Question 1 The financial controller has supplied you with the following information (#) in s financial statements for the year ended 30 June 2019 5 Lad correctly oplied the provision of IAS . Totable Assets (b) Sadypent the following amounts on research and development in the year ended 30 June 2000 General research expenditure 31,200 ProjectX Development expenditure 101,100 Pre-fachlesting costs forway 2020) 6.150 Staltraining (April 2009 15.100 175.950 The following dates are relevant to Project and its product, the Grande 1 October 2015 Pret med 1 May 2019 Project considered to have led to a technically feasible and commercially viable product, the Grande 30 June 2019 Developerspenditure Botad 200 21 March 2000 Development and receased 1 April 2020 The Grande Launched The Grande is selling well. It is expected that the Grande will have a useful life of three years from the launch date fore it is superseded Sad also purchased a machine for use in Project X and then in subsequent production of the Grande. The machine cost 60.000 on 1 July 2019 and has a five-year useful life All development expenditure accrued evenly over the relevant year, except where indicated. Lad wishes to capitalise the maximuttunt possible ey On March 2020 S Lad paid 40.000 for a patient. This allows Stad role we of new technology for five years, which will allow it to expand its matufacturing capacity Requirement Prepare the note to the financial statements for the year ended 30 June 2020 showing the movements ca intangible assets. A total column is not required. (% marks) Parlos Questi Gabby, the finance director of Tara La prepared the draft financial statements for the year andet 30 September 2020. before being taken ill. The managing director hasiven Gabby's file to Eldora, the financial controller, to enable berta complete the financial statements. Both Gabby and Elders 2 of 5 Question Gabby, the finance director of Tara Lad, prepared the draft financial statements for the your ended 30 September 2030, before being taken ill. The managing director has given Gabby's file to Ellier, the financial controller, to enable her to complete the financial statements. Both Gabby and Eldon are Chartered Accountants The managing director told Elidor that the direction need a large profit for the year ended 30 September 2020 as they wish to expand their operations further and will need additional funding An earnings per share figure in exces of 2,00 is needed to secure additional funding. The directors hold all of the shares in Tamid and have a bonus scheme based on the carnings per share target of 2.00 being exceeded Draft profile for the year was 1,096,500 and based on this Gabby calculated on camings per share of 02.15 At 1 October 2019 Tarald had 400.000 El ordinary shares in issue On 1 January 2020 Tarald made al for bonus issue. On 1 July 2020 Tara Lidssued 120.000 cl ordinary shares at market price Gabby's file contains the following outstanding ito (1) On 1 January 2020 Tara Ludborrowed 100,000 rate of $ pa to part finance the construction of a new head office building. Due to bad weather caming delays in the first quarter of the year, work on the building only started on April 2020. The building is expected to take 12 months to complete Interest of 3.800 was cared on surplus funds invested and credited to finance income in the statement of profit or loss, of which C1500 was camed up to 31 March 2020 Gabby debited property, plant and equipment with interest peable for the nine months to 30 September 2020 2) A new manufacturing plant housing the latest robotics technology was set up during the year The following costs were incurred during the year and capitalised as part of property, plant and equipment Construction costs Assembly and installation of equipment Allocated general overheads Testing of cupset Employee training Advertising of new products being factured Safety inspection Sales launch event for new product 180,000 45.000 20.000 8.000 3.000 1.300 1.000 1.500 259.00 The manufacturing plant was really for use on March 2020. However, the propriately trained staff were not immediately available to run the plant and therefore it did not open until 1 April 2020. Six months depreciation has been charged on the plant's capitalised cost. The mutufacturing plant is deprecated on a straight-line basis over 20 years Page 2 (3) In November 2019, as part of a Lad's business expansion, it quired a number of gaming and entertainment venues, where comes can play video games and take part in virtual reality experiences