F3 (FA/FFA) – Chapter 25 – PART G – CBE MCQs – ACCA

These are ACCA F3 (FA/FFA) Financial Accounting MCQs for Part-G of the Syllabus ” Preparing simple consolidated financial statements”.

These multiple-choice questions (MCQs) are designed to help ACCA F3 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

  • Students should not attempt these MCQs until they have finished the entire chapter.
  • All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F3 (FA/FFA) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:ACCA – Associations of Chartered Certified Accountants
Fundamental Level:Knowledge, FIA – Foundation in Accounting
Subject:Financial Accounting
Paper:F3 – FA/FFA
Chapter: Preparing simple consolidated financial statements
Chapter Number:25 of the Practice and Exam Kit
Syllabus Area:G – ” Preparing simple consolidated financial statements”
Questions Type:CBE MCQs
Exam Section:Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part G of the Syllabus; ” Preparing simple consolidated financial statements” of ACCA F3 (FA/FFA) Financial Accounting Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate

Result

Students will get their F3 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “( select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

 

0 votes, 0 avg
6

F3 - Chapter 25 - Part G - MCQs

Course: ACCA - FIA
Subject:
F3 (FA/FFA) Financial Accounting
Syllabus Area: F - Preparing basic financial statements
Chapter in Kit: 25 - Preparing simple consolidated financial statements
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

  1. If you are using mobile, turn on the mobile rotation and solve the MCQs on wide screen for better experience.

REQUEST

  1. Please rate the quiz and give us feedback once you completed the quiz.
  2. Share with ACCA students on social media such as, Facebook Groups, Whatsapp, Telegram, etc.

1 / 13

Swing purchased 80% of Cat's equity on 1 January 20X7 for $120,000 when Cat's retained earnings were $50,000. The fair value of the non-controlling interest on that date was $40,000. During the year, Swing sold goods which cost $80,000 to Cat, at an invoiced cost of $100,000. Cat had 50% of the goods still in inventories at the year end. The two companies' draft financial statements as at 31 December 20X8 are shown below.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Revenue 5,000 1,000
Cost of sales 2,900 600
Gross profit 2,100 β€β€β€Ž β€Žβ€β€β€Ž β€Ž400
Other expenses 1,700 320
Net profit β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž400 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž80
Income tax 130 25
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž270 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž55

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Non-current assets
Investment in Cat 120 -
Tangible non-current assets 1,880 200
2,000 200
Current assets
Inventory 500 120
Trade receivables 650 40
Bank and cash 390 35
1,540 195
3,540 395
Equity and liabilities
Equity
Share capital 2,000 100
Retained earnings 400 200
2,400 300
Current liabilities
Trade payables 910 30
Tax 230 65
1,140 β€β€β€Ž β€Žβ€β€β€Ž β€Ž95
3,540 395

TASK

What is the amount of the adjustment for unrealised profit on inventory?

2 / 13

Swing purchased 80% of Cat's equity on 1 January 20X7 for $120,000 when Cat's retained earnings were $50,000. The fair value of the non-controlling interest on that date was $40,000. During the year, Swing sold goods which cost $80,000 to Cat, at an invoiced cost of $100,000. Cat had 50% of the goods still in inventories at the year end. The two companies' draft financial statements as at 31 December 20X8 are shown below.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Revenue 5,000 1,000
Cost of sales 2,900 600
Gross profit 2,100 β€β€β€Ž β€Žβ€β€β€Ž β€Ž400
Other expenses 1,700 320
Net profit β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž400 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž80
Income tax 130 25
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž270 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž55

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Non-current assets
Investment in Cat 120 -
Tangible non-current assets 1,880 200
2,000 200
Current assets
Inventory 500 120
Trade receivables 650 40
Bank and cash 390 35
1,540 195
3,540 395
Equity and liabilities
Equity
Share capital 2,000 100
Retained earnings 400 200
2,400 300
Current liabilities
Trade payables 910 30
Tax 230 65
1,140 β€β€β€Ž β€Žβ€β€β€Ž β€Ž95
3,540 395

TASK

What will be the consolidated cost of sales at 31 December 20X8?

