FINANCIAL ACCOUNTING

MBA

(Answer key on last page)

FINAL EXAM – Version 3

December 10, 2015
(Time: 9:30-12:30)

INSTRUCTIONS

This exam booklet comprises an instructions page, several pages of questions, and an answer sheet on
the last page.

The exam is a multiple-choice exam. It contains 6 parts (A to F) and 58 consecutively numbered questions.
It is important therefore, that you follow the steps listed below:

1) Write your name and section on the answer sheet at the back of the exam booklet.

2) Detach the answer sheet from the exam booklet.

3) Use the answer sheet to record your answers to the questions. For each question, circle the
appropriate letter [a, b, … e] on the answer sheet. There is no penalty for wrong answers.

4) The professor and the invigilators are unable to answer questions during the exam. If you
discover a material typographical error in the exam paper, please notify the professor so that
other students can be informed. Please, respect this no-questions rule .

5) On finishing the exam, hand your answer sheet to the person in charge. You can keep the exam
booklet. Please leave the classroom quietly to avoid disturbing fellow students.

Page 1
PART A

PaintArt is a manufacturer and distributor of decorative paints for use inside and outside the home.
The company´s end-x3 and end-x4 balance sheets and the x4 income statement are set out below.
(All figures save per-share amounts are in € millions)

Consolidated balance sheets at 31 December x4 x3

Noncurrent Assets
Property, plant and equipment, at cost 4,184 4,220
Less: Accumulated depreciation -1,188 -1,292
Property, plant and equipment, net 2,996 2,928
Investments in associated companies (equity method) 420 384
3,416 3,312
Current Assets
Inventories 3,292 2,968
Accounts receivable 4,084 3,648
Less: Allowance for bad debts -308 -284
Accounts receivable, net 3,776 3,364
Trading investments (FVTPL) 1,172 1,080
Cash at bank and in hand 2,584 1,736
10,824 9,148

TOTAL ASSETS 14,240 12,460

Shareholders' equity
Share capital (€5 par value per share) 1,920 1,400
Share premium 1,680 1,416
Retained profits 3,612 2,896
Treasury shares -84 0
7,128 5,712
Long-term liabilities
Bonds payable 1,508 1,200
Restructuring provision 192 504
1,700 1,704
Current liabilities
Trade and other payables 3,704 3,740
Income tax payable 468 404
Bank loans 1,240 900
5,412 5,044

TOTAL EQUITY AND LIABILITIES 14,240 12,460

Consolidated income statement for year x4

Sales revenue 18,972
Cost of goods sold -11,012
Other operating costs -6,068
Bad debt expense -380
Gain on disposal of equipment 192
Operating profit 1,704
Interest expense -176
Investment gain from trading securities 92
Share of net profit of associated companies 96
Loss on early retirement of bonds -236
Profit before tax 1,480
Income tax expense -444
Net profit for the year 1,036

Page 2
 Additional notes:

1) PaintArt purchased equipment for 552 cash and sold old equipment for 244 cash
in x4.

2) PaintArt accounts for its stakes in associated companies by the equity method. It made no new
investments or disposals during x4.

3) All sales are on account. The company recognized bad debt expense and write-offs in x4.
There were no recoveries.

4) The company did not change its portfolio of trading investments during x4.

5) During year x4 no restructuring expenses were recognized.

6.a) In late January of x4, PaintArt issued 40 million new shares at 12 €/share to finance the
planned acquisition of a wallpaper company. Issuance costs of 16 , all paid in the year,
were charged against share premium. The share issue was received in cash in x4.

6.b) In November, PaintArt declared a 20% share dividend which was valued at par. This increased
share capital.

6.c) At the end of the year, the share price dropped to 7 €/share and PaintArt repurchased certain
amount of shares at that price to send a signal of confidence to the market. There were no other
transactions with treasury shares during x4. At end-x3, there were no treasury shares.