There are two different payment options available to customers visiting each one Pay-on-cally customers pay a fixed price per hour at any venue when they arrive Annual membership: an annual subscription of 480 is paid in advance Members can lmy.t 21:09 18% FR SECOND ASSIG... @ () In November 2019, as part of Tod's business expansion, it acquired a number of paning und entertainment venues, where customers can play video games and take part in virtual reality experiences There are two different payment options available to customers visiting each venue Pay-on-entry, customers pay a fixed price per hour at any venue when they arrive. Antal membership: an annual subscription of 480 is paid in advance Members can se any of the venues for an unlimited amount of time throughout the year of membership By 30 September 2030, 350 members had signed up and paid for annual membership. All of these recipes were recognised as revenue. The average mexpired period of membership at 30 September 2020 was seven months. Members used the gaming facilities evenly throughout the Requirements a) Explain the required IFRS financial reporting treatment of Items) to above in Tamu Led's financial statements for the year ended ) September 2020 Include all relevant calculations and set out the required adjustments in the form of jounal entries. (24 marks) (b) For the year ended 30 September 2020, calculate Tulad's revised profit, showing each adjustment made and basic camino per sture. (dmarks) c) Discuss the ethical issues arising from the scenario for Elder und Gabby and set out any action that Eldora should take. (marks) Questi Post has a number of subsidiary companies and is preparing its consolidated financial statements for the year ended 30 September 2019 On 1 March 2019 Pot und purchased 25% of the ordinary share capital of Chi Lada separate legal entity, for 80,000 There are three other investors cach of which has a 25% holding in Chi Lad Under a contractual agreement between the four parties, each investor is entitled to an equal share of the profits and losses of Child. Unanimous sent is required by all four parties for all key operating decisions Chi Led made a profit for the year ended 30 September 2019 of 108,000. All profits and losses accrued evenly throughout the year Requirement Explain the required IFRS financial reporting treatment of the investment in Chi Ladino Lid's consolidated financial statements for the year coded 30 September 2019. preparing all relevant cakolations (5 marks) Pagesos Questi 3.1 As a newly qualified Chartered Accountant you have been wed by your firm of Chartered FR SECOND ASSIG... On 1 March 2019 Pot Led perchased 25% of the ordinary share capital of Chi La separate legal entity, for 80,000. There are three other investors, cach of which has 25% holding in Chi Lid Under a contractual agreement between the four parties, each investor is entitled to an equal share of the profits and losses of Chi Lud. Unanimous consent is required by all for parties for all key operating decisions Chi Lad made a profit for the year ended 30 September 2019 of 108,000. All profits and some accrued evenly throughout the year Requirement Explain the required IFRS financial reporting treatment of the investment in Chi Ladin Pot Lad's consolidated financial statements for the you ented 30 September 2019. preparing all relevant calculations. (5 marks) Page of Quest As a newly qualified Chartered Accountant you have been asked by your firm of Chartered Accountants to prepare a checklist cowering the fundamental principles of the IFAC Code of Ethics Requirement Prepare the checklist which should set out the five fundamental principles with a senes of relem questions for each to help assess whether an individual has complied with each principle och new assignment undertake 15 marks) Question 4 At 1 October 2018 Cha Ladhada item in a subsidiary. Head, as well as a number of other insignificant imvestments. On January 2019 Chad acquired 80% of the ordinary sture capital of Salad The deal summarised statements of financial position of Che Lid, Hei Land Su Ladus 30 September 2019 are shown below Cha Ltd Hel Lid Sallad ASSETS Non-current assets Property, plant and 563.000 314.000 235.000 equipment Investments 565.000 1.127,000 374.000 215.000 Currentes Inventories 72,000 39.400 35,300 Trade and other 47.800 31,000 receivables Cash and cash 7.100 3.200 1,800 valents 126,900 1.250,00 93.600 467.000 6.500 Total assets EQUITY AND LIABILITIES Equity Ordinary share capital (El shares) Share premium account