3 / 13

Swing purchased 80% of Cat's equity on 1 January 20X7 for $120,000 when Cat's retained earnings were $50,000. The fair value of the non-controlling interest on that date was $40,000. During the year, Swing sold goods which cost $80,000 to Cat, at an invoiced cost of $100,000. Cat had 50% of the goods still in inventories at the year end. The two companies' draft financial statements as at 31 December 20X8 are shown below.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Revenue 5,000 1,000
Cost of sales 2,900 600
Gross profit 2,100 β€β€β€Ž β€Žβ€β€β€Ž β€Ž400
Other expenses 1,700 320
Net profit β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž400 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž80
Income tax 130 25
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž270 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž55

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Non-current assets
Investment in Cat 120 -
Tangible non-current assets 1,880 200
2,000 200
Current assets
Inventory 500 120
Trade receivables 650 40
Bank and cash 390 35
1,540 195
3,540 395
Equity and liabilities
Equity
Share capital 2,000 100
Retained earnings 400 200
2,400 300
Current liabilities
Trade payables 910 30
Tax 230 65
1,140 β€β€β€Ž β€Žβ€β€β€Ž β€Ž95
3,540 395

TASK

Which TWO of the following statements concerning the non-controlling interest are correct?

4 / 13

Swing purchased 80% of Cat's equity on 1 January 20X7 for $120,000 when Cat's retained earnings were $50,000. The fair value of the non-controlling interest on that date was $40,000. During the year, Swing sold goods which cost $80,000 to Cat, at an invoiced cost of $100,000. Cat had 50% of the goods still in inventories at the year end. The two companies' draft financial statements as at 31 December 20X8 are shown below.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Revenue 5,000 1,000
Cost of sales 2,900 600
Gross profit 2,100 β€β€β€Ž β€Žβ€β€β€Ž β€Ž400
Other expenses 1,700 320
Net profit β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž400 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž80
Income tax 130 25
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž270 β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž55

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8

Swing Cat
$'000 $'000
Non-current assets
Investment in Cat 120 -
Tangible non-current assets 1,880 200
2,000 200
Current assets
Inventory 500 120
Trade receivables 650 40
Bank and cash 390 35
1,540 195
3,540 395
Equity and liabilities
Equity
Share capital 2,000 100
Retained earnings 400 200
2,400 300
Current liabilities
Trade payables 910 30
Tax 230 65
1,140 β€β€β€Ž β€Žβ€β€β€Ž β€Ž95
3,540 395

TASK

What is the amount of the Goodwill?

5 / 13

The following are the financial statements relating to Black, a limited liability company, and its subsidiary company Bury.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X5

Blackβ€β€β€Ž β€Ž Buryβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 245,000β€β€β€Ž β€Ž 95,000β€β€β€Ž β€Ž
Cost of sales (140,000) (52,000)
Gross profit β€β€β€Ž β€Žβ€β€β€Ž β€Ž105,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž43,000β€β€β€Ž β€Ž
Distribution costs (12,000) (10,000)
Administrative expenses (55,000) (13,000)
Dividend income from Bury 7,000β€β€β€Ž β€Ž β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž β€Žβ€Žβ€β€β€Ž β€Ž
Profit before tax β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž45,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž20,000β€β€β€Ž β€Ž
Tax (13,250) (5,000)
Profit for the year β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž31,750β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž15,000β€β€β€Ž β€Ž

