ACCA FR - Mock exam_Consolidation

Date submitted 03-Feb-2025 12:11 PM

Name Vaqif Vaqifzadə
Email [email protected]
Score 0 / 0 (0%)
Duration 01h:22m:38s

Consolidated statement of financial position

Alpha, a parent company with one subsidiary, Beta, is preparing the consolidated statement of financial position (SOFP) as at 30
September 20X2.
Below are the statement of financial position of each companies as at 30 September 20X2:
SOFP as at 30-Sep-X2 Alpha Beta
$'000 $'000
Assets
Non-current assets
Property, plant and equipment 680,000 430,000
Intangible assets 3,000 -
Investments 398,000 -
Total non-current assets 1,081,000 430,000

Current assets
Inventories 30,000 28,000
Trade receivables 16,700 9,800
Cash and cash equivalents 12,000 6,450
Total current assets 58,700 44,250
Total assets 1,139,700 474,250

Equity and liabilities

Equity
Share capital ($1 shares) 380,000 100,000
Retained earnings 703,000 340,000
Total equity 1,083,000 440,000

Non-current liabilities
Long-term borrowings 4,200 8,900
Deferred tax 3,750 4,500
Total non-current liabilities 7,950 13,400

Current liabilities
Trade and other payables 18,960 11,400
Short-term borrowings 29,790 9,450
Total current liabilities 48,750 20,850
Total liabilities 56,700 34,250
Total equity and liabilities 1,139,700 474,250

The following information is relevant:

1) On 1 October 20X0, Alpha acquired 75 million shares in Beta, paying cash of $380 million for these shares. Beta had a retained
earnings balance of $275 million on the date of acquisition. On the date of acquisition, the directors measured the non-controlling
interest in Beta at its fair value of $98 million.
2) The directors of Alpha carried out a fair value exercise to measure the identifiable assets and liabilities of Beta at 1 October 20X0
and identified the following:
− Plant and equipment with a carrying amount of $220 million had a fair value of $240 million. The estimated remaining useful life of
this plant and equipment at 1 October 20X0 was five years.
− On 1 October 20X0, the notes to the financial statements of Beta disclosed a contingent liability. On 1 October 20X0, the fair value
of this contingent liability was reliably measured at $4 million. The contingency was resolved in the year ended 30 September 20X1.
− A customer list used by Beta had a fair value of $1·6 million. This customer list was not recognised in the individual financial
statements of Beta as it was internally generated. The directors of Alpha considered that the useful life of this list was four years from
1 October 20X0.
3) No impairment of the goodwill on acquisition of Beta was evident when the review was carried out on 30 September 20X1. On 30
September 20X2, the directors of Alpha carried out a further review and concluded that the goodwill is impaired by $5.4M since 1
October 20X1.
4) Alpha sells goods to Beta and applies a mark-up of 20% on the cost of these supplies. Sales of these goods from Alpha to Beta
during the year to 30 September 20X2 totalled $15 million. One quarter of these goods were still in Beta’s inventory on 30 September
20X2. Half of this amount is still outstanding as at 30 September 20X2.
5) On 1 October 20X1, Alpha purchased 25% of the equity shares of Drax at a cost of $18 million giving it significant influence over
Drax. On the date of purchase, Drax had net assets with a carrying amount of $70 million. On 1 October 20X1, there was no
significant difference between the fair values of the net assets of Drax and their carrying amounts. Drax’s net assets on 30
September 20X2 were $79 million. Alpha’s investment in Drax has suffered $1 million impairment since acquisition.
6) On 1 October 20X1, Alpha purchased a licence to extract minerals from a new site for a five-year period. The costs of the
extraction licence were recognised in intangible assets and amortised appropriately. Local legislation requires the site owner to
restore any environmental damage at the end of the five-year licence. The cost of restoration includes landscaping and other
groundworks which are expected to cost $4 million and will take place at the end of the five-year period. Alpha will capitalise these
costs as part of the extraction licence. No entries have been recorded in the draft financial statements of Alpha for these restoration
costs. An appropriate discount rate for determining the present value of future payments is 10%. At this rate, the present value of $1
payable in five years is 62·1 cents.
Requirement: Prepare consolidated statement of financial position of Alpha Group as at 30 September 20X2 in
accordance with the attached Excel file.


Consolidated statement of financial position.xlsx

"Please upload your Excel file here"

Consolidated statement of profit or loss and other comprehensive income

Alpha, a parent with one subsidiary, Beta, is preparing the consolidated statement of profit or loss and other comprehensive income
for the year ended 30 September 20X5.
Below are the statement of profit or loss and other comprehensive income of both entities for the year ended 30 September 20X5:
Statement of PL and OCI for
Alpha Beta
the year ended 30 Sep X5

$'000 $'000
Revenue 290,000 240,000
Cost of sales (130,500) (132,000)
Gross profit 159,500 108,000
Distribution costs (15,000) (12,000)
Administrative expenses (55,000) (50,000)
Other income 19,000 -
Operating profit 108,500 46,000
Finance costs (30,000) (28,000)
Profit before tax 78,500 18,000
Income tax expense (15,000) (4,000)
Profit for the year 63,500 14,000

Other comprehensive income

Gain on revaluation 10,000 2,000
Total comprehensive
73,500 16,000
income

The following information is relevant:

1) On 1 October 20X4, Alpha made a cash payment of $185 million to purchase 48 million of Beta’s 60 million issued equity shares
and gain control of Beta. On 1 October 20X4, the net assets of Beta as shown in the individual financial statements of Beta totalled
$180 million. The fair values of Beta’s identifiable assets and liabilities were the same as their carrying amounts in the individual
financial statements of Beta with the exception of:
(i) Property, plant and equipment (PPE) which had a fair value of $18 million in excess of its carrying amount in the financial
statements of Beta. On 1 October 20X4, the useful life of this PPE was six years.
(ii) An internally developed patent relating to one of Beta’s products which had a fair value of $20 million on 1 October 20X4. On 1
October 20X4, the useful life of this internally developed patent was ten years.
(iii) Inventory which had a fair value of $1·5 million in excess of its carrying amount in the financial statements of Beta. All this
inventory was disposed of in the year ended 30 September 20X5.
On 1 October 20X4, the directors of Alpha measured the non-controlling interest in Beta based on Alpha’s proportionate share of the
net assets of Beta at the date of acquisition.
On 1 July 20X5, Beta paid a dividend of $10 million. Alpha included its share of this dividend in ‘other income’ in its own individual
financial statements.
On 30 September 20X5, the directors of Alpha tested the goodwill on acquisition of Beta for impairment as required by IAS 36 –
Impairment of Assets. The directors decided goodwill should be impaired by $1M since the acquisition.
All depreciation, amortisation and impairment charges are made to cost of sales.
2) Since 1 October 20X4, Alpha has been supplying Beta with a product (product X). Alpha makes a profit of 25% on the invoiced
price for these supplies of product X. During the year ended 30 September 20X5, Alpha sold $20 million of product X to Beta and
invoiced Beta for this amount. At 30 September 20X5, the inventories of Beta included $3·2 million of product X purchased from
Alpha. Since 1 October 20X4, Alpha has been providing Beta with administrative services. Alpha charged Beta a total of $6 million for
these services during the year ended 30 September 20X5. Alpha recognised this amount in ‘other income’ and Beta recognised the
amount as an administrative expense.
Requirement: Prepare consolidated statement of profit or loss and other comprehensive income of Alpha Group as at
30 September 20X5 in accordance with the attached Excel file.


Consolidated statement of profit or loss.xlsx

"Please upload your Excel file here"