7) PaintArt issued at par 10-year 10% bonds at the start of x1. The market rate of interest for
debt of equivalent risk and maturity fell below 6% in x4 and the company decided to refinance the
debt. It retired all the 10% bonds at the end of x4 and, at the same time, it issued new 10-year 6%
bonds with a total face value of 1,400 at a price of 1,508 to yield 5% to maturity.

8) Bank loans were increased by 340 during x4.

9) Total interest expense is equal to interest paid in x4.

10) Interest paid and received, and dividends received are treated as operating cash flows.
Issuance costs of new equity capital are treated as financing cash flows.

Compute the following items:

1) Bad debt write-offs recognized in x4

(a) 404
(b) 380
(c) 308
(d) 356
(e) None of the above

2) Cash collected from customers in x4

(a) 18,156
(b) 18,180
(c) 18,204
(d) 18,972
(e) None of the above

3) Carrying amount of the used equipment sold in x4

(a) 76
(b) 436
(c) 588
(d) 52
(e) None of the above
Page 3
4) Original cost of the used equipment sold in x4
(a) 696
(b) 536
(c) 588
(d) 436
(e) None of the above

5) Total depreciation recognized in x4

(a) 720
(b) 536
(c) 432
(d) 572
(e) None of the above

6) Dividend received from the associated companies in x4

(a) 132
(b) 96
(c) 104
(d) 60
(e) None of the above

7) Compute the total value of inventory purchases and capitalized production costs in x4
(a) 11,660
(b) 11,336
(c) 11,012
(d) Cannot be computed without additional information
(e) None of the above

8) What was the fair value adjustment of the Trading investments in x4?
(a) 0 (FVTPL)
(b) 92
(c) 1,172
(d) 128
(e) None of the above

9) What was the net change in Share premium from the issue of new shares in January?
(a) 264
(b) 296
(c) 480
(d) 280
(e) None of the above

10) How much was the value of the share dividend?

(a) 280
(b) 320
(c) 242.40
(d) 202.40
(e) None of the above

11) How many new shares (in millions) were issued in the share dividend of x4?
(a) 64
(b) 56
(c) 48.48
(d) 40.48
(e) None of the above

Page 4
12) What was the number of issued shares at the end x4?
(a) 372
(b) 344
(c) 332
(d) 384
(e) None of the above

13) How many shares were repurchased during x4?

(a) 12
(b) 84
(c) 13.20
(d) 28
(e) None of the above

14) What was the number of shares outstanding at the end of x4?
(a) 372
(b) 384
(c) 332
(d) 344
(e) None of the above

15) Calculate the total payments done in x4 as a result of the implementation of restructuring plans
(a) 192
(b) 504
(c) 272
(d) 348
(e) None of the above

16) How much cash was paid to retire the 10% bonds at the end of x4?
(a) 856
(b) 1,400
(c) 964
(d) 1,436
(e) None of the above

17) Compute the interest expense that will be recognized in x5 for the new 6% bonds
(a) 70.00
(b) 90.48
(c) 84.00
(d) 75.40
(e) None of the above

18) What will be the carrying amount of the 6% bonds at the end of x5?
(a) 1,403.40
(b) 1,431.40
(c) 1,499.40
(d) 1,416.60
(e) None of the above

19) How much was the interest expense from the bank loans recognized in x4?
(a) 176
(b) 120
(c) 56
(d) 92
(e) None of the above

Page 5
20) How much was the amount of cash dividends paid by PaintArt in x4?
(a) 320
(b) 0
(c) 280
(d) 240
(e) None of the above

21) Calculate the payments for taxes in x4

(a) 444
(b) 468
(c) 380
(d) 428
(e) None of the above

22) Calculate gross margin in x4

(a) 7,960
(b) 1,892
(c) 1,512
(d) Cannot be computed without additional information
(e) None of the above

23) How much would be the operating profit if PainArt provided the Income Statement
classifying expenses by nature instead of by function?
(a) 7,960
(b) 7,636
(c) 1,892
(d) Cannot be computed without additional information
(e) None of the above

