SET A AFAR MARCH 2016 SET A MARCH Consolidated Statements of Profit and Loss and Other Comprehensive Income for the Year ended 31 December 2015

Transcription

1 SET A MARCH 2016 SUGGESTED SOLUTION QUESTION 1 Consolidated Statements of Profit and Loss and Other Comprehensive Income for the Year ended 31 December 2015 Revenue 69, ,385 + (29,920 x 6/12) 5, ,530 Cost of sales 20, ,350 + (13,500 x 6/12) 5, (36,225) Gross profit 82,305 Other income bargain purchase 13,728 Operating expenses 15, ,185 + (5,920 x 6/12) 1,000 (26,855) Finance cost (160 x 6/12) (1,080) Profit before taxation 68,098 Taxation 8, ,050 + (2,580 x 6/12) (13,435) Profit for the year 54,663 Other comprehensive income Surplus of fair value of land 5,000 Total comprehensive income 59,663 Profit attributable: Owners of the parent 50,756 NCI (W1) 3,907 54,663 Total comprehensive income attributable to: Owners of the parent 54,756 NCI: 3,907 + (20% x 5,000) 4,907 59,663 W1: Profit attributable to NCI Brassia Bhd: PAT 12,400 - URP (625) 11,775 x 20% 2,355 Cattleya Bhd: PAT: 6/12 x 7,760 3,880 x 40% 1,552 3,907 (8 marks) 1

2 Non-Current Assets Property, plant and equipment Consolidated Statements of Financial Position as at 31 December , , , , ,000 5, ,000 SET A AFAR MARCH ,029,000 Goodwill schedule 16,000 Current Assets Inventories 4, , , ,675 Trade receivables 20, , ,975 41,545 Bank 113, , , , ,420 1,266,640 Equity Ordinary shares of 1 700,000 Retained profit schedule 145,881 Other reserve 262, , ,500 NCI schedule 103,609 Non-current Liabilities 6% loan 10,000 Current Liabilities Trade payables 6, , ,400 21,450 Ordinary dividend payable 18,000 + (0.2 x 4,000) + (0.25 x 1,600) 19,200 1,266,640 Goodwill NCI Brassia Bhd Consideration transferred 240,000 + NCI (20% x 280,000) 56,000 56,000 GRP - FV NA OSC 200,000 Retained Profit 45,000 Share Premium 25,000 RR 10,000 (280,000) Goodwill 16,000 2

3 Goodwill NCI Cattleya Bhd Consideration transferred 72,000 (18,000) + NCI (40% x 142,880) 57,152 57,152 GRP - FV NA OSC 80,000 Retained Profit 32,880 (29,000 + [7,760 x 6/12]) Share Premium 30, ,880 Bargain purchase 13,728 Retained profit b/f (Brassia) Balance 68,750 (-) Pre (45,000) 23,750 4,750 19,000 Retained profit b/f (Aranda) Balance 98,125 (-) URP (5,000) (+) Depreciation 1,000 94,125 94,125 Current year profit As per CSOPL 3,907 50,756 (-) ordinary dividend: A (18,000) (-) ordinary dividend :B (800) 20% x 4,000 (-) ordinary dividend :B 25% x 1,600 (400) Revaluation reserve 1,000 4, , ,881 4,000 (17 marks) 3

4 QUESTION 2 A. Amount of inventories in the Statement of Financial Position of Helcia Bhd as at 31 Dec 2015: Cost/unit NRV/unit Value in SOFP Finished good good condition Material 450 Labour 450 Overhead 300 1,200 Est. SP 1,800 Selling exp (300) 1,500 1,200 x 400 = 480,000 Finished good damaged 1,200 Est. SP 1,800 Selling exp (300) Rect. cost (700) x 10 = 8,000 WIP Material 150 Labour 195 Overhead Est. SP 1,800 Selling exp (300) Cost to (555) complete (1, ) x 150 = 96,750 Raw materials 60 x 300 = 18,000 (10 marks) B. i. Amount of cost of sales incurred: Revenue to date 33,750,000 Profit to date 45% x 15,000,000* 6,750,000 Cost of sales to date 27,000,000 % of completion 33,750,000/75,000,000 45% *Total contract profit Total contract revenue 75,000,000 Cost incurred to date 42,000,000 Estimated costs to complete 18,000,000 (60,000,000) 15,000,000 (4 marks) 4

5 ii. Amount due from contract customer: Contract costs to date 42,000,000 Profit to date 6,750,000 48,750,000 Progress billing to date (33,750,000) Amount due from customers 15,000,000 (2 marks) iii. The conditions to be satisfied are: (a) total contract revenue can be measured reliably; (b) it is probable that the economic benefits associated with the contract will flow to the entity; (c) both the contract costs to complete the contract and the stage of contract completion at the end of the reporting period can be measured reliably; and (d) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates. (4 marks) C. The segments have similar economic characteristics if: 1. They exhibit similar long term performance Consider the long term average gross margin Consider past, current and future performance Consider other indicators such as sales metric, ROI or other standard industry measures 2. They are similar in the certain aspects including: The nature of the products and services The nature of the production processes The type of class of customer for their products and services The methods used to distribute their products or provide their services If applicable, the nature of the regulatory environment (5 marks) (Total: 25 marks) 5

