Get premium membership and access questions with answers, video lessons as well as revision papers.
1. Jointly controlled operations.
These are ventures where the assets and resources of the individual ventures are used. If a joint venture was established by three ventures to construct a spacecraft with one manufacturing the shell and furbishing the interior, the second the engines and the third the computer hardware and software, and each carried out the work alongside its normal activities using its own employees and incurring its own expenses and liabilities, this would be regarded as a jointly controlled operation.
2. Jointly controlled assets.
These occur when venturers jointly own and control specific assets for the purpose of a joint venture. For example, if two ventures acquired a furbished castle and rented out rooms in the castle, each venture receiving rents and bearing expenses, this would be regard as a joint venture with jointly controlled assets.
3. Jointly controlled entities.
This is where a distinct entity is formed in which each venturer has an interest. A common example is when two enterprises combine their activities in a particular line of business by transferring the relevant assets and liabilities into a jointly controlled entity. Another example arises when an enterprise commences a business in a foreign country in conjunction with the government or other agency in that country, by establishing a separate entity, which is jointly controlled by enterprise and the government or agency.
marto answered the question on February 13, 2019 at 09:23
- The following is an extract of the summarized financial statements of Ngoma Ltd, Kinanda Ltd. and Ngozi Ltd. for the year ended 30 September 2013:(Solved)
The following is an extract of the summarized financial statements of Ngoma Ltd, Kinanda Ltd. and Ngozi Ltd. for the year ended 30 September 2013:
Additional information:
1. The functional currency of both Ngoma Ltd. and Ngozi Ltd. is the Kenya shilling (Ksh.) while the functional currency of Kin and a Ltd. is the Tanzania shilling (Tsh.).
2. Ngoma Ltd. acquired 80% of Kinanda Ltd. on 1 October 2011 for Ksh.18, 200 million when the revenue reserves of Kinanda Ltd. were Tsh.6, 300 million. The investment is held at cost in the individual financial statements of Ngoma Ltd.
3. Ngoma Ltd. acquired 40% of Ngozi Ltd. on 1 October 2008 for Ksh.3, 150 million when the revenue reserves of Ngozi Ltd. were Ksh.2, 450 million. The investment is held at cost in the individual financial statements of Ngoma Ltd.
4. Ngoma Ltd. advanced a 5 year loan of Ksh.1, 000 million to Kinanda Ltd. on 30 September 2012. This loan is included in the financial assets and non-current liabilities of Ngoma Ltd. and Kinanda Ltd. respectively. Kinanda Ltd. had recorded the loan at the exchange rate prevailing as at 30 September 2012.
5. An impairment test conducted on 30 September 2013 revealed that cumulative impairment losses in respect of the investment in Ngozi Ltd. were Ksh.1 ,000 million, of which Ksh.250 million related to the current financial year. No impairment losses were necessary in respect of the investment in Kinanda Ltd.
6. The group's policy is to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interest of Kinanda Ltd. at 1 October 2011 was Tsh.2, 100 million.
7. Ngoma Ltd. has a building which is located in the same country as Kinanda Ltd. The building was acquired on 30 September 2012 and is carried at a cost of Tsh.2.500 million. The property is depreciated over 10 years on a straight line basis. As at 30 September 2013, the property was revalued to Tsh.3, 500 million. Depreciation has been charged for the year but the revaluation has not been taken into account in the preparation of financial statements as at 30 September 2013.
8. Relevant exchange rates are as follows:
Required:
a) Consolidated statement of comprehensive income for the year ended 30 September 2013.
b) Consolidated statement of financial position as at 30 September 2013.
Date posted: February 13, 2019. Answers (1)
- H Limited, a quoted company at the securities exchange, acquired 80% of the equity shares of P Limited ten years ago.
On 1 April 2014, H...(Solved)
H Limited, a quoted company at the securities exchange, acquired 80% of the equity shares of P Limited ten years ago.
