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GFA712S-FINANCIAK ACCOUNTING 320-2ND OPP- JAN 2025 |
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nAmI BI AunIVER s ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07 BOAC
LEVEL: 7
COURSE CODE: GFA 712S
COURSE NAME: FINANCIALACCOUNTING320
SESSION: January 2025
PAPER: THEORYAND CALCULATIONS
DURATION: 3 hours
MARKS: 100
EXAMINER(S)
MODERATOR:
2ND OPPORTUNITY EXAMINATION - QUESTION PAPER
D. R. Muzira /D. Kamotho
M Tondota
INSTRUCTIONS
1. Answer ALL questions in blue or black ink only.
2. Capture your full name, student number and assessment number on the first page.
3. Write clearly and neatly.
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
ofthe 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 9 PAGES (Including the front page)
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Question 1
(25 marks)
Part A
Queen Ltd has an investment property in the form of an office building in Windhoek which
was acquired for rental purposes on 1 January 2021 at a cost of $440 000. Land &
buildings are revalued by a sworn valuer at the end of the year. The valuation report had
the following values based on the different ways in which Queen Ltd could benefit from
the asset:
Selling price
Office building (current use-rented out)
Residential (rent out for domestic use)
2023
N$
740,000
650,000
800,000
2022
N$
580,000
600,000
620,000
Additional information
It is physically possible and legally permissible to use the building for residential
purposes. The cost of converting the office building to residential property are
insignificant. The report noted that the area in which the plot is located was de-
designated (disallowed)for residential accommodation by the municipality at the
beginning of 2022.
Required:
Determine the fair value in 2022 and 2023 0ustify your answers)
(5 marks)
Part B
Outline the steps to be taken where control is attained in a piece meal acquisition.
(20 marks)
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Question 2
Statement of Financial position as at 31 December 2022
'
Assets
Non-Current assets:
Property Plant & Equipment
Investment in S Ltd (cost)
Current assets
Total Assets
(25 marks)
P Ltd
S Ltd
N$ '000' N$'000'
46,380
7,464
53,844
15,240
69,084
9,120
-
9,120
2,640
11,760
Equity & Liabilities
Share capital (N$1 per share)
Revenue Reserves
Current liabilities
Total equity & liabilities
12,240
47,904
60,144
8,940
69,084
960
9,480
10,440
1,320
11,760
Statement of profit or loss and other comprehensive income for the year ended
31 December 2022
Revenue
Cost of sales & Expenses
Profit Before Tax
Income tax Expense
Profit After Tax
Other comprehensive income
Gain on property revaluation net of tax
Total comprehensive income
N$ '000'
12,240
(10,800)
1,440
(432)
1,008
N$'000'
4,800
(4,320)
480
(96)
384
288
96
1,296
480
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Additional Information:
1. P Ltd acquired 25% of S Ltd on 1 January2021 for N$2,424,000 and exercised
significant influence over the financial and operating policy decisions of S Ltd.
2. The FV of S's identifiable assets & liabilities as at 1 January 2021 was equivalent to
their book value. S Ltd's reserves stood at N$6,960,000.
3. A further 35% stake was acquired by P ltd in S ltd on 30 September 2022 for
N$5,040,000. The fair value of S Ltd's identifiable assets and liabilities as at that date was
N$11,040,000 and S Ltd's revenue reserves stood at N$9,360,000. As at 30 September
2022, S Ltd's share price was N$14.50.
4. The difference between the fair value of the identifiable assets and liabilities of S Ltd
and their book value was due to brands. The brands were estimated to have an average
remaining useful life of 5 years from 30 September 2022.
5. Income and expenses are assumed to accrue evenly over the year. Neither company
paid dividend during the year and neither issued any shares.
6. P Ltd elected to measure NCI as at the date of acquisition at fair price.
7. There is no impairment loss on goodwill as at 31 December 2022 while amortisation of
brands is classified in cost of sales.
Required:
Consolidated statement of profit and loss and other comprehensive income for the year
ended 31 December 2022.
(25 marks)
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Question 3
(25 marks)
a) Your Managing director does not understand the meaning of 'deferred tax'.
Explain to him how deferred tax arises in an organization
(5 marks)
b) X Ltd has machinery that is traded in three different markets as shown below:
Volume (annual)
Price
Transport cost
Transaction cost
Market A
Market B
MarketC
N$'000'
N$'000'
N$'000'
20 000
12 000
10 000
10 000
9 800
11 000
(500)
(500)
(550)
(200)
(200)
(120)
Required:
a) Identify the principal market
(2)
b) Identify the most advantageous market
(2)
c) Determine the fair value of the machinery uustifying your answers) if the following
assumptions are made:
i. Market A is the principal market.
(4)
ii. Market Bis the principal market.
(4)
iii. Market C is the principal market
(4)
iv. There is no principal market for the machinery
(4)
(justify your answers)
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Question 4
(25 marks)
Financial statements of Pee Ltd and subsidiaries for the year ended 31 March
2024.
