Advanced Financial Accounting Past Exam Paper
Autor: Joshua • October 28, 2018 • 2,283 Words (10 Pages) • 832 Views
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1) The good will on consolidation would be calculated as follows:
The fair value of the identifiable net assets of the subsidiary at the date of acquisition:
$
Share capital 400,000
Retained earnings 486,000
886,000
BCVR 14,000
$900,000
Calculation of goodwill:
$
Cost of business combination 800,000
Less: share (80%) of fair value of net assets acquired ($900,000) 720,000
Goodwill: 80,000
- Worksheet entries as at 30 June 20×6
Dr Land 20,000
Cr DTL 6,000
Cr BCVR 14,000
Dr Retained Earnings (1/7/×5) 388,800
Dr share capital 320,000
Dr BCVR 11,200
Dr Goodwill 80,000
Cr shares in subsidiary Ltd 800,000
Dr gain on sale 16,000
Cr equipment 16,000
Dr DTA 4,800
Cr ITE 4,800
Dr accumulated depreciation 4,000
Cr depreciation expense 4,000
Dr ITE 1,200
Cr DTA 1,200
Dr Loan payable 100,000
Cr Loan receivable 100,000
- Measurement of non-controlling interest in net profit after tax and closing retained earnings for the year ended at 30 June 20×6
NCI in net profit after tax
= 20% of: net profit after tax in books of subsidiary minus unrealised after tax profits made by the subsidiary plus realised profits after tax
=20% of: (100,000- 16,000(1-30%) + 4,000(1-30%))
=18,320
NCI in closing retained earnings (方法一)：
= 20% of: closing retained earnings of subsidiary minus unrealised after tax profits made by the subsidiary
= 20% of: (576,000- 16,000(1-30%) + 4,000(1-30%))
=113,520
方法二:
Opening retained earnings 486,000
+ Profit (100,000- 16,000(1-30%) + 4,000(1-30%)) 91,600
- Dividend (10,000)
Closing retained earnings 567,600
20% of the Closing retained earnings
= 20% × 567,600
=113,520
- Measurement of non-controlling interest in net profit after tax and closing retained earnings for the year ended at 30 June 20×7
NCI in net profit after tax
= 20% of: net profit after tax in books of subsidiary minus unrealised after tax profits made by the subsidiary plus realised profits after tax
=20% of: (120,000+ 4,000(1-30%))
=24,560
NCI in closing retained earnings (方法一) ：
= 20% of: closing retained earnings of subsidiary minus unrealised after tax profits made by the subsidiary
= 20% of: (686,000 + 4,000(1-30%))
=688,800
方法二:
Opening retained earnings 567,600
+ Profit (120,000+ 4,000(1-30%)) 122,800
- Dividend (10,000)
Closing retained earnings 680,400
20% of the Closing retained earnings
= 20% × 680,400
=136,080
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Q4 Equity method (total 11 marks)
- Three differences in equity method and consolidation method.(3 marks)
1, do not eliminate investment with equity accounting – basis of measurement
Consolidation – eliminate investment and include subsidiary’s assets and liabilities
2, equity – goodwill not separately recognised.
Consolidation – recognise goodwill separately
3, equity – take up share of profit
Consolidation – take up all revenue and expenses of subsidiary
4, equity – eliminate inter-entity transaction in proportion to share of associate
Consolidation – eliminate intra-group transactions in full
- Using cost and equity method journal entry (prepare consolidated financial statements)
Journal entries (this year or next year) (8 marks)
E.g. Topic 5 lecture example 3 (b)
Investor required 30% of the associate’s share, initial cost 400,000 from 20×2; profit after tax at 20×5 is 100,000; dividend paid at 20×5 is 20,000
Cost method
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