24) Compute the cash flow from investment in x4

(a) -308
(b) 308
(c) 552
(d) -552
(e) None of the above

25) Compute the cash flow from financing in x4

(a) 792
(b) 808
(c) 452
(d) 776
(e) None of the above

26) Compute the cash flow from operations in x4

(a) 608
(b) 348
(c) -236
(d) 364
(e) None of the above

END OF PART A

Page 6
PART B

Solid Bank undertakes three investments in debt and equity securities at the beginning of year x1.
The acquisition cost of these financial assets, their type and the end-year x1 market values are
set in the table below (all amounts in thousands of euros). Ignore taxes.

Security Accounted Acquisition Market value:

for as cost: start x1 end-x1
Apple, 5% bonds due end-x5 * held to maturity (Amor. cost)1520 1560
IBM, 20,000 shares available for sale (FVOCI) 3000 3400
ABB, 40,000 shares held for trading (FVTPL) 3200 2880
* Issued at the start of x1
Apple bonds have a face value of 1600 and pay interest annually at the end of the year. The
effective interest rate (yield) at the date of issuance was 6.20%. During year x1, Solid Bank received a
dividend of 200 from IBM shares. ABB did not pay any dividend in x1.

27) What is the total amount of the 3 financial assets recognized at the start of x1?
(a) 7,800
(b) 7,720
(c) 7,840
(d) 6,200
(e) None of the above

28) What is the interest income from the bonds recognized by Solid Bank at the end of x1?
(a) 80.00
(b) 14.24
(c) 94.24
(d) 99.20
(e) None of the above

29) What is the interest income from the bonds recognized by Solid Bank at the end of x2?
(a) 96.72
(b) 80.00
(c) 15.12
(d) 78.00
(e) None of the above

30) What is the total effect on the P&L account of the 3 investments during year x1?
(a) 94.24
(b) 200.00
(c) -25.76
(d) 294.24
(e) None of the above

31) What is the total increase in owners' equity recognized in x1?

(a) -25.76
(b) 374.24
(c) 400.00
(d) 80.00
(e) None of the above

32) What is the total carrying amount of the 3 investments at the end of x1?
(a) 7814.24
(b) 7840.00
(c) 7880.00
(d) 7734.24
(e) None of the above

Page 7
At the end of x2, Solid Bank sells ABB shares for a total amount of 3000 . It also sells the IBM
shares for a total amount of 2450

33) What is the gain (loss) on the sale of ABB shares recorded in the P&L account at the end of x2?
(a) -200
(b) 120
(c) -440
(d) 200
(e) None of the above

34) What is the gain (loss) on the sale of IBM shares recorded in the P&L account at the end of x2?
(a) -550 (skip this question; the standard has changed)
(b) -950
(c) 950
(d) 550
(e) None of the above

END OF PART B

PART C

Ocean Power Inc. is a startup that develops and manufactures turbines for tidal power plants. The
company is experiencing a rapid growth but will not generate positive cash flows for a few years.
In order to finance this growth, on December 31st x0, the company issues five-year zero-coupon
bonds with a face value of 400 million euros. Ocean Power raises a total of 259.97 million
euros after selling all the issued bonds. The bonds are priced to yield 9% (i.e. the market rate).

35) What is the discount or premium at the date of issue?

(a) 259.97 discount
(b) 140.03 discount
(c) 140.03 premium
(d) 0.00 bonds issued at par
(e) None of the above

36) What is the life-time cost of the bonds to the company?

