-
Hadel Ltd., a public limited company incorporated in Kenya owns 75% of the ordinary share capital of Scot Ltd.., a public limited company incorporated in...
(Solved)
Hadel Ltd., a public limited company incorporated in Kenya owns 75% of the ordinary share capital of Scot Ltd.., a public limited company incorporated in a foreign country. The reporting currency of Scot Ltd is the domes (DM) whereas that of Hadel Ltd is the Kenya shilling (Ksh). Hadel Ltd acquired its shareholding in Scot on 1 May 2008 at 120 million domes (DM) when the retained profits of Scot Ltd were 80 million domes (DM). Scot Ltd has not revalued its assets or issued any share capital since 1 May 2008.
The following are financial statements of Hadel Ltd and Scot Ltd.
Required:
Consolidated income statement for the year ended 30 April 2009.
Date posted:
December 10, 2021
.
Answers (1)
-
The statements of financial position of H Ltd, S Ltd, A Ltd, J Ltd and B Ltd as at 31 October 2009 are as follows:
(Solved)
The statements of financial position of H Ltd, S Ltd, A Ltd, J Ltd and B Ltd as at 31 October 2009 are as follows:
Additional information:
1. H Ltd purchased 75% of the ordinary shares of S Ltd on 1 November 2007, when the balance of the earnings of S Ltd was sh. 80 million.
2. S Ltd purchased 30% of the ordinary shares of A Ltd on 1 November 2007 were sh. 140 million.
3. H Ltd and another company, Ukwala Ltd, each bought 50% of the share capital of J Ltd on 1 May 2009. H Ltd and Ukwala Ltd have a joint control of J Ltd. Both companies are to account for their Joint venture using proportionate consolidation; combining items on a line by line basis. J Ltd’s retained earnings on 1 May 2009 were sh. 110 million.
4. On 1 May 2009, H Ltd acquired 45 million ordinary shares of shs. 10 each in B Ltd when the retained earnings of B Ltd were sh.400 million.
5. On 1 May 2009, the fair values of the identifiable net assets of B Ltd, approximated book value except for leasehold whose book value was sh. 40 million below its fair value. The property is depreciated to nil residual value over the term of the lease. On 1 May 2009, there were 10 years remaining of the lease.
6. On 1 November 2007, the book value of the identifiable net assets of A Ltd was sh. 20 million below their fair value. The assets revalued are not to be depreciated.
7. Included in the closing inventory of H Ltd is shs. 12 million worth of goods purchased from J Ltd which cost sh. 8 million.
8. In the year ended 31 October 2009, H Ltd sold goods to B Ltd at a price of sh. 15 million. H Ltd had marked up these goods by 50% on cost. B Ltd held 50% of these goods in its closing inventory on 31 October 2009.
9. As at 31 October 2009, H Ltd owed J Ltd sh. 12 million. As at the same date, S Ltd owed H Ltd sh. 13 million and A Ltd Sh 20 million. All the current accounts between the companies were in agreement.
10. As at 31 October 2009, it was estimated that since the date of acquisition, goodwill had suffered impairment loss by the following percentages:
S Ltd = 40%
B Ltd = 25%
The goodwill of J Ltd and the premium on acquisition of A Ltd had not been impaired since the date of acquisition.
11. It is groups’ policy to value the non-controlling interest at fair value or the market value. The fair value of the non-controlling interest in S Ltd at the date of acquisition was Sh. 120 million, while the fair value of the non-controlling interest in B Ltd, at the date of acquisition was shs. 124 million.
Required:
Consolidated statement of financial position as at 31 October 2009, J Ltd should be accounted for using the proportionate consolidation method as per IAS 31(Interest in Joint ventures)
Date posted:
December 10, 2021
.
Answers (1)
-
Head Limited sold off its entire shareholding of 80% in Shoulder Limited and acquired 75% of the shares of Stem Limited during the year ended...
(Solved)
Head Limited sold off its entire shareholding of 80% in Shoulder Limited and acquired 75% of the shares of Stem Limited during the year ended 30 September 2010. Head Limited also acquired 40% of the shares of Angle Limited.
The following income statements relate to the four companies:
Additional information:
1. Head Limited had acquired it s shareholding in Shoulder Limited at a cost of Sh 2200 million on 1 October 2007 when the retained earnings of Shoulder Limited were Sh.500 million. The ordinary share capital of Shoulder Limited was Sh. 2,000 million and there were no other reserves. The fair value of the non-controlling interest in Shoulder Limited on the same date was Sh.550 million.