On 1 April 2014, H Limited disposed of half of its investment in P Limited and acquired 80% of the equity shares of R Limited.
Below are the financial statements of the three companies for the year ended 30 September 2014.
Additional information:
1. On 1 April 2014, H Limited disposed of half of its investment in P Limited for Sh.4, 500 million. This disposal has already been accounted for by H Limited but not by the group. The fair value of the remaining investment in P Limited was Sh.3, 900 million on the date of disposal.
2. H Limited had acquired its shareholding in P Limited for Sh. 7,200 million when the retained profit of P Limited amounted to Sh.4, 500 million.
There was no fair value adjustment at the time of this acquisition. Assume that the profits of P Limited accrued evenly during the year.
3. Intercompany receivables and payables were as follows as at 30 September 2014:
4. As at 1 October 2013 half of the goodwill of P Limited had been impaired. The goodwill of the companies were not impaired in the current year to 30 September 2014. The group uses the partial goodwill method when preparing the consolidated financial statements.
5. Between 1 April 2014 and 30 September 2014, H Limited sold to R Limited goods worth Sh.1, 200 million at a profit of Sh.300 million. 50% of the goods were still in the inventory of R Limited as at 30 September 2014.
Required:
a) Group income statement for the year ended 30 September 2014.
b) Group statement of financial position as at 30 September 2014.
Date posted: February 13, 2019. Answers (1)
- Accountancy bodies have a great deal of time and energy in developing codes of conduct. These codes supplement regulations imposed by government bodies.
Required:
a) Discuss the...(Solved)
Accountancy bodies have a great deal of time and energy in developing codes of conduct. These codes supplement regulations imposed by government bodies.
Required:
a) Discuss the difficulties associated with regulating the activities of professionally-qualified accountants who are involved in the preparation and audit of financial statements.
b) Explain why government bodies might wish to regulate the financial reporting process despite the fact that professional bodies already regulate the activities of the members
Date posted: February 13, 2019. Answers (1)
- Briefly explain any two challenges faced by the accounting profession and reporting entities with regard to the application of current international accounting standards on financial...(Solved)
Briefly explain any two challenges faced by the accounting profession and reporting entities with regard to the application of current international accounting standards on financial instruments.
Date posted: February 13, 2019. Answers (1)
- Explain the term 'accounting theory' and indicate why it is important in the practice of accounting.(Solved)
Explain the term 'accounting theory' and indicate why it is important in the practice of accounting.
Date posted: February 13, 2019. Answers (1)
- Briefly comment on the emergence of social environmental accounting and reporting in the last few years(Solved)
Briefly comment on the emergence of social environmental accounting and reporting in the last few years
Date posted: February 13, 2019. Answers (1)
- Citing reasons, explain why it is important for a reporting entity to provide a social and environmental report in the annual financial statements.(Solved)
Citing reasons, explain why it is important for a reporting entity to provide a social and environmental report in the annual financial statements.
Date posted: February 13, 2019. Answers (1)
- Many corporate boards are now agreed on the need to take responsibility for any potential or actual social impact caused by their companies’ activities. This...(Solved)
Many corporate boards are now agreed on the need to take responsibility for any potential or actual social impact caused by their companies’ activities. This is done through a social responsibility report.
Required:
(a) Write short notes on five issues/stakeholders that may be addressed by a company’s social responsibility report.
(b) Explain five benefits that would accrue to a company from the reporting of the company’s social responsibility activities.
(c) Comparing conventional financial accounting reporting with social responsibility reporting, list and explain five challenges peculiar to social responsibility accounting
Date posted: February 13, 2019. Answers (1)
- The following information was extracted from the books of Engwen Ltd. As at 30 June 2008(Solved)
The following information was extracted from the books of Engwen Ltd. As at 30 June 2008
The company’s activities had a negative impact on the cost of living of the community, which increased by shs.3, 500,000 during the year ended 30 June 2008.
Required:
A statement of net social benefits to staff and community for the year ended 30 June 2008.