(a) 140.03
(b) 400.00
(c) 0.00
(d) 259.97
(e) None of the above

37) What is the interest expense the company recognizes in year x1?
(a) 36.00
(b) 0.00
(c) 23.40
(d) 12.60
(e) None of the above

38) What is the carrying amount of the bond at the end of year x1?
(a) 236.58
(b) 400.00
(c) 259.97
(d) 283.37
(e) None of the above

END OF PART C

Page 8
PART D

On Dec. 31st of year x0, AutoRent signs a capital lease contract to renew part of its
vehicle fleet. Annual payments are done in the beginning of the year, starting on Jan 1st x1.
The terms of the leasing contract are the following:

Lease term: 4 years

Present value of lease payments: 13,947
Fair value of the vehicles: 16,000
Expected useful life of the vehicles: 5 years
Residual value of vehicles at the end of their useful life: 2000
Implicit interest rate in the lease: 10%
Annual lease payment (at the start of the year): 4,000
The cars return to the lessor at the end of the lease
(All € amounts in thousands)

39) What is the value of the leased asset that AutoRent recognizes on the balance sheet at inception?
(a) 13,947
(b) 16,000
(c) 14,000
(d) 12,000
(e) None of the above

40) What is the value of the lease liability in AutoRent's B/S immediately after the first payment?
(a) 12,000
(b) 13,947
(c) 9,947
(d) 10,941.70
(e) None of the above

41) What is the interest expense of the lease obligation recognized in year x1?
(a) 994.70
(b) 3,486.75
(c) 4,000
(d) 1,395
(e) None of the above

42) What is the interest expense of the lease obligation recognized in year x2?
(a) 1,094.17
(b) 594.70
(c) 1,134.17
(d) 994.70
(e) None of the above

43) What is the life-time cost of the lease obligation?

(a) 16,000
(b) 2,053
(c) 13,947
(d) 2,000
(e) None of the above

44) What is the carrying amount of the leased cars at the end of year x2? (use straight-line)
(a) 8,000.00
(b) 5,973.50
(c) 6,973.50
(d) 7,000.00
(e) None of the above

Page 9
45) What is the total cost resulting from the finance lease contract recognized in the P&L account in x2?
(a) 694.17
(b) 3,486.75
(c) 4,180.92
(d) 4,920.00
(e) None of the above

46) If this leasing contract had been accounted for as an operating lease, what would have been the
total expense recognized in the income statement of year x2?
(a) 694.17 (skip this question; the standard has changed)
(b) 3,486.75
(c) 4,180.92
(d) 4,920.00
(e) None of the above

END OF PART D

Page 10
PART E (CONSOLIDATION)

At the start of year x1 company P acquired 90% of the shares of company S paying (€ million) 2200
in cash. P uses the cost method to account for its investment in S. Below, you are given the balance
sheets of both firms before the acquisition. Company P capitalizes goodwill arising on consolidation
and performs an impairment test at year end. S’s assets and liabilities are stated at historical cost.
Both companies close the fiscal year on December 31.

Balance Sheets as of Jan. 1, x1 (€mn) PS

Assets 12,000 800
Total Assets 12,000 800

Liabilities 4,000 200

Owners' equity 8,000 600
Total L & OE 12,000 800

When P performs the acquisition due diligence discovers the following:

Revaluation of S's fixed assets to fair market value 720

Unrecognized brands developed in-house 600
Revaluation of S's liabilities to fair market value 40
(Note: revaluation means the incremental amount to be added to S's assets & liabilities)

The revalued fixed assets have a remaining useful life of 15 years and the brands are assumed to have
indefinite life. P uses straight line to depreciate all its fixed assets. The increase in liabilities arises from
additional pension provisions. This adjustment will increase the group pension expense in x1 by 40

During year x1, both companies reported the following revenues and expenses. P's revenues do not
include the dividend income from S. There are no intercompany sales. A year-end impairment test
reveals that the goodwill and the brand are not impaired. Ignore taxes and assume full consolidation.