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X5

Black Bury
$'000 $'000
Assets
Non-current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽProperty, plant and equipment 110,000 40,000
Investments
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž21,000,000 $1 ordinary shares in Bury at cost 21,000 β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž
131,000 40,000
Current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInventory, at cost 13,360 3,890
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽTrade receivables and dividend receivable 14,640 6,280
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽBank 3,500 2,570
Total assets 162,500 52,740
Equity and liabilities
Equity
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž$1 Ordinary shares 100,000 30,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽRetained earnings 33,500 10,280
133,500 40,280
Current liabilities
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽPayables 9,000 2,460
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽDividend 20,000 10,000
Total equity and liabilities 162,500 52,740

Additional information

  1. Black purchased its $1 ordinary shares in Bury on 1 November 20X0. At that date the balance on Bury's retained earnings was $2 million. The fair value of the non-controlling interest at the date of acquisition was $11,800,000. Goodwill on acquisition was $800,000.
  2. During the year ended 31 October 20X5 Black sold goods which originally cost $12 million to Bury.
    Black invoiced Bury at cost plus 40%. Bury still has 30% of these goods in inventory at 31 October 20X5.
  3. Bury owed Black $1.5 million at 31 October 20X5 for some of the goods Black supplied during the year.

TASK

Black purchased its shares in Bury on 1 November 20X0. Goodwill on acquisition was $800,000.

What was the amount paid by Black to acquire the shares? (see the information in note 1)

$ _______

6 / 13

The following are the financial statements relating to Black, a limited liability company, and its subsidiary company Bury.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X5

Blackβ€β€β€Ž β€Ž Buryβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 245,000β€β€β€Ž β€Ž 95,000β€β€β€Ž β€Ž
Cost of sales (140,000) (52,000)
Gross profit β€β€β€Ž β€Žβ€β€β€Ž β€Ž105,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž43,000β€β€β€Ž β€Ž
Distribution costs (12,000) (10,000)
Administrative expenses (55,000) (13,000)
Dividend income from Bury 7,000β€β€β€Ž β€Ž β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž β€Žβ€Žβ€β€β€Ž β€Ž
Profit before tax β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž45,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž20,000β€β€β€Ž β€Ž
Tax (13,250) (5,000)
Profit for the year β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž31,750β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž15,000β€β€β€Ž β€Ž

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X5

Black Bury
$'000 $'000
Assets
Non-current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽProperty, plant and equipment 110,000 40,000
Investments
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž21,000,000 $1 ordinary shares in Bury at cost 21,000 β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž
131,000 40,000
Current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInventory, at cost 13,360 3,890
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽTrade receivables and dividend receivable 14,640 6,280
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽBank 3,500 2,570
Total assets 162,500 52,740
Equity and liabilities
Equity
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž$1 Ordinary shares 100,000 30,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽRetained earnings 33,500 10,280
133,500 40,280
Current liabilities
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽPayables 9,000 2,460
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽDividend 20,000 10,000
Total equity and liabilities 162,500 52,740

Additional information

  1. Black purchased its $1 ordinary shares in Bury on 1 November 20X0. At that date the balance on Bury's retained earnings was $2 million. The fair value of the non-controlling interest at the date of acquisition was $11,800,000. Goodwill on acquisition was $800,000.
  2. During the year ended 31 October 20X5 Black sold goods which originally cost $12 million to Bury.
    Black invoiced Bury at cost plus 40%. Bury still has 30% of these goods in inventory at 31 October 20X5.
  3. Bury owed Black $1.5 million at 31 October 20X5 for some of the goods Black supplied during the year.

TASK

What is the amount of the unrealized profit on the intragroup sale?