Date posted: February 13, 2019. Answers (1)
- The International Accounting Standards Board (IASB) is currently working with other accounting standards setting bodies in the world to have a global application of International...(Solved)
The International Accounting Standards Board (IASB) is currently working with other accounting standards setting bodies in the world to have a global application of International Financial Reporting Standards. An important point of focus is conceptual framework.
Required:
Explain the importance of a conceptual framework and the key issues that such a framework should address.
Date posted: February 13, 2019. Answers (1)
- Amos Tiriki Headline Electronics (ATHE) develops and manufactures innovative computer peripherals. It sells its products to variety of vendors in its home country and the...(Solved)
Amos Tiriki Headline Electronics (ATHE) develops and manufactures innovative computer peripherals. It sells its products to variety of vendors in its home country and the vendors sell in turn to corporate and individual customers.
The company is in the process of finalizing its draft financial statements for the year ended 31 December 2007. The finance director is locked in a major debate with a partner in charge of external audit. During the year the company spent a material amount on attending a major tradefair in Cheptulu Town. This was the first time that the company had attended the event. The trade fair is the biggest opportunity for the companies such as ATHE to talk to potential customers from all over the world. All major multinational electronics companies are represented at this annual event. The fair lasted for five days in June 2007. It is now January 2008 and not a single order has been generated from new customers who might have seen ATHE’s presentation at the trade fair.
The partner in charge of the external audit feels very strongly that the cost of attending the fair should be written off as an expense. ATHE’s finance director feels equally strongly that the cost should be capitalized as an asset. He argues that the contacts made at the trade fair are likely to take years to generate new business and that the investment in attending should be carried forward until those orders start to come in. He argues further that the cost should be capitalized on the grounds that they meet the definition of an asset, as laid down by the IASB’s Frame work for the preparation and presentation of financial statements (Framework)
Required:
a) Discuss the finance director assertion that the money spent on attending the fair should be treated as an asset.
b) Explain the importance of the Framework to the reporting of corporate performance and whether it takes into account the business and legal constraints placed.
c) Discuss the assertion that the external auditor might be the primary beneficiary of having a clear and unequivocal Framework that sets out the basis for financial reporting
Date posted: February 13, 2019. Answers (1)
- Evaluate the main steps followed in the development and issue of international financial reporting standards (IFRS)(Solved)
Evaluate the main steps followed in the development and issue of international financial reporting standards (IFRS)
Date posted: February 13, 2019. Answers (1)
- In the context of IFRS 4(Insurance Contracts), identify four items that are excluded from requirements of this standard.(Solved)
In the context of IFRS 4(Insurance Contracts), identify four items that are excluded from requirements of this standard.
Date posted: February 13, 2019. Answers (1)
- a)Accounting reports are not sufficiently accurate to be truthful and they are not sufficiently truthful to be accurate. Hence, they are neither accurate nor truthful.
Critically...(Solved)
a)Accounting reports are not sufficiently accurate to be truthful and they are not sufficiently truthful to be accurate. Hence, they are neither accurate nor truthful.
Critically comment on the above statement.
b) Evaluate the importance of ethics in the practice of accounting.
Date posted: February 13, 2019. Answers (1)
- The International Accounting Standards Board (IASB) Framework for the preparation and presentation of financial statements has seven main sections. Analyse any four sections and indicate...(Solved)
The International Accounting Standards Board (IASB) Framework for the preparation and presentation of financial statements has seven main sections. Analyse any four sections and indicate how they contribute to the quality of financial statements.
Date posted: February 13, 2019. Answers (1)
- The International Accounting Standards Board (IASB) Framework requires that a useful set of financial statements should be reliable.
Explain five qualities of financial statements that make...(Solved)
The International Accounting Standards Board (IASB) Framework requires that a useful set of financial statements should be reliable.
Explain five qualities of financial statements that make them reliable
Date posted: February 13, 2019. Answers (1)