Income Statement for x1 P S

Operating Revenues 7,200 1,000
Operating Expenses -6,400 -872
Net Profit 800 128
Dividend -360 -40

47) What is the goodwill arising on consolidation at the start of year x1?
(a) 320
(b) 280
(c) 508
(d) 472
(e) None of the above

Assume now (and only for the next question) that P had acquired 100% of S:
48) What would be the goodwill arising on consolidation at the start of year x1?
(a) 508
(b) 280
(c) 472
(d) 320
(e) None of the above

Ignore the assumption made in the previous question for the next questions.
49) What is the non-controlling interest (NCI) shown on the group balance sheet at the start of x1?
(a) 192
(b) 80
(c) 60
(d) 188
(e) None of the above

Page 11
50) Compute the consolidated total assets of the group at the start of x1 after the acquisition
(a) 12,428
(b) 12,000
(c) 12,508
(d) 12,472
(e) None of the above

51) What is the consolidated profit of the group in x1?

(a) 840
(b) 888
(c) 848
(d) 928
(e) None of the above

52) What is the x1 profit allocated to theNCI in x1?

(a) 12.8
(b) 4
(c) 8
(d) 7.2
(e) None of the above

53) Compute the total dividend paid off by the group in x1

(a) 400
(b) 364
(c) 392
(d) 360
(e) None of the above

END OF PART E

Page 12
PART F (TAXATION)

In year x2, company ABC reports profit before tax of 1,200 (€ million)
This figure includes interest income from government bonds which is tax-free. This interest is 40
and creates a permanent difference between profit before tax and taxable income.
The following table describes the book and tax value of a large piece of equipment that gives rise to
temporary taxable differences. The statutory tax rate is 30%
x1 x2
Equipment BV EB 600 440
Equipment TV EB 480 240
Temporary taxable difference 120 200

From the tax return filed by ABC for year x2 you learn that the current tax expense is 324

54) Compute the deferred tax asset or liability shown on ABC's balance sheet at the end of x2
(a) 200 liability
(b) 24 asset
(c) 60 liability
(d) 60 asset
(e) None of the above

55) How much is the taxable income shown in ABC's tax return of year x2?
(a) 1,200
(b) 1,160
(c) 1,240
(d) 1,080
(e) None of the above

56) How much is the deferred tax expense (benefit) of year x2?
(a) -60
(b) 60
(c) -24
(d) 24
(e) None of the above

57) Compute the total tax expense for year x2

(a) 360
(b) 348
(c) 372
(d) 320
(e) None of the above

58) Compute the effective tax rate of ABC in year x2

(a) 28%
(b) 31%
(c) 30%
(d) 29%
(e) None of the above

END OF THE EXAM: CONGRATULATIONS!

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Page 14
 FINANCIAL ACCOUNTING

FINAL EXAM – Version 3

December 10, 2015

First name: Last name: Section:

(PRINT)

I hereby certify that the answers to this exam are exclusively the result of my own work and
that I have not used any unauthorized help.

Signature:

ANSWER SHEET
(circle the correct option)

1) a b c d e 31) a b c d e
2) a b c d e 32) a b c d e
3) a b c d e 33) a b c d e
4) a b c d e 34) a b c d e
5) a b c d e 35) a b c d e
6) a b c d e 36) a b c d e
7) a b c d e 37) a b c d e
8) a b c d e 38) a b c d e
9) a b c d e 39) a b c d e
10) a b c d e 40) a b c d e
11) a b c d e 41) a b c d e
12) a b c d e 42) a b c d e
13) a b c d e 43) a b c d e
14) a b c d e 44) a b c d e
15) a b c d e 45) a b c d e
16) a b c d e 46) a b c d e
17) a b c d e 47) a b c d e
18) a b c d e 48) a b c d e
19) a b c d e 49) a b c d e
20) a b c d e 50) a b c d e
21) a b c d e 51) a b c d e
22) a b c d e 52) a b c d e
23) a b c d e 53) a b c d e
24) a b c d e 54) a b c d e
25) a b c d e 55) a b c d e
26) a b c d e 56) a b c d e
27) a b c d e 57) a b c d e
28) a b c d e 58) a b c d e
29) a b c d e
30) a b c d e
Page 15
DETAILED SOLUTIONS TO MBA FA FINAL EXAM 2015 v3  (See the solution key on last page) 
Gain = Price - BV PPE sold Orig. Cost - Acc. Depr.
192 244 52 ====> 588 536

