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GFA712S-FINANCIAL ACCOUNTING 320-1ST OPP-NOV 2025 |
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nAm I BI A un IVERSITY
OF SCI En CE Ano TECH n OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07 BOAC
LEVEL: 7
COURSE CODE: GFA 7125
COURSE NAME: FINANCIAL ACCOUNTING 320
SESSION: Oct/Nov 2025
PAPER: THEORY AND CALCULATIONS
DURATION: 3 hours
MARKS: 100
pt OPPORTUNITY/ FINAL EXAMINATION - QUESTION PAPER
EXAMINER(S} D Kamotho & S Dzomira
MODERATOR: M Tondota
INSTRUCTIONS
1. Answer ALL questions in blue or black ink only.
2. Read all the questions carefully before answering.
3. Please ensure that your writing is legible, neat and presentable.
4. Start each question on a new page and number the answers clearly.
5. No programmable calculators are allowed .
6. The names of people and businesses used throughout this assessment do not reflect the
reality and may be purely coincidental.
7. Questions relating to the paper may be raised in the initial 30 minutes after the start of
the paper. Thereafter, candidates must use their initiative to deal with any perceived
error or ambiguities & any assumption made by the candidate should be clearly stated.
8. Do not write in pencil and do not use tip-ex, as this will not be marked.
9. SHOW All WORKINGS!
THIS QUESTION PAPER CONSISTS OF 7 PAGES (excluding the front page)
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QUESTION 1
(25 marks)
Shimii Ltd acquired 75% of the shares in Shilongo Ltd on 1 January 2024 when Shilongo Ltd had
retained earnings of N$15,000. The market price of Shilongo's shares just before the date of
acquisition was N$1.60. Shimii values non-controlling interest at fair value. Goodwill is not impaired.
The statements of financial position of Shimii and Shilongo at 31 December 2024 were as follows:
Property, plant and equipment
Shares in Shilongo ltd
Shimii
N$
60,000
68,000
128,000
Shilongo
N$
50 ,000
--
50 ,000
Current assets
52,000
180,000
35,000
85,000
Share capital - $1 shares
Retained earnings
100,000
70,000
170,000
50,000
25,000
75,000
Current liabilities
10,000
180,000
10,000
85,000
Required
a) Prepare the consolidated statement of financial position of the Shimii Group as at 31
December 2024
(20)
b) Define the following as per IFRS 13
i. Principal market
(2)
ii. Most advantageous market
(3)
{Total: 25 Marks}
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QUESTION 2
(25 marks)
Orion Ltd acquired an 80% interest in Vega Ltd on 1 July 2025. The consideration and additional
information are as follows:
Consideration transferred
• Equity instruments - Issue of 120 000 ordinary shares in Orion Ltd (nominal value N$1). Orion's
quoted share price at 1 July 2025 is N$9.
• Deferred cash payments -A commitment to pay N$1 200 000 in four equal instalments on 1
July 2026, 2027, 2028 and 2029 . No interest is charged .
• Non-monetary asset - Transfer of equipment carried at N$250 000; fair value at 1 July 2025 is
N$300 000.
• Inventory delivery- Delivery of 8 000 finished-goods units (cost N$18 per unit; fair value N$24
per unit).
• Acquisition-related costs - Unpaid legal fees of N$220 000 incurred on 30 June 2025.
Acquiree's operating lease {Vega Ltd}
• Office lease commenced 1 July 2023 for five years; annual rentals N$75 000 payable in arrears
on 30 June. Three payments remain.
• Market rent for a similar lease is N$90 000 p.a.; incremental borrowing rate 9%.
Identifiable net assets at acquisition
• Carrying amount: N$4 000 000.
• Contingent liability (not in books): fair-value outflow estimate N$360 000.
• Fair-value vs carrying differences at 1 July 2025: PPE: carrying N$800 000 ➔ fair value N$900
000; Inventory: carrying N$600 000 ➔ fair value N$560 000.
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Other information
• Tax rate : 30%.
• NCI measurement: proportionate share of net assets (partial method).
Required:
a. Compute the acquisition-date fair value of the consideration t ransferred .
(8)
b. Prepare the journal entries in Orion Ltd's separate financial statements at 1 July 2025 to record
the transactions in 1).
(7)
c. IFRS 3 & IFRS 16: Account for Vega Ltd's operating lease at acqu isition; identify and measure
any lease-related intangible.
(5)
d. Calculate goodwill (or ga in on bargain purchase), considering deferred tax.
(5)
{Total: 25 Marks}
QUESTION 3
(25 marks)
On 1 September 2024 Swing Co acquired 70% of Slide Co for N$5,000,000, comprising N$1 ,000,000
cash and 1,500,000 N$1 shares.
