Part D Preparation of financial statement

On 1 October 20X8, Pacemaker Co acquired 30 million of Vardine Co's 100 million shares in exchange for 75 million of its own shares. The fair value of Pacemaker Co's shares at the date of this share exchange was $1.60 each.

Vardine Co's profit is subject to seasonal variation. Its profit for the year ended 31 March

20X9 was $100 million. $20 million of this profit was made from 1 April 20X8 to 30

September 20X8.

Pacemaker Co has one subsidiary and no other investments apart from Vardine Co.

What amount will be shown as investment in associate" in the consolidated statement of financial position of Pacemaker Co as at 31 March 20X9?

$144 million

$150 million

$78 million

$126 million

• $144 million

• $150 million

• $78 million

• $126 million

Jarvis Co owns 30% of Molintock Co. During the year to 31 December 20X4 McLintock Co the ya million of goods to aris o Furig the year to 31 Decein 20x Melitock Co

the year end. MoLintock Co applies a mark-up of 25% on all goods sold.

What effect would the above transactions have on group inventory at 31 December 20X4?

• Debit group inventory $48,000

• Debit group inventory $160,000

• Credit group inventory $48,000

• No effect on group inventory

Ulysses Co owns 25% of Grant Co, which it purchased on 1 May 20X8 for $5 million. At that date Grant Co had retained earnings of $7.4 million. At the year-end date of 31 October 20X8 Grant Co had retained earnings of $8.5 million after paying out a dividend of $1 million. On 30 September 20X8, Grant Co sold $600,000 of goods to Ulysses Co, on which it made 30% profit. Ulysses Co had not resold these goods by 31 October.

At what amount will Ulysses Co report its investment in Grant Co in its consolidated statement of financial position at 31 October 20X8?

• $5,000,000

• $5,275,000

• $5,230,000

• $4,855,000

On 1 February 20X3, Pinot Co acquired 30% of the equity shares of Noir Co, its only associate, for 10 million in cash. The profit for the year of Noir Co for the year to 30 September 20X3 was $6 million. Profits accrued evenly throughout the year. Noir Co made a dividend payment of $1 million on 1 September 20X3. At 30 September 20X3 Pinot Co decided that an impairment loss of $700,000 should be recognised on its investment in Noir Co.

What amount will be shown as 'investment in associate in the statement of financial position of Pinot Co as at 30 September 20X3?

(a)  

Ruby Co owns 30% of Emerald Co and exercises significant influence over it. Emerald Co reports a profit of $1,980,000 in its individual financial statements for the year ended 30 September 20X7. During the year, Emerald Co sold goods to Ruby Co for $160,000.

Emerald Co applies a one-third mark-up on cost. Ruby Co still had 25% of these goods in inventory at the year end.

What amount should be recognised as the share of profit from the associate in the consolidated statement of profit or loss of Ruby Co for the year ended 30 September

20X7?

(a)  

Chloe Co owns 40% of Amy Co and exercises significant influence over it. During the year, Chloe Co sold goods to Amy Co, earning a margin of 30% on the sale. Amy Co still had half of these goods in inventory at the year end.

Identify the correct adjustments to eliminate the unrealised profit in inventories.

• Dr. Cost of Sales

• Cr. Investment in associate

• Cr. Cost of Sales

• Dr. Inventoies

Alpha Co acquired 80% of the ordinary share capital of Bravo Co on 1 September 20X4 and 40% of the ordinary share capital of Charlie Co a number of years ago.

On 30 November 20X4, Alpha Co sold goods to Bravo Co, making a profit of $2,000. Half of these items remained in inventory at the year end. The profit for the year ended 31

December 20X4 for each company is:

Required:

What is the amount of profit attributable to the equity shareholders of Alpha Co in the consolidated of profit os loss fro the year ended 31 December 20X4 ?

(a)  

Which of the following would not NECESSARILY lead to a liability being classified as a current liability?

• The liability is expected to be settled in the course of the entity's normal operating cycle

• The liability has arisen during the current accounting period

• The liability is held primarily for the purpose of trading

• The liability is due to be settled within 12 months after the end of the reporting period

Which of the following would be shown in the 'other comprehensive income section of the statement of profit or loss and other comprehensive income?

• An increase in valuation on an investment property

• Profit on sale of an investment

• Receipt of a government grant

• A revaluation surplus of a factory building

Using the pull-down list provided which of the following are NOT items required by lAS 1

Presentation of Financial Statements to be shown on the face of the statement of financial position?

• Government grants

• Intangible assets

• Inventories

• Provisions