$ _______

7 / 13

The following are the financial statements relating to Black, a limited liability company, and its subsidiary company Bury.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X5

Blackβ€β€β€Ž β€Ž Buryβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 245,000β€β€β€Ž β€Ž 95,000β€β€β€Ž β€Ž
Cost of sales (140,000) (52,000)
Gross profit β€β€β€Ž β€Žβ€β€β€Ž β€Ž105,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž43,000β€β€β€Ž β€Ž
Distribution costs (12,000) (10,000)
Administrative expenses (55,000) (13,000)
Dividend income from Bury 7,000β€β€β€Ž β€Ž β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž β€Žβ€Žβ€β€β€Ž β€Ž
Profit before tax β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž45,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž20,000β€β€β€Ž β€Ž
Tax (13,250) (5,000)
Profit for the year β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž31,750β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž15,000β€β€β€Ž β€Ž

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X5

Black Bury
$'000 $'000
Assets
Non-current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽProperty, plant and equipment 110,000 40,000
Investments
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž21,000,000 $1 ordinary shares in Bury at cost 21,000 β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž
131,000 40,000
Current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInventory, at cost 13,360 3,890
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽTrade receivables and dividend receivable 14,640 6,280
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽBank 3,500 2,570
Total assets 162,500 52,740
Equity and liabilities
Equity
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž$1 Ordinary shares 100,000 30,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽRetained earnings 33,500 10,280
133,500 40,280
Current liabilities
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽPayables 9,000 2,460
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽDividend 20,000 10,000
Total equity and liabilities 162,500 52,740

Additional information

  1. Black purchased its $1 ordinary shares in Bury on 1 November 20X0. At that date the balance on Bury's retained earnings was $2 million. The fair value of the non-controlling interest at the date of acquisition was $11,800,000. Goodwill on acquisition was $800,000.
  2. During the year ended 31 October 20X5 Black sold goods which originally cost $12 million to Bury.
    Black invoiced Bury at cost plus 40%. Bury still has 30% of these goods in inventory at 31 October 20X5.
  3. Bury owed Black $1.5 million at 31 October 20X5 for some of the goods Black supplied during the year.

TASK

Bury owed Black $1.5 million for goods supplied. How will this be accounted for in the consolidated financial statements?

8 / 13

The following are the financial statements relating to Black, a limited liability company, and its subsidiary company Bury.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X5

Blackβ€β€β€Ž β€Ž Buryβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 245,000β€β€β€Ž β€Ž 95,000β€β€β€Ž β€Ž
Cost of sales (140,000) (52,000)
Gross profit β€β€β€Ž β€Žβ€β€β€Ž β€Ž105,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž43,000β€β€β€Ž β€Ž
Distribution costs (12,000) (10,000)
Administrative expenses (55,000) (13,000)
Dividend income from Bury 7,000β€β€β€Ž β€Ž β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž β€Žβ€Žβ€β€β€Ž β€Ž
Profit before tax β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž45,000β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž20,000β€β€β€Ž β€Ž
Tax (13,250) (5,000)
Profit for the year β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž31,750β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž15,000β€β€β€Ž β€Ž

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X5

Black Bury
$'000 $'000
Assets
Non-current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽProperty, plant and equipment 110,000 40,000
Investments
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž21,000,000 $1 ordinary shares in Bury at cost 21,000 β€“β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€β€β€Ž
131,000 40,000
Current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInventory, at cost 13,360 3,890
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽTrade receivables and dividend receivable 14,640 6,280
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽBank 3,500 2,570
Total assets 162,500 52,740
Equity and liabilities
Equity
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž$1 Ordinary shares 100,000 30,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽRetained earnings 33,500 10,280
133,500 40,280
Current liabilities
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽPayables 9,000 2,460
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽDividend 20,000 10,000
Total equity and liabilities 162,500 52,740

Additional information

  1. Black purchased its $1 ordinary shares in Bury on 1 November 20X0. At that date the balance on Bury's retained earnings was $2 million. The fair value of the non-controlling interest at the date of acquisition was $11,800,000. Goodwill on acquisition was $800,000.
  2. During the year ended 31 October 20X5 Black sold goods which originally cost $12 million to Bury.
    Black invoiced Bury at cost plus 40%. Bury still has 30% of these goods in inventory at 31 October 20X5.
  3. Bury owed Black $1.5 million at 31 October 20X5 for some of the goods Black supplied during the year.