6 QUESTION 3 Lagenda Bhd Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2015 Turnover 40,088 Cost of sales (18,000) Gross profit 22,088 Selling & distribution expenses (3,680) Administrative expenses [10, ,652] (13,352) Provision for compensation (450) Finance cost ( ) (840) Change in FV of investment (6,500 5,000) 1,500 Profit before tax 5,266 Taxation: Current tax expense 1,658 Deferred tax expense (250) (1,408) Profit for the period 3,858 Other Comprehensive Income Surplus on revaluation of land (10m 8.8m) 1,200 Surplus on available-for-sale financial asset 1,000 2,200 Total Comprehensive Income 6,058 (7 marks) Lagenda Bhd Statement of Changes in Equity for the year ended 31 December 2015 Share capital Share premium Retained earnings Revaluation reserve AFS reserve Total Balance b/d 32,000 18,500 4,880 55,380 Profit for the period 3,858 3,858 Dividend paid (1,000) (1,000) Surplus on 1,200 1,200 revaluation Available for sale 1,000 1,000 instruments Balance c/d 32,000 18,500 7,738 1,200 1,000 60,438 (3 marks) 6

7 Lagenda Bhd Statement of Financial Position as at 31 December 2015 Non-current assets Property, plant & equipment 38,400 Intangibles: Development Cost (13,260 2,652) 10,608 Investments (12, , ,000) 14,500 Current assets Inventories 4,508 Accounts receivables (3, ) 2,688 Cash at Bank 6,700 77,404 Equity and liabilities Share capital 32,000 Retained earnings 7,738 Other reserves (18, , ,000) 20,700 Non-current liabilities 7% Loan notes 12,000 Deferred tax liability 420 Current liabilities Tax payable 38 Accounts payables 3,638 Accrued interest 420 Provision for compensation ,404 Workings W1: Deferred Tax Balance at 1 Jan ,000 Def. Tax movement (250,000) Balance at 31 Dec 2015 (1,680,000 x 25%) 420,000 W2: Tax expenses Tax for the year 1,408,000 (+) transfer from DT a/c 250,000 1,658,000 Tax paid (1,620,000) Tax payable 38,000 7

8 W3: Available for sale investment million Cost 7.0 FV 8.0 Surplus on revaluation 1.0 W4: Property Plant and Equipment Cost/Rev Acc. dep Impairment loss Carrying value Plant 800 (300) (100) 400 Land 10,000-10,000 Building (36,800 8,800) 28,000 (3,360) 24,640 Machinery and equipment 4,800 (1,440) 3,660 38,400 W5: Impairment loss Value in use Year 31/12/16 180,000 x ,800 31/12/17 140,000 x ,200 31/12/18 150,000 x , ,500 NRV = 400,000 Therefore, the recoverable amount = 400,000 (the higher) Carrying amount at 31/12/2015: Cost 800,000 (-) Accumulated depreciation (800,000 50,000) x 2 300, ,000 Impairment Loss: Carrying value 500,000 Recoverable value 400,000 Impairment loss 100,000 8 (15 marks) (Total: 25 marks)

9 QUESTION 4 (A) (a) Bistari Bhd Initially, the convertible bond will be recognized at fair value. The present value of liability components of convertible bond will be calculated as follows: Determining the value of the liability and equity components Period Discount rate (9%) Interest payment Principle payment Total Present value /12/ ,000-7,000 6,419 31/12/ ,000-7,000 5,894 31/12/ , , ,000 82,604 Present value of liability 94,917 Bond Value 100,000 Equity 5,083 Journal entries Dr Cash 100,000 Cr Liability 94,917 Cr Equity 5,083 (5 marks) (b) Subsequent measurement based on amortized cost basis. Statement of Financial Position as at 31 December Equity Bond Reserves 5,083 Long term liability 7% Bonds 96,460 9

10 Amortised cost table Year Opening balance (000) Effective interest (9%) (000) Coupon paid (7%) (000) Closing balance (000) 31 Dec ,917 8,543 (7,000) 96,460 (5 marks) (B) (a) Equity-settled share-based payment: In equity settled share-based payment transactions, the entity rewards staff with equity instruments (e.g. shares or share options) and for equity-settled transactions, the fair value is typically the option price at the grant date. Cash-settled share-based payment: In cash-settled share-based payment transactions, the entity rewards staff with amounts of cash measured by reference to the entity s share price (e.g. share appreciation rights). It is initially measured at fair value at the grant date and subsequently remeasured to fair value at each year-end. (3 marks) (b) Accounting entries: 2014 Eligible employees ( ) = 233 Equivalent cost of SARs = 233 employees x 1,000 rights x FV8 = 1,864,000 Allocate over 3-year vesting period 1,864,000/3 = 621,333 equivalent charge to the income statement in the first year Eligible employees ( ) = 230 Equivalent cost of SARs = 230 employees x 1,000 rights x FV12 = 2,760,000 Cumulative amount to be recognized as a liability = 2,760,000 x 2/3 years = 1,840,000. Less amount previously recognized = 1,840, ,333 = 1,218,

11 The expense will be recorded as: Dr staff costs 1,218,667 Cr liability 1,218,667 (5 marks) (C) (a) Basic EPS: Profit attributable to ordinary shareholders Weighted average number of issued ordinary shares during the year ended 31 Dec 2015: (5,000,000 x 7/12) + (8,000,000 x 5/12) + 2,500,000 (bonus) Basic EPS Basic EPS for y/e 31 Dec 2014 (restated) 48.2 cents x 2/3 3,800,000 8,750, sen 32.1 sen (4 marks) (b) Diluted EPS: Profit attributable to ordinary shareholders 3,800,000 Weighted average number of issued ordinary shares 8,750,000 during the year ended 31 Dec 2015 from part a: Shares held under option 1,000,000 Shares that would have been issued at average (775,000) market price (1,000,000 x 3.10/4.00) Shares effectively issued for no consideration and therefore dilutive 225,000 Weighted average number of issued ordinary shares and Potential ordinary shares during the year ended 30 June ,975, sen (3 marks) (Total: 25 marks) 11