PPE Inventories Trading investments

BB 4,220 orig. cost 2,968 1,080
Purch. 552 588 PPE sold RM purch. & 11336 11,012 COGS 92 FV adjustment
cap. costs (unrealized gain)
EB 4,184 3,292 1,172

Accum. Depreciation Accounts receivable Cash

Acc depr. 1,292 BB 3,648 BB 1,736
of old eq. 536 432 Depr. for x4 Sales 18,972 356 write-off Div.assoc. 60 552 Purch Equip.
18180 collections A/R collect. 18180 380 Taxes paid
1,188 EB 4,084 Cap. Issuance 480 84 Shr repurchase
New bond 1,508 1,436 6% bond retirement
New loans 340 16 Issuance costs
Investment in Assoc. Allowance for bad debt Equip. disp. 244 312 Restruct. payments
BB 384 284 BB 176 Interest expense
Eq.Inc. 96 60 Div. write-off 356 380 Bad debt exp. 17,008 Othr oper costs et alia

EB 420 308 EB EB 2,584 CFI -308

CFF 792
CFO 364
Share capital (par 5) Bonds payable Income tax payable
BB no. shrs 280 1,400 1,200 404
shr issue 40 200 New issue Bond ret. 1,200 1,508 New bond Taxes paid 380 444 Tax expense
shr div 64 320 Shr div
EB no. shrs 384 1,920 1,508 468
issued

Share premium Restructuring provision Trade and other payables

1,416 504 3,740
Issuance cost 16 280 New issue Payments 312 0 Payments for 17,008 16,972 Purch of goods and services
oper costs et alia
1,680 192 3,704

Retained profits Bank loans Profit and Loss

2,896 900 18,972 Sales
Shr div 320 1,036 Net profit 340 New loans COGS 11,012 192 gain disposal PPE
No cash div. Othr oper costs 6,068 92 Invest. Gain
3,612 1,240 Loss bond ret. 236 96 Eq.income
Interest exp 176
Treasury shares Tax exp 444
BB no. shrs 0 0 Bad debt exp 380
No. shrs rep 12 84 Repurchase at €7/shr 1,036 Net profit
EB no. shrs 12 84
Int. from 6% bond 120
No. Shrs outstanding Int. from loans 56
end-x4 = 372 176
Questions 16‐18: 
Old bond 10% 10%
year Bond/P BB Int. Exp. Coupon Diff. Bond/P EB
x1 1,200 120 120 0 1,200
x2 1200 120 120 0 1200
x3 1200 120 120 0 1200
x4 1200 120 120 0 1200 We sell it here

New bond 5% 6%
year Bond/P BB Int. Exp. Coupon Diff. Bond/P EB
x4 1,508.00
x5 1,508.00 75.40 84.00 8.60 1,499.40
x6 1,499.40 74.97 84.00 9.03 1,490.37
x7 1,490.37 74.52 84.00 9.48 1,480.89
x8 1,480.89 74.04 84.00 9.96 1,470.93
x9 1,470.93 73.55 84.00 10.45 1,460.48
x10 1,460.48 73.02 84.00 10.98 1,449.50
x11 1,449.50 72.48 84.00 11.52 1,437.98
x12 1,437.98 71.90 84.00 12.10 1,425.88
x13 1,425.88 71.29 84.00 12.71 1,413.17
x14 1,413.17 70.66 84.00 13.34 1,399.83 Rounding error  
 

PART B 
Apple bonds: Face Value 1600
Bond yield 6.20%
Coupon 5.00%

Year Start-year Interest Coupon Discount End-year

receivable income amortization receivable
1 1520.00 94.24 80.00 14.24 1534.24
2 1534.24 95.12 80.00 15.12 1549.36
3 1549.36 96.06 80.00 16.06 1565.42
4 1565.42 97.06 80.00 17.06 1582.48
5 1582.48 98.11 80.00 18.11 1600.59  
Impact on P&L year x1:
Interest income 94.24
Receipt of dividends from IBM shares 200
Unrealized loss in ABB shares -320
Total effect on P&L -25.76

