consolidated financial statements, the fair value adjustments will be regarded as temporary differences for the purposes of computing deferred tax. The rate of deferred tax to apply to temporary differences is 20%. On 1 October 2011, the directors of Alpha initially measured the non-controlling interest in Beta at its fair value on that date. On 1 October 2011, the fair value of an equity share in Beta (which can be used to measure the fair value of the non-controlling interest) was $1.70. No impairments of the goodwill on acquisition of Beta have been evident up to and including 30 September 2018. Note 2 - Alpha's investment in September 2018. Note 2 - Alpha's investment in Gamma On 1 October 2015, Alpha acquired 36 million shares in Gamma by means of a cash payment of $145 million. Gamma's issued share capital at that date was 120 million shares. On 1 October 2015 and 30 September 2018, the individual financial statements of Gamma showed retained earnings of $45 million and $65 million respectively. Since 1 October 2015, no other investor has owned more than 2% of the shares of Gamma. Note 3 Alpha's investment in Delta On 1 October 2012, Alpha issued 80 million of its own shares in exchange for an 80% shareholding in Delta. Delta has an issued share capital of 100 million shares. The fair value of an equity share in Alpha on that date was $1.40. The fair values of the net assets of Delta at 1 October 2012 were the same as their carrying amounts. On 1 October 2012, the directors of Alpha initially measured the non-controlling interest in Delta at its fair value on that date. On 1 October 2012, the fair value of an equity share in Delta (which can be used to measure the fair value of the non-controlling interest) was $1.10. The individual financial statements of Delta showed net assets at the following amounts: - $110 million on 1 October 2012. - $170 million on 30 September 2017. In the year ended 30 September 2018, the individual financial statements of Delta showed a profit of $24 million. On 31 March 2018, Delta paid a dividend of $9 million. On 30 June 2018, Alpha disposed of its shareholding in Delta for cash proceeds of $180 million. The individual financial statements of Alpha recognised the correct profit on disposal of its shareholding in Delta. No impairment of the goodwill on acquisition of Delta had been necessary between 1 October 2012 and 30 June 2018. Note 4 - Intra-group trading Alpha supplies a yuuuvili UiT uuquioTIOIT UI VOILU HUU Nttin necessary between 1 October 2012 and 30 June 2018. Note 4 - Intra-group trading Alpha supplies a component to Beta at a mark-up of 25% on its production cost. The trade receivables of Alpha at 30 September 2018 include $10 million receivable from Beta in respect of sales of the component. Beta paid Alpha $10 million to clear the outstanding balance on 29 September 2018. Alpha received and recorded this amount on 3 October 2018. On 30 September 2018, the inventories of Beta included $15 million in respect of components purchased from Alpha. All such inventory is measured at original cost to Beta. Note 5 - Property lease On 1 October 2017, Alpha began to lease a property under a 10-year lease. The annual rate of interest implicit in the lease was 5%. The lease rentals payable by Alpha were $10 million, payable annually in arrears. The lease does not transfer ownership of the property to Alpha at the end of the lease term. The lease contains no option for Alpha to purchase the property at the end of the lease term. On 1 October 2017, Alpha incurred direct costs of $4 million in arranging this lease. The only accounting entries made by Alpha in respect of this lease were to charge $ 14 million to the statement of profit or loss. Using a discount rate of 5%, the cumulative present value of $1 payable annually in arrears for ten years is $7.72. 5 (P.T.O. Required: (a) Compute the profit or loss on disposal of the investment in Delta which would be shown in the consolidated statement of profit or loss of Alpha for the year ended 30 September 2018 (b) Prepare the consolidated statement of financial position of Alpha at 30 September 2018. You need only consider the deferred tax implications of any adjustments you make where the question specifically refers to deferred tax. Note: You should show all workings to the nearest $'000