2. During the year ended 30 September 2010, Head Limited acquired the investment in Stem Limited and Angle Limited. The details of the acquisitions are as follows:
On the date of its acquisition, Stem Limited had an item of plant that was Sh.270 million below its fair value. Plant is depreciated at 20% per annum with a full year’s charge in the year of purchase or revaluation.
3. On 1 July 2010, Head Limited sold its investment in Shoulder Limited at a price of Sh.3,430 million. This disposal has not been reflected in the income statement of Head Limited.
4. During the year, the companies traded as follows:
5. Goodwill of Shoulder Limited had been impaired by half as at 1 October 2009. Any goodwill arising in Stem Limited and Angle Limited is impaired by 20%.
6. All dividends were paid on 31 August 2010.
Required:
a) The group income statement for the year ended 30 September 2010.
b) The statement of changes in equity showing only the retained profits column.
Date posted:
December 10, 2021
.
Answers (1)
-
Hunga Limited, a company quoted on the securities exchange, acquired 80% of Shika Limited several years ago. On 1 January 2012 Hunga limited sold half...
(Solved)
Hunga Limited, a company quoted on the securities exchange, acquired 80% of Shika Limited several years ago. On 1 January 2012 Hunga limited sold half of its investment in Shika Limited and acquired 75% of the equity shares of Shujaa Limited.
The financial statements for the year ended 30 June 2012 for the three companies are as given below.
Additional information:
1. Hunga Limited had acquired its shareholding in Shika Limited for Sh.2,400 million when the retained profits of Shika Limited amounted to Sh. 1,500 million. There was no fair value adjustment at the time of this acquisition.
2. Hunga Limited sold half of the investment in Shika Limited for Sh.1.500 million. This disposal has already been accounted for by Hunga Limited but not by the group. The fair value of the remaining investment in Shika Limited was Sh.1, 300 million on the date of disposal.
3. Between 1 January 2012 and 30 June 2012. Hunga Limited sold to Shujaa Limited goods worth Sh.500 million reporting, a profit of Sh. 100 million. Half of the goods were still in the inventory of Shujaa Limited as at 30 June 2012.
4. Intercompany receivables and payables were as follows as at 30 June 2012:
5. As at 1 July 2011, half of the goodwill of Shika Limited had been impaired. The goodwills of the companies were not impaired in the current year to 30 June 2012. The group uses the partial goodwill method when preparing the consolidated financial statements.
Required;-
a) Group statement of comprehensive income for the year ended 30 June 2012.
b) Group statement of financial position as at 30 June 2012.
Date posted:
December 10, 2021
.
Answers (1)
-
Describe four shortcomings of cost accounting.
(Solved)
Describe four shortcomings of cost accounting.
Date posted:
February 15, 2019
.
Answers (1)
-
Explain what 'integrated reporting' entails.
(Solved)
Explain what 'integrated reporting' entails.
Date posted:
February 15, 2019
.
Answers (1)
-
Explain the benefits that would accrue from the adoption of international public sector accounting standards (IPSASs) by governments and public entities.
(Solved)
Explain the benefits that would accrue from the adoption of international public sector accounting standards (IPSASs) by governments and public entities.
Date posted:
February 15, 2019
.
Answers (1)
-
The following information has been compiled by the Ministry of Finance for the fiscal year ended 30 June 2009:
(Solved)
The following information has been compiled by the Ministry of Finance for the fiscal year ended 30 June 2009:
Date posted:
February 15, 2019
.
Answers (1)
-
The International Public Sector Accounting Standards (IPSASs) are developed by the International Public Sector Accounting Standards Board (IPSASB) to enhance uniformity in the way...
(Solved)
The International Public Sector Accounting Standards (IPSASs) are developed by the International Public Sector Accounting Standards Board (IPSASB) to enhance uniformity in the way public sector organizations prepare their financial statements. The Board (IPSASB) is promoting the international adoption and application of these standards.
Required:
Highlight four challenges that the Board is facing in promoting the use of IPSASs.
Date posted:
February 15, 2019
.
Answers (1)
-
The following data has been collected from the Ministry of Trade and Commerce for the fiscal year ended 30 June 2010:
(Solved)
The following data has been collected from the Ministry of Trade and Commerce for the fiscal year ended 30 June 2010:
Required:
The following statements in accordance with IPSAS 1 (Presentation of Financial Statements):
i) Statement of financial performance for the year ended 30 June 2010.
ii) Statement of financial position as at 30 June 2010.
Date posted:
February 15, 2019
.
Answers (1)
-
The following summary of receipts and payments was extracted from the records of the Ministry of Finance for the fiscal year ended 30 June 2010.
(Solved)
The following summary of receipts and payments was extracted from the records of the Ministry of Finance for the fiscal year ended 30 June 2010.