TASK

Non-controlling interest will appear in both the consolidated statement of profit or loss (SPL) and the consolidated statement of financial position (SFP).

The amount of non-controlling interest in the consolidated SPL is $ _______

9 / 13

Prestend is the parent company of Northon. The following are the statements of financial position for both companies as at 31 October 20X7.

Prestend Northon
$'000 $'000
Assets
Non-current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽProperty, plant and equipment 4,200 3,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInvestments: shares in Northon at cost 3,345 –
Current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInventory 1,500 800
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽReceivables 1,800 750
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽBank 600 350
Total assets 11,445 5,200
Equity and liabilities
Equity
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž$1 ordinary shares 9,000 4,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽRetained earnings 525 200
9,525 4,200
Current liabilities
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽPayables 1,220 200
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽTax 700 800
Total equity and liabilities 11,445 5,200

The following information is also available.

  1. Prestend purchased 2,800,000 shares in Northon a year ago when Northon had retained earnings of $60,000. The fair value of the non-controlling interest at the date of acquisition was $1,415,000.
  2. During the year Prestend sold goods with an invoice value of $240,000 to Northon. These goods were invoiced at cost plus 20%. Half of the goods are still in Northon's inventory at the year end.
  3. Northon owes Prestend $30,000 at 31 October 20X7 for goods it purchased during the year.

TASK

Β What is the unrealised profit on intragroup sales?

10 / 13

Prestend is the parent company of Northon. The following are the statements of financial position for both companies as at 31 October 20X7.

Prestend Northon
$'000 $'000
Assets
Non-current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽProperty, plant and equipment 4,200 3,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInvestments: shares in Northon at cost 3,345 –
Current assets
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽInventory 1,500 800
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽReceivables 1,800 750
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽBank 600 350
Total assets 11,445 5,200
Equity and liabilities
Equity
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž$1 ordinary shares 9,000 4,000
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽRetained earnings 525 200
9,525 4,200
Current liabilities
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽPayables 1,220 200
β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€ŽTax 700 800
Total equity and liabilities 11,445 5,200

The following information is also available.

  1. Prestend purchased 2,800,000 shares in Northon a year ago when Northon had retained earnings of $60,000. The fair value of the non-controlling interest at the date of acquisition was $1,415,000.
  2. During the year Prestend sold goods with an invoice value of $240,000 to Northon. These goods were invoiced at cost plus 20%. Half of the goods are still in Northon's inventory at the year end.
  3. Northon owes Prestend $30,000 at 31 October 20X7 for goods it purchased during the year.

TASK

A parent-subsidiary relationship is based on control.

Which TWO of the following would signify that one entity controls another?

11 / 13

The summarised statements of profit or loss of two companies, Liverton and Everpool, for the year ended 31 May 20X6 are provided below. Liverton acquired 3,000,000 ordinary shares in Everpool for $3,500,000 on 1 June 20X4. At that time, the retained earnings of Everpool were $200,000 and the fair value of the non-controlling interest in Everpool was $1,000,000.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 20X6

Livertonβ€β€β€Ž β€Ž Everpoolβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 6,400β€β€β€Ž β€Ž 2,600β€β€β€Ž β€Ž
Cost of sales (3,700) (1,450)
Gross profit β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž2,700β€β€β€Ž β€Ž β€β€β€Ž β€Žβ€β€β€Ž β€Ž1,150β€β€β€Ž β€Ž
Distribution costs (1,100) (490)
Administrative expenses (700) (320)
Profit from operations β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž900β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž340β€β€β€Ž β€Ž
Dividends received from Everpool 150β€β€β€Ž β€Ž β€“β€β€β€Ž β€Ž
Profit before tax β€β€β€Ž β€Žβ€β€β€Ž β€Ž1,050β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž340β€β€β€Ž β€Ž
Tax (400) (80)
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž650β€β€β€Ž β€Ž β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž260β€β€β€Ž β€Ž

The following information is also available.

