MODULE: ACCOUNTING 2B

ASSIGNMENT 4 2022

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ASSIGNMENT 4 (SUGGESTED SOLUTION)

4.1 PRO FORMA JOURNALS TO ELIMINATE INTRAGROUP ITEMS

Dr Cr
R R
J1 Revenue (S)(P/L) ✓ 200 000
Cost of sales (P)(P/L) ✓ 200 000
Elimination of intragroup sales
J2 Retained earnings – Beginning of year (S)(SCE) ✓ 15 000 ✓
Cost of sales (S)(P/L) ✓ 15 000
Elimination of unrealised intragroup profit included in
the opening inventories of S Ltd at 1/4/2020
(60 000 × 33⅓/133⅓)
J3 Cost of sales (S)(P/L) ✓ 25 000 ✓
Inventories (P)(SFP) ✓ 25 000
Elimination of unrealised intragroup profit included in
the closing inventories of S Ltd at 31/3/2021
(100 000 × 33⅓/133⅓)
J4 Dividend received (P)(P/L) 12 000 ✓
Non-controlling interests (SFP) 8 000 ✓
Dividend paid (S)(SCE) 20 000 ✓
Elimination of intragroup dividend and recognition of
obligation to NCI
J5 Loan from P Ltd (S)(SFP) 85 000 ✓
Loan to S Ltd (P)(SFP) 85 000 ✓
Elimination of intragroup loan

(13)
4.2 ANALYSIS OF OWNERS’ EQUITY OF S LTD:

P Ltd 60%✓
Total NCI
At Since
i At acquisition (1/6/2016)
Share capital 500 000✓ 300 000 200 000
Revaluation surplus 40 000✓ 24 000 16 000
Retained earnings 60 000✓ 36 000 24 000
600 000 360 000 240 000
Equity represented by goodwill – Parent and ✓ ✓
100 000✓ 60 000 40 000
NCC
Consideration
S Ltd: (80 000 x R3,50) 700 000 420 000 280 000 ✓
ii Since acquisition
• To beginning of current year :
Retained earnings 30 000 18 000 12 000
(105 000 – 60 000(at)) ✓ – 15 000(J2) ✓)
292 000
• Current year :
Profit for the year
80 000 48 000 32 000
(90 000 + 15 000(J2) ✓ – 25 000(J3)✓)
Dividend paid (20 000) (12 000) (8 000)
R790 000 R54 000 R316 000

(12)
MODULE: ACCOUNTING 2B
ASSIGNMENT 4 2022

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ASSIGNMENT 4 (SUGGESTED SOLUTION - CONTINUED)

4.3 CONSOLIDATED FINANCIAL STATEMENTS

P LTD GROUP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2021
ASSETS
Non-current assets
Property, plant and equipment (2 000 000(P) + 600 000(S)) 2 600 000 ✓
Goodwill (Analysis) ✓ 100 000
2 700 000
Current assets
Inventories ((615 000(P) + 120 000(S)) ✓ – 25 000(J3) ✓) 710 000
Trade receivables (380 000(P) + 260 000(S)) 640 000 ✓
1 350 000
Total assets R4 050 000
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital (P Ltd) 2 500 000 ✓
Retained earnings 804 000 ✓P
3 304 000
Non-controlling interests (Correctly classified) ✓P 316 000 ✓P
Total equity 3 620 000
Non-current liabilities - ✓
Current liabilities
Trade payables (250 000(P) + 180 000(S)) 430 000 ✓
Total equity and liabilities R4 050 000
(11)

P LTD GROUP
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2021
Revenue (1 000 000(P) + 400 000(S) – 200 000(J1)) 1 200 000 ✓
Cost of sales (480 000(P) + 190 000(S) – 200 000(J1) ✓
(480 000)
– 15 000(J2) ✓ + 25 000(J3) ✓)
Gross profit 720 000
Other income (12 000(P) – 12 000(J4)) - ✓
Other expenses (232 000(P) + 80 000(S)) (312 000) ✓
Profit before tax 408 000
Income tax expense (80 000(P) +40 000(S)) (120 000) ✓
PROFIT FOR THE YEAR 288 000
Other comprehensive income for the year – ✓
TOTAL COMPREHENSIVE INCOME FOR THE YEAR R288 000
Profit attributable to:
Owners of the parent 256 000 ✓P
Non-controlling interests 32 000 ✓P
R288 000
Total comprehensive income attributable to: (attempt) ✓
Owners of the parent 256 000
Non-controlling interests 32 000
R288 000
(11)
MODULE: ACCOUNTING 2B
ASSIGNMENT 4 2022

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ASSIGNMENT 4 (SUGGESTED SOLUTION - CONTINUED)

P LTD GROUP
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
Non-
Share Retained con- Total
Total
capital earnings trolling equity
interests
Balance at 1 April 2020 2 500 000 *618 000 3 118 000 292 000 3 410 000
✓ ✓P
Changes in equity for 2020
Total comprehensive income
for the year:
Profit for the year 256 000 32 000
- ✓P 256 000 ✓P 288 000
Dividend paid (70 000) (8 000)
- ✓P (70 000) ✓P (78 000)
Balance at 31 March 2021 2 500 000✓ ♦804 000 3 304 000 ■316 000 3 620 000
* 600 000(P) + 18 000 (analysis) = 618 000 (7)
♦ 750 000(P) + 54 000(Analysis) = 804 000
■ Analysis
(29 limited to 25)

Calculations:

Proof of calculation of purchase difference of S Ltd in terms of IFRS 3 .32

(Not required, shown for the sake of completeness)

Consideration transferred at acquisition date: IFRS 3.32(a)(i) 420 000

Amount of non-controlling interests: IFRS 3.32(a)(ii) 280 000
700 000
Net of the identifiable assets acquired and liabilities assumed
at acquisition date: IFRS 3.32(b) (600 000)
Purchase difference - Goodwill R100 000