Consolidated income statements for the year ended 31 March 2024
N$
N$
Sales
875,630
Opening Inventory
61,600
Purchases
5401908
602,508
Less closing Inventory
1301730
4711778
Gross profit
403,852
Expenses:
Selling & distribution
72,140
Administration
80,200
Interest paid
2,500
Goodwill written-off
51000
1591840
Operating profit
244,012
Taxation
(461830)
Profit after tax
197,182
Attributable to:
Group
Non-controlling interest
174,822
22,360
197,182
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Consolidated Statement of financial positions as at 31 March.
31 March 2024
31 March 2023
N$
N$
N$1 ordinary shares
100,000
100,000
Retained profit
256,462
81,640
Non-controlling interest
41,040
18,680
397,502
200,320
Non-current assets
181,820
173,320
Goodwill
5,000
Inventory
130,730
61,600
Debtors & prepayments
224,012
30,500
Bank & cash balances
12,440
35,800
Less current liabilities:
Trade creditors
(97,360)
(44,700)
Taxation
(54,140)
(61,200)
397,502
200,320
Additional information
1. Some non-current assets were sold for N$33,000 cash.
2. Sar Ltd, another subsidiary, was acquired during the year. A Cash payment of
N$ 72,600 was made for a 100% interest in that company. The relevant assets
and liabilities acquired were:
Plant & Machinery
N$ 41,500
Inventories
53,600
Prepayments
8,400
Bank & cash balances
6,240
Creditors
37,140
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Required:
Prepare the consolidated statement of cash flows for Pee Group for the year ended 31
March 2024 in accordance with IAS?. Use the indirect method.
(25 marks)
END OF QUESTION PAPER
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Present Value Table
Year
1
2
3
4
5
6
7
8
9
10
1%
0.990
0.980
0.971
0.961
0.951
0.942
0.933
0.923
0.914
0.905
0.980
0.961
0.942
0.924
0.906
0.888
0.871
0.853
0.837
0.820
lli
0.971
0.943
0.915
0.888
0.863
0.837
0.813
0.789
0.766
0.744
0.962
0.925
0.889
0.855
0.822
0.790
0.760
0.731
0.703
0.676
lli
0.952
0.907
0.864
0.823
0.784
0.746
0.711
0.677
0.645
0.614
6%
0.943
0.890
0.840
0.792
0.747
0.705
0.665
0.627
0.592
0.558
IBi
1. 0.901
2 0.812
3 0.731
4 0.659
5 0.593
6 0.535
7 0.482
8 0.434
9 0.391
10 0.352
12%
0.893
0.797
0.712
0.636
0.567
0.507
0.452
0.404
0.361
0.322
13%
0.885
0.783
0.693
0.613
0.543
0.480
0.425
0.376
0.333
0.295
14%
0.877
0.769
0.675
0.592
0.519
0.456
0.400
0.351
0.308
0.270
1lli
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
16%
0.862
0.743
0.641
0.552
0.476
0.410
0.354
0.305
0.263
0.227
21%
1 0.826
2 0.683
3 0.564
4 0.467
5 0.386
6 0.319
7 0.263
8 0.218
9 0.180
10 0.149
22%
0.820
0.672
0.551
0.451
0.370
0.303
0.249
0.204
0.167
0.137
23%
0.813
0.661
0.537
0.437
0.355
0.289
0.235
0.191
0.155
0.126
0.806
0.650
0.524
0.423
0.341
0.275
0.222
0.179
0.144
0.116
0.800
0.640
0.512
0.410
0.328
0.262
0.210
0.168
0.134
0.107
26%
0.794
0.630
0.500
0.397
0.315
0.250
0.198
0.157
0.125
0.099
lli
0.935
0.873
0.816
0.763
0.713
0.666
0.623
0.582
0.544
0.508
17%
0.855
0.731
0.624
0.534
0.456
0.390
0.333
0.285
0.243
0.208
27%
0.787
0.620
0.488
0.384
0.303
0.238
0.188
0.148
0.116
0.092
8'/o
0.926
0.857
0.794
0.735
0.681
0.630
0.583
0.540
0.500
0.463
1!lli
0.847
0.718
0.609
0.516
0.437
0.370
0.314
0.266
0.225
0.191
28%
0.781
0.610
0.477
0.373
0.291
0.227
0.178
0.139
0.108
0.085
9%
0.917
0.842
0.772
0.708
0.650
0.596
0.547
0.502
0.460
0.422
0.840
0.706
0.593
0.499
0.419
0.352
0.296
0.249
0.209
0.176
0.775
0.601
0.466
0.361
0.280
0.217
0.168
0.130
0.101
0.078
10%
0.909
0.826
0.751
0.683
0.621
0.564
0.513
0.467
0.424
0.386
20%
0.833
0.694
0.579
0.482
0.402
0.335
0.279
0.233
0.194
0.162
30%
0.769
0.592
0.455
0.350
0.269
0.207
0.159
0.123
0.094
0.073
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