Retained caming 600,000 300,000 200,000 200,000 280.000 1.050,00 19,700 389,700 45,000 245.000 Current liabilities Trade and other payables 91.000 40.900 31,900 Question 4 At 1 October 2018 Cha Ltd had an investment in a subsidiary, Hei Ltd, as well as a number of other insignificant investments. On 1 January 2019 Cha Lad acquired 80% of the ordinary share capital of Sai Lad The draft summarised statements of financial position of Cha Lad, Heilad and Salads at 30 September 2019 are shown below. Cha Ltd Hei Led Sai Led ASSETS Non-current assets Property, plant and 562,000 374,000 235,000 quipment Investments 565.000 1.127.000 374,000 235,000 Current assets Inventories 72.000 $9,400 35.500 Trade and other 47,800 31,000 29,400 receivables Cash and cash 7.100 3.200 1.800 equivalents 126,900 93.600 6 500 Total assets 1.253,00 467.000 301.500 EQUITY AND LIABILITIES Equity Ordinary share capital 600,000 300.000 200,000 (El shares) Share premium account 200,000 Retained carnings 280.900 89,700 45.600 1,080.900 389,700 245.600 Current liabilities Trade and other 93,000 40,000 31.900 payables Income tax 30,000 37.000 24.000 173,000 77,900 $5.900 Total equity and linbilities 1.251.900 467.600 301.500 dos Additional information: Hei Lid Salud Date of acquisition 1 Oct 2015 1 Jan 2019 Percentage holding acquired . Consideration (note (23) 295,000 250,000 Retained earnings at date of acquisition 42.400 51.000 Goodwill and non-controlling interest method Proportionate Fair value Cumulative goodwill impairment to 30 September 2018 6,000 Goodwill impairment for year ended 30 September 2019 3.000 (1) At the dates of acquisition the fair values of the assets, liabilities and contingent liabilities of Rei Lid and Sai Lid were equal to their carrying amounts, with one exception Sal Lad has an internally-generated brand which was not recognised in its own financial statements. However, an independent expert valued this brand at 40,000, with a ful life of five years, at 1 January 2019, the date of acquisition of Sas Ltd by Cha Ltd (2) The consideration for the acquisition of Hei Lid was made up of cash of 190,000 paid on 1 October 2015 and a further cash payment of 105,000, deferred until 1 October 2016. An appropriate discount factor is Spa Cha Led accounted for the deferred consideration my 100,000 300,000 200,000 200.000 280.900 1.00.900 39.00 389,700 5 of 5 245,600 Equity Ordinary share capital les) Share premium account Retained eaming Current liabilities Trade and other Income tax Total equity and liabilities 93.000 30.900 31.900 80.000 171.000 2,253.900 37.000 77.900 467,600 24,000 S5,00 301.500 Papers 30 Additional informatie: Hel Lad Sald Date of acquisition 1 Oct 2015 1 Jan 2019 Percentage holding acquired Consideration note 2 295.000 250,000 Retained earnings at date of acquisition 642.400 51.000 Goodwill and non-controlling interest method Proporticale Fair value Cumulative goodwill impacto 30 September 2016 16,000 Goodwill impairment for your ended 30 September 2010 3.000 (1) Al the dines of acquisition the fair values of the assets, liabilities and contingent liabilities of Helled and Sarad were equal to their carrying out with me exception Sai Lad has an internally-generated brand which was not recognised in its own financial statements. However, an independent expert valued this brand at 40,000, with a weal life of five years, at 1 January 2019. the date of acquisition of Sai Lad by Cha Led () The consideration for the acquisition of Hei Lid was made up of each of 190,000 paid on October 2015 and a further cash payment of 105,000, deferred until October 2016. An wppropriate discount factor is 5% pa Cha Lad accounted for the deferred comidenation correctly (3) The fair value of the non-controlling interest in Said on January 2019 was 64.000 > On 1 October 2018 Cha Lad sold a machine to Hei Lad for 63.000. On that date the machine had a remaining useful life of six years and a carrying amount of 45,000 Requirements 4.1 Prepare the consolidated statement of financial position of Cha Led as at 30 September 2019 (19 marks) 42 set out the journal entries that will be required on consolidation to recognise the goodwill relating to the acquisition of Sul Lid in the consolidated statement of financial position of Che Ltd as at 30 September 2019, (2 marks) 43 One month atter the year end on 31 October 2019 Cla Lind sold its 65%. holding in Heited for 1346.000 Hei Lad made a profit for the month of October 2019 of 18.900 Calculate the profit or loss on disposal of Hei Led marks) Total: 23 marks Page 1 