The statement of financial position of Slide Co at acquisition was as follows:
N$'000
Property, plant and equipment
2,700
Inventories
1,600
Trade receivables
600
Cash
400
Trade payables
(300)
Income tax payable
(200)
4,800
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The consolidated statement of financial position of Swing Co as at 31 December 2024 was as follows:
Non-current assets
Property, plant and equipment
Goodwill
Current assets
Inventories
Trade receivables
Cash
Equity attributable to owners of the parent
Share capital
Share premium
Revaluation surplus
Retained earnings
Non-controlling interest
Current liabilities
Trade payables
Income tax payable
2024
N$'000
35,500
1,400
36,900
16,000
9,800
2,400
28,200
65,100
12,300
5,800
350
32,100
50,550
1,750
52,300
7,600
5,200
12,800
65,100
2023
N$'000
25,000
--
25,000
10,000
7,500
1,500
19,000
44,000
10,000
2,000
-
21,900
33,900
--
33,900
6,100
4,000
10,100
44,000
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The consolidated statement of profit or loss and other comprehensive income of Swing Co for the
year ended 31 December 2024 was as follows :
2024
N$'000
Profit before tax
16,500
Income tax expense
(5,200}
Profit for the year
11,300
Other comprehensive income (not reclassified to P/L)
Revaluation surplus
500
Total comprehensive income for the year
11,800
Profit attributable to:
Owners of the parent
11,100
Non-controlling interest
200
11300
Total comprehensive income for the year attributable to
Owners of the parent
11,450
Non-controlling interest 200 + (500 x 30%)
350
11,800
Notes:
1. Depreciation charged for the year was N$5,800,000. The group made no disposals of property,
plant and equipment.
2. Dividends paid by Swing Co amounted to N$900,000.
It is the group's policy to value the non-controlling interest at its proportionate share of the fair value
of the subsidiary's identifiable net assets.
Required
Prepare the consolidated statement of cash flows of Swing Co for the year ended 31 December 2024.
No notes are required
(25)
{Total: 25 Marks}
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QUESTION 4
(25 marks)
The following statements of profit or loss and other comprehensive income (SoPLOCI) relate to
Aurora Ltd and its investee companies, Nebula Ltd and Quasar Ltd, for the year ended 31 December
2024.
Particulars
Revenue
Cost of Sales
Gross Profit
Operating Expenses
Finance Costs
Other Income
Investment Income
Profit Before Tax
Taxation
Profit for the Year
Other Comprehensive Income: Gains on property
revaluations
Total Comprehensive Income
Aurora Ltd
(N$ m)
4,200
-1,480
2,720
-980
-160
55
110
1,745
-350
1,395
180
1,575
Nebula Ltd
(N$ m)
2,400
-1,080
1,320
-520
-70
-
-
730
-160
570
100
670
Quasar Ltd
(N$ m)
1,100
-440
660
-220
-40
-
-
400
-80
320
40
360
Additional Information
• Aurora Ltd acquired 80% of Nebula Ltd on 1 July 2024. Consideration: cash of N$1,400 million,
plus 600 million shares of N$1 par each issued at a fair value of N$3.00 per share (N$1,800
million). The fair value of the non-controlling interest (NCI) at acquisition was N$850 million.
Nebula's identifiable net assets at fair value were N$3,500 million at acquisition.
• Aurora Ltd has held 25% of Quasar Ltd for several years and exercises significant influence
(equity-accounted).
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• On acquisition, Nebula's property's fair value exceeded carrying amount by N$120 million.
Remaining useful life: 20 years . Additional depreciation related to this fair value step-up is charged
to cost of sales.
• During the post-acquisition period, Nebula sold goods to Aurora for N$80 million at a profit margin
of 25% on selling price. Thirty percent (30%) of these goods remained in Aurora's closing
inventory at year-end .
• Aurora provides management services to Nebula for an annual fee of N$5 million, recognised by
Aurora in "Other income" and by Nebula as part of "Operating expenses". The fee accrues evenly
throughout the year.
• Goodwill was tested for impairment at year-end; an impairment loss of N$60 million is recognised
in group operating expenses.
• All revaluation gains were recorded in the post-acquisition period. Unless otherwise stated,
income and expenses accrued evenly throughout the year.
Required:
a. Calculate:
(i) The goodwill arising on the acquisition of Nebula Ltd by Aurora Ltd; and
(ii) The amount of goodwill that should appear in the consolidated Statement of Financial
Position as at 31 December 2024.
(5)
b. Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the
Aurora Group for the year ended 31 December 2024, showing the composition of your figures.
(20)
{Total: 25 Marks}
END OF QUESTION PAPER
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