Impact on OE year x1:

Effect on P&L -25.76
Unrealized gain IBM shares 400
Total effect on OE 374.24

Carrying amount end x1:

Apple bonds, HTM 1534.24
ABB shares, AFS 2880
IBM shares, HFT 3400
Total 7814.24  
 

PART C 
9% Coupon
Yr Bond BB Int. Exp. payment Difference Bond EB
x1 259.97 23.40 0 23.40 283.37
x2 283.37 25.50 0 25.50 308.87
x3 308.87 27.80 0 27.80 336.67
x4 336.67 30.30 0 30.30 366.97
x5 366.97 33.03 0 33.03 400.00
140.03 140.03  
 

PART D 
10%
Lease liab. Lease Lease liab. Interest Lease liab.
Year BB bef. pmt payment BB after pmt expense EB
x1 13,947.00 4,000 9,947.00 994.70 10,941.70
x2 10,941.70 4,000 6,941.70 694.17 7,635.87
x3 7,635.87 4,000 3,635.87 363.59 3,999.46
x4 3,999.46 4,000 -0.54 -0.05 -0.60 Rounding error
life-time cost = 2,053.00

Leased asset Annual Leased asset

Year BB deprec. BB
x1 13,947.00 3,486.75 10,460.25 x2
x2 10,460.25 3,486.75 6,973.50 Interest exp 694.17
x3 6,973.50 3,486.75 3,486.75 Deprec. Exp 3,486.75
x4 3,486.75 3,486.75 0.00 Total lease exp 4,180.92  
PART E 
B/S start x1, after acquis. P aft. Acq S Adj G
Investment in S 2,200 -2,200 0
Other assets 9,800 800 10,600
Revaluation of fixed assets 720 720
Brands 600 600
Goodwill * 508 508
Total assets 12,000 800 -372 12,428

Liabilities 4,000 200 4,200

Additional liabilities 40 40
NCI ** 188 188
Owners' equity 8,000 600 -600 8,000
Total L&OE 12,000 800 -372 12,428

I/S of year x1 P S Adj G

Operating Revenues 7,200 1,000 8,200
Investment income from S 36 -36 0
Operating expenses -6,400 -872 -7,272
Additional depreciation exp. -48 -48
Additional pension expense -40 -40
Net profit 836 128 -124 840 Group profit
Profit to NCI *** -4 -4
Profit attributable to P's owners 836  
 * Goodwill = 2200 – 90% x (800 + 720 + 600 – 200 – 40) = 508 

** NCI = 10% x (800 + 720 + 600 – 200 – 40) = 188 

*** Profit for NCI = 10% x (128 – 48 – 40) = 4 

Total dividend paid by the Group = 360 + 10% x 40 = 364 

 
Solution key to MBA Final FA 2015

V1 V2 V3
1 A B D Solution to E questions:
2 C D B
3 A C D V1 V2 V3
4 D D C 15) 156 234 312
5 D C C 23) 852 1278 1704
6 A B D 29) 47.56 71.34 95.12
7 A C B 42) 347.14 520.71 694.17
8 C D B 46) 2000 3000 4000
9 B A A
10 C D B
11 B C A
12 A B D
13 B A A
14 B C A
15 E E E
16 A B D
17 A B D
18 C D C
19 D A C
20 C D B
21 D A C
22 B C A
23 E E E
24 B C A
25 D A A
26 A B D
27 C D B
28 D A C
29 E E E
30 D A C
31 C D B
32 B C A
33 C D B
34 B A A
35 B C B
36 B C A
37 C D C
38 A B D
39 B C A
40 B C C
41 D C A
42 E E E
43 C D B
44 D A C
45 C D C
46 E E E
47 D A C
48 A B D
49 A B D
50 B C A
51 B C A
52 A D B
53 C A B
54 C D C
55 A B D
56 D A D
57 B B B
58 D B D