Question 1 The financial controller has supplied you with the following information (#) in s financial statements for the year ended 30 June 2019 5 Lad correctly oplied the provision of IAS . Totable Assets (b) Sadypent the following amounts on research and development in the year ended 30 June 2000 General research expenditure 31,200 ProjectX Development expenditure 101,100 Pre-fachlesting costs forway 2020) 6.150 Staltraining (April 2009 15.100 175.950 The following dates are relevant to Project and its product, the Grande 1 October 2015 Pret med 1 May 2019 Project considered to have led to a technically feasible and commercially viable product, the Grande 30 June 2019 Developerspenditure Botad 200 21 March 2000 Development and receased 1 April 2020 The Grande Launched The Grande is selling well. It is expected that the Grande will have a useful life of three years from the launch date fore it is superseded Sad also purchased a machine for use in Project X and then in subsequent production of the Grande. The machine cost 60.000 on 1 July 2019 and has a five-year useful life All development expenditure accrued evenly over the relevant year, except where indicated. Lad wishes to capitalise the maximuttunt possible ey On March 2020 S Lad paid 40.000 for a patient. This allows Stad role we of new technology for five years, which will allow it to expand its matufacturing capacity Requirement Prepare the note to the financial statements for the year ended 30 June 2020 showing the movements ca intangible assets. A total column is not required. (% marks) Parlos Questi Gabby, the finance director of Tara La prepared the draft financial statements for the year andet 30 September 2020. before being taken ill. The managing director hasiven Gabby's file to Eldora, the financial controller, to enable berta complete the financial statements. Both Gabby and Elders 2 of 5 Question Gabby, the finance director of Tara Lad, prepared the draft financial statements for the your ended 30 September 2030, before being taken ill. The managing director has given Gabby's file to Ellier, the financial controller, to enable her to complete the financial statements. Both Gabby and Eldon are Chartered Accountants The managing director told Elidor that the direction need a large profit for the year ended 30 September 2020 as they wish to expand their operations further and will need additional funding An earnings per share figure in exces of 2,00 is needed to secure additional funding. The directors hold all of the shares in Tamid and have a bonus scheme based on the carnings per share target of 2.00 being exceeded Draft profile for the year was 1,096,500 and based on this Gabby calculated on camings per share of 02.15 At 1 October 2019 Tarald had 400.000 El ordinary shares in issue On 1 January 2020 Tarald made al for bonus issue. On 1 July 2020 Tara Lidssued 120.000 cl ordinary shares at market price Gabby's file contains the following outstanding ito (1) On 1 January 2020 Tara Ludborrowed 100,000 rate of $ pa to part finance the construction of a new head office building. Due to bad weather caming delays in the first quarter of the year, work on the building only started on April 2020. The building is expected to take 12 months to complete Interest of 3.800 was cared on surplus funds invested and credited to finance income in the statement of profit or loss, of which C1500 was camed up to 31 March 2020 Gabby debited property, plant and equipment with interest peable for the nine months to 30 September 2020 2) A new manufacturing plant housing the latest robotics technology was set up during the year The following costs were incurred during the year and capitalised as part of property, plant and equipment Construction costs Assembly and installation of equipment Allocated general overheads Testing of cupset Employee training Advertising of new products being factured Safety inspection Sales launch event for new product 180,000 45.000 20.000 8.000 3.000 1.300 1.000 1.500 259.00 The manufacturing plant was really for use on March 2020. However, the propriately trained staff were not immediately available to run the plant and therefore it did not open until 1 April 2020. Six months depreciation has been charged on the plant's capitalised cost. The mutufacturing plant is deprecated on a straight-line basis over 20 years Page 2 (3) In November 2019, as part of a Lad's business expansion, it quired a number of gaming and entertainment venues, where comes can play video games and take part in virtual reality experiences