  1. Everpool's total share capital consists of 4,000,000 ordinary shares of $1 each.
  2. During the year ended 31 May 20X6 Liverton sold goods costing $120,000 to Everpool for $200,000.
    At 31 May 20X6, 60% of these goods remained in Everpool's inventory.

TASK

Calculate the unrealised profit on Liverton's sales to Everpool $ _______

12 / 13

The summarised statements of profit or loss of two companies, Liverton and Everpool, for the year ended 31 May 20X6 are provided below. Liverton acquired 3,000,000 ordinary shares in Everpool for $3,500,000 on 1 June 20X4. At that time, the retained earnings of Everpool were $200,000 and the fair value of the non-controlling interest in Everpool was $1,000,000.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 20X6

Livertonβ€β€β€Ž β€Ž Everpoolβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 6,400β€β€β€Ž β€Ž 2,600β€β€β€Ž β€Ž
Cost of sales (3,700) (1,450)
Gross profit β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž2,700β€β€β€Ž β€Ž β€β€β€Ž β€Žβ€β€β€Ž β€Ž1,150β€β€β€Ž β€Ž
Distribution costs (1,100) (490)
Administrative expenses (700) (320)
Profit from operations β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž900β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž340β€β€β€Ž β€Ž
Dividends received from Everpool 150β€β€β€Ž β€Ž β€“β€β€β€Ž β€Ž
Profit before tax β€β€β€Ž β€Žβ€β€β€Ž β€Ž1,050β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž340β€β€β€Ž β€Ž
Tax (400) (80)
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž650β€β€β€Ž β€Ž β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž260β€β€β€Ž β€Ž

The following information is also available.

  1. Everpool's total share capital consists of 4,000,000 ordinary shares of $1 each.
  2. During the year ended 31 May 20X6 Liverton sold goods costing $120,000 to Everpool for $200,000.
    At 31 May 20X6, 60% of these goods remained in Everpool's inventory.

TASK

What is the goodwill on the acquisition of Everpool?

13 / 13

The summarised statements of profit or loss of two companies, Liverton and Everpool, for the year ended 31 May 20X6 are provided below. Liverton acquired 3,000,000 ordinary shares in Everpool for $3,500,000 on 1 June 20X4. At that time, the retained earnings of Everpool were $200,000 and the fair value of the non-controlling interest in Everpool was $1,000,000.

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 20X6

Livertonβ€β€β€Ž β€Ž Everpoolβ€β€β€Ž β€Ž
$'000β€β€β€Ž β€Ž $'000β€β€β€Ž β€Ž
Sales revenue 6,400β€β€β€Ž β€Ž 2,600β€β€β€Ž β€Ž
Cost of sales (3,700) (1,450)
Gross profit β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž2,700β€β€β€Ž β€Ž β€β€β€Ž β€Žβ€β€β€Ž β€Ž1,150β€β€β€Ž β€Ž
Distribution costs (1,100) (490)
Administrative expenses (700) (320)
Profit from operations β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž900β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž340β€β€β€Ž β€Ž
Dividends received from Everpool 150β€β€β€Ž β€Ž β€“β€β€β€Ž β€Ž
Profit before tax β€β€β€Ž β€Žβ€β€β€Ž β€Ž1,050β€β€β€Ž β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž340β€β€β€Ž β€Ž
Tax (400) (80)
Profit for the year β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž650β€β€β€Ž β€Ž β€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Žβ€β€β€Ž β€Ž260β€β€β€Ž β€Ž

The following information is also available.

  1. Everpool's total share capital consists of 4,000,000 ordinary shares of $1 each.
  2. During the year ended 31 May 20X6 Liverton sold goods costing $120,000 to Everpool for $200,000.
    At 31 May 20X6, 60% of these goods remained in Everpool's inventory.

TASK

What is the consolidated statement of profit or loss (after tax) for the year?

Leave a Reply

Your email address will not be published. Required fields are marked *