Required:
The statement of comparison of budget and actual amounts for the fiscal year ended 30 June 2010 in accordance with International Public Sector Accounting Standard (IPSAS) 24 (Presentation of Budget Information in Financial Statements
Date posted:
February 15, 2019
.
Answers (1)
-
In the context of IPSAS 19 (Provisions, Contingent Liabilities and Contingent Assets), explain the meaning of the term 'constructive obligation'.
(Solved)
In the context of IPSAS 19 (Provisions, Contingent Liabilities and Contingent Assets), explain the meaning of the term 'constructive obligation'.
Date posted:
February 15, 2019
.
Answers (1)
-
In the context of IPSAS 23 (Revenue from Non-exchange Transactions), summarize five sources of revenue from non-exchange transactions recognized by this standard.
(Solved)
In the context of IPSAS 23 (Revenue from Non-exchange Transactions), summarize five sources of revenue from non-exchange transactions recognized by this standard.
Date posted:
February 15, 2019
.
Answers (1)
-
With reference to IPSAS 9 (Revenue from Exchange Transactions), summarize five conditions that must be satisfied before revenue from the sale of goods can be...
(Solved)
With reference to IPSAS 9 (Revenue from Exchange Transactions), summarize five conditions that must be satisfied before revenue from the sale of goods can be recognized.
Date posted:
February 15, 2019
.
Answers (1)
-
In the context of IPSAS 4 (The Effects of Changes in Foreign Exchange Rates), explain how exchange differences arising on monetary items are recognized.
(Solved)
In the context of IPSAS 4 (The Effects of Changes in Foreign Exchange Rates), explain how exchange differences arising on monetary items are recognized.
Date posted:
February 15, 2019
.
Answers (1)
-
With reference to IPSAS 26 (Impairment of Non-Cash Generating Assets):
i) Explain the meaning of ‘cash-generating assets’.
ii) Analyse the criteria that could be used to identify...
(Solved)
With reference to IPSAS 26 (Impairment of Non-Cash Generating Assets):
i) Explain the meaning of ‘cash-generating assets’.
ii) Analyse the criteria that could be used to identify ah asset that might be impaired.
Date posted:
February 15, 2019
.
Answers (1)
-
In the context of unethical management practices, discuss four incentives that could motivate the management of a business entity to manipulate the entity's financial statements...
(Solved)
In the context of unethical management practices, discuss four incentives that could motivate the management of a business entity to manipulate the entity's financial statements as well as the underlying supporting records.
Date posted:
February 14, 2019
.
Answers (1)
-
Pamoja group has-prepared the following draft statements of financial position as at 30 June:
(Solved)
Pamoja group has-prepared the following draft statements of financial position as at 30 June:
Date posted:
February 14, 2019
.
Answers (1)
-
The following trial balance relates to Ndovu Limited as at 31 March 2013:
(Solved)
The following trial balance relates to Ndovu Limited as at 31 March 2013:
Additional information:
1. The value of land in the trial balance is given as Sh.300 million. The buildings were revalued on 31 March 2013 at Sh.920 million. The estimated useful life of buildings was 20 years as at 1 April 2012. Depreciation on buildings is charged at 60% to cost of sales and 20% each to distribution costs and administrative expenses.
2. The company constructed its own plant at a total cost of Sh.240 million. The plant was brought into use on 1 October 2012 but its cost had not been capitalized. Instead, its cost had been included in the cost of sales. Plant is depreciated at 12.5% per annum using the reducing balance method (time apportioned) and charged to the cost of sales.
3. The fair value of the investments held at fair value was Sh.271 million as at 3 1 March 2013.
4. The balance of tax on the trial balance represents an overprovision of previous years" tax.
The estimate of tax for the current year is Sh.187 million. At 31 March 2013, there were Sh.400 million of taxable temporary differences. For deferred, tax assume an average tax rate of 30%.
5. The 2% loan note was issued on 1 October 2012 under the terms that require a large premium on repayment. The effective interest rate therefore is 6% per annum.
6. The suspense account relates to a rights issue of shares that was made on 1 January 2013. The terms of the issue were one share for every four held at Sh.8 per share. The par value of each share is Sh.5. The issue was fully subscribed.
Required:
Prepare the following statements in a format suitable for publication:
a) Statement of comprehensive income for the year ended 31 March 2013.
b) Statement of financial position as at 31 March 2013.
Date posted:
February 14, 2019
.
Answers (1)
-
The Kengo group has prepared the following financial statements for the years ended 31st March 2013 and 2012:
(Solved)
The Kengo group has prepared the following financial statements for the years ended 31st March 2013 and 2012:
Date posted:
February 14, 2019