There are two different payment options available to customers visiting each one Pay-on-cally customers pay a fixed price per hour at any venue when they arrive Annual membership: an annual subscription of 480 is paid in advance Members can lmy.t 21:09 18% FR SECOND ASSIG... @ () In November 2019, as part of Tod's business expansion, it acquired a number of paning und entertainment venues, where customers can play video games and take part in virtual reality experiences There are two different payment options available to customers visiting each venue Pay-on-entry, customers pay a fixed price per hour at any venue when they arrive. Antal membership: an annual subscription of 480 is paid in advance Members can se any of the venues for an unlimited amount of time throughout the year of membership By 30 September 2030, 350 members had signed up and paid for annual membership. All of these recipes were recognised as revenue. The average mexpired period of membership at 30 September 2020 was seven months. Members used the gaming facilities evenly throughout the Requirements a) Explain the required IFRS financial reporting treatment of Items) to above in Tamu Led's financial statements for the year ended ) September 2020 Include all relevant calculations and set out the required adjustments in the form of jounal entries. (24 marks) (b) For the year ended 30 September 2020, calculate Tulad's revised profit, showing each adjustment made and basic camino per sture. (dmarks) c) Discuss the ethical issues arising from the scenario for Elder und Gabby and set out any action that Eldora should take. (marks) Questi Post has a number of subsidiary companies and is preparing its consolidated financial statements for the year ended 30 September 2019 On 1 March 2019 Pot und purchased 25% of the ordinary share capital of Chi Lada separate legal entity, for 80,000 There are three other investors cach of which has a 25% holding in Chi Lad Under a contractual agreement between the four parties, each investor is entitled to an equal share of the profits and losses of Child. Unanimous sent is required by all four parties for all key operating decisions Chi Led made a profit for the year ended 30 September 2019 of 108,000. All profits and losses accrued evenly throughout the year Requirement Explain the required IFRS financial reporting treatment of the investment in Chi Ladino Lid's consolidated financial statements for the year coded 30 September 2019. preparing all relevant cakolations (5 marks) Pagesos Questi 3.1 As a newly qualified Chartered Accountant you have been wed by your firm of Chartered FR SECOND ASSIG... On 1 March 2019 Pot Led perchased 25% of the ordinary share capital of Chi La separate legal entity, for 80,000. There are three other investors, cach of which has 25% holding in Chi Lid Under a contractual agreement between the four parties, each investor is entitled to an equal share of the profits and losses of Chi Lud. Unanimous consent is required by all for parties for all key operating decisions Chi Lad made a profit for the year ended 30 September 2019 of 108,000. All profits and some accrued evenly throughout the year Requirement Explain the required IFRS financial reporting treatment of the investment in Chi Ladin Pot Lad's consolidated financial statements for the you ented 30 September 2019. preparing all relevant calculations. (5 marks) Page of Quest As a newly qualified Chartered Accountant you have been asked by your firm of Chartered Accountants to prepare a checklist cowering the fundamental principles of the IFAC Code of Ethics Requirement Prepare the checklist which should set out the five fundamental principles with a senes of relem questions for each to help assess whether an individual has complied with each principle och new assignment undertake 15 marks) Question 4 At 1 October 2018 Cha Ladhada item in a subsidiary. Head, as well as a number of other insignificant imvestments. On January 2019 Chad acquired 80% of the ordinary sture capital of Salad The deal summarised statements of financial position of Che Lid, Hei Land Su Ladus 30 September 2019 are shown below Cha Ltd Hel Lid Sallad ASSETS Non-current assets Property, plant and 563.000 314.000 235.000 equipment Investments 565.000 1.127,000 374.000 215.000 Currentes Inventories 72,000 39.400 35,300 Trade and other 47.800 31,000 receivables Cash and cash 7.100 3.200 1,800 valents 126,900 1.250,00 93.600 467.000 6.500 Total assets EQUITY AND LIABILITIES Equity Ordinary share capital (El shares) Share premium account