QUESTION 10:2 SUGGESTED SOLUTIONS

Raider (Pty) Limited

Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 20.4

R
Revenue (450 000 + 400 000 – 30 000) 820 000
Cost of sales and operating expenses (excl. depr.) (balance) (576 700)
Depreciation (40 000 + 29 000 – 8 000) (61 000)
Operating Profit (148 300 + 93 000 + 2 000(Inv) – 40 000 – 29 000 + 8 000(Depr)) 182 300
Investment income (400 – 200) 200
Finance costs (2 000 – 200) (1 800)
Profit before taxation 180 700
Taxation (42 000 + 30 000 + 800 + 3 200) (76 000)
Profit after taxation and total comprehensive income 104 700

Attributable to:
Non-controlling interests 8 300
Parent shareholders 96 400
104 700

Consolidated Statement of Changes in Equity for the year ended 31 December 20.4

Share General Retained Total Non- Total

Capital Reserve Earnings Parent Controlling Equity
Equity Interests
R R R R R R
Balances 1 January 20.4 276 000 28 750(2) 127 250(1) 432 500 50 650 482 650
Total comprehensive income for the year
Dividends 96 400 96 400 8 300 104 700
Transfer to general reserve (12 000) (12 000) (13 000) (25 000)
Balances 31 December 20.4 18 750(3) (18 750)(3) – – –
276 000 47 500 192 900 516 400 45 950 562 380

(1)
140 900 – 15 600(Plant and DT) + 1 950 = 127 250
(2)
40 000 – 15 000 + 3 750 = 28 750
(3)
15 000 + 3 750 = 18 750

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QUESTION 10:2 SUGGESTED SOLUTIONS

Consolidated Statement of Financial Position of Raider (Pty) Limited and its subsidiary
at 31 December 20.4
R
ASSETS
Non-current assets (Note 5) 611 000

Current assets 145 250

Inventory (37 750 – 2 000 + 22 000) 57 750
Accounts receivable (46 000 + 26 500) 72 500
Bank (14 800 + 200) 15 000

756 250

EQUITY AND LIABILITIES

Share capital 276 000
Reserves (40 000 + 7 500) 47 500
Retained earnings 192 900
Total parent equity 516 400
Non-controlling interests 45 950
Total equity 562 350

Non-current liabilities 92 500

Deferred taxation (70 000 – 7 200 + 8 000 – 800) 70 000
Debentures (25 000 – 2 500) 22 500

Current liabilities 101 400

Account payable (54 400 + 11 500 + 12 500(Non-controlling div)) 78 400
Shareholders for dividend 12 000
Taxation payable 8 000
Bank overdraft 3 000

756 250
Note to the financial statements:

5. Non-current assets:
Cost Accumulated Carrying
Depreciation Amount
Property, plant and equipment: R R R
Land 390 000 (1) – 390 000
Plant and machinery 250 000 (2) (80 500)(4) 169 500
Furniture and fittings 103 000 (3) (51 500)(5) 51 500
743 000 (132 000) 611 000

(1)
210 000 + 180 000 = 390 000
(2)
180 000 + 110 000 – 40 000 = 250 000
(3)
75 000 + 70 000 – 42 000* = 103 000
(4) 42 000 + 60 500 – 6 000 – 8 000 – 8 000 = 80 500
(5) 30 500 + 63 000 – 42 000* = 51 500

* At acquisition depreciation

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QUESTION 10:2 SUGGESTED SOLUTIONS

Workings:

1. Worksheet
Since

Date Details S Cap G. Res RE Land Invent DT Total NCI Inv RE G. Res
1.1.20.2 Purchase 100 000 25 000 50 000 20 000 – – 195 000 48 750 146 250*
3.1.20.2 Sale Prop 30 000 (20 000) 10 000 2 500 7 500
Dividend (30 000) (30 000) (7 500) (22 500)
31.12.20.3 Increase –RE 25 000 (4 000) (1) 1 600 22 600 5 650 16 950
– G.Res 5 000 5 000 1 250 3 750
100 000 30 000 75 000 – (4 000) 1 600 202 600 50 650 146 250 1 950 3 750
31.12.20.4 Profit 32 000 2 000 (2) (800) 33 200 8 300 24 900
Transfer 5 000 (5 000) – – (3 750) 3 750
Dividends (52 000) (52 000) (13 000) (39 000)
100 000 35 000 50 000 – (2 000) 800 183 800 45 950 146 250 15 900 7 500

* 138 250 + 8 000 (impairment reversal) = 146 250

2. Plant:

Unrealised Deferred
Profit Tax Net
1. 4.20.2 Sale 40 000 (16 000) 24 000
31.12.20.2 Dep (6 000) 2 400 (3 600)
31.12.20.3 Dep (8 000) 3 200 (4 800)
31.12.20.4 Dep (8 000) 3 200 (4 800)
18 000 (7 200) 10 800

(1) 25% × 16 000 = 4 000

(2)
25% (16 000 – 8 000) = 2 000

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QUESTION 10:2 SUGGESTED SOLUTIONS

Pro forma journal entries:

DR CR
Investment in V Ltd 8 000
Impairment expense (V Ltd) 8 000

Share capital 100 000

General reserve 25 000
Retained earnings 50 000
Land 20 000
Non-controlling interest 48 750
Investment in V Ltd 146 250

Retained earnings 15 000

Non-controlling interests 5 000
Land 20 000

Retained earnings (4 000 – 1 600) 2 400

Trading profit 4 000
Deferred taxation (SOFP) 1 600
(prior years)

Trading profit 2 000

Inventory 2 000
(current year)

Deferred taxation (P/L) 800

Deferred taxation (SOFP) 800
(NCI share : prior years)

Retained earnings 5 650

Non-controlling interests 5 650
(NCI share : prior years)

General reserve 1 250

Non-controlling interests 1 250
(NCI share : prior years)

General reserve 1 250

Transfer to General reserve 1 250
(NCI share of current year transfer)

Dividends received 39 000

Non Controlling interests 13 000
Dividends paid 2 000
Dividends declared 50 000

Shareholders for dividend 50 000

Current account V Ltd 37 500
Accounts payable 12 500

Cash-in-transit 200
Current account V Ltd 200

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QUESTION 10:2 SUGGESTED SOLUTIONS

DR CR
Debentures 2 500
Investment in V Ltd – Debentures 2 500

Interest received 200

Interest paid 200
Retained earnings 15 600
Deferred taxation (SOFP) 10 400
Plant – acc depr 14 000
Plant – cost 40 000

Plant – acc depr 8 000

Depreciation 8 000

Deferred taxation (P/L) 3 200

Deferred taxation (SOFP) 3 200

Sales 30 000
Cost of sales and operating expenses 30 000

Non-controlling interests share of current year profit 8 300

Non-controlling interests 8 300

Furniture and fittings – acc depr 42 000

Furniture and fittings – costs 42 000
(at acq acc. depr. (63 000 – 3 × 7 000))

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