Retained caming 600,000 300,000 200,000 200,000 280.000 1.050,00 19,700 389,700 45,000 245.000 Current liabilities Trade and other payables 91.000 40.900 31,900 Question 4 At 1 October 2018 Cha Ltd had an investment in a subsidiary, Hei Ltd, as well as a number of other insignificant investments. On 1 January 2019 Cha Lad acquired 80% of the ordinary share capital of Sai Lad The draft summarised statements of financial position of Cha Lad, Heilad and Salads at 30 September 2019 are shown below. Cha Ltd Hei Led Sai Led ASSETS Non-current assets Property, plant and 562,000 374,000 235,000 quipment Investments 565.000 1.127.000 374,000 235,000 Current assets Inventories 72.000 $9,400 35.500 Trade and other 47,800 31,000 29,400 receivables Cash and cash 7.100 3.200 1.800 equivalents 126,900 93.600 6 500 Total assets 1.253,00 467.000 301.500 EQUITY AND LIABILITIES Equity Ordinary share capital 600,000 300.000 200,000 (El shares) Share premium account 200,000 Retained carnings 280.900 89,700 45.600 1,080.900 389,700 245.600 Current liabilities Trade and other 93,000 40,000 31.900 payables Income tax 30,000 37.000 24.000 173,000 77,900 $5.900 Total equity and linbilities 1.251.900 467.600 301.500 dos Additional information: Hei Lid Salud Date of acquisition 1 Oct 2015 1 Jan 2019 Percentage holding acquired . Consideration (note (23) 295,000 250,000 Retained earnings at date of acquisition 42.400 51.000 Goodwill and non-controlling interest method Proportionate Fair value Cumulative goodwill impairment to 30 September 2018 6,000 Goodwill impairment for year ended 30 September 2019 3.000 (1) At the dates of acquisition the fair values of the assets, liabilities and contingent liabilities of Rei Lid and Sai Lid were equal to their carrying amounts, with one exception Sal Lad has an internally-generated brand which was not recognised in its own financial statements. However, an independent expert valued this brand at 40,000, with a ful life of five years, at 1 January 2019, the date of acquisition of Sas Ltd by Cha Ltd (2) The consideration for the acquisition of Hei Lid was made up of cash of 190,000 paid on 1 October 2015 and a further cash payment of 105,000, deferred until 1 October 2016. An appropriate discount factor is Spa Cha Led accounted for the deferred consideration my 100,000 300,000 200,000 200.000 280.900 1.00.900 39.00 389,700 5 of 5 245,600 Equity Ordinary share capital les) Share premium account Retained eaming Current liabilities Trade and other Income tax Total equity and liabilities 93.000 30.900 31.900 80.000 171.000 2,253.900 37.000 77.900 467,600 24,000 S5,00 301.500 Papers 30 Additional informatie: Hel Lad Sald Date of acquisition 1 Oct 2015 1 Jan 2019 Percentage holding acquired Consideration note 2 295.000 250,000 Retained earnings at date of acquisition 642.400 51.000 Goodwill and non-controlling interest method Proporticale Fair value Cumulative goodwill impacto 30 September 2016 16,000 Goodwill impairment for your ended 30 September 2010 3.000 (1) Al the dines of acquisition the fair values of the assets, liabilities and contingent liabilities of Helled and Sarad were equal to their carrying out with me exception Sai Lad has an internally-generated brand which was not recognised in its own financial statements. However, an independent expert valued this brand at 40,000, with a weal life of five years, at 1 January 2019. the date of acquisition of Sai Lad by Cha Led () The consideration for the acquisition of Hei Lid was made up of each of 190,000 paid on October 2015 and a further cash payment of 105,000, deferred until October 2016. An wppropriate discount factor is 5% pa Cha Lad accounted for the deferred comidenation correctly (3) The fair value of the non-controlling interest in Said on January 2019 was 64.000 > On 1 October 2018 Cha Lad sold a machine to Hei Lad for 63.000. On that date the machine had a remaining useful life of six years and a carrying amount of 45,000 Requirements 4.1 Prepare the consolidated statement of financial position of Cha Led as at 30 September 2019 (19 marks) 42 set out the journal entries that will be required on consolidation to recognise the goodwill relating to the acquisition of Sul Lid in the consolidated statement of financial position of Che Ltd as at 30 September 2019, (2 marks) 43 One month atter the year end on 31 October 2019 Cla Lind sold its 65%. holding in Heited for 1346.000 Hei Lad made a profit for the month of October 2019 of 18.900 Calculate the profit or loss on disposal of Hei Led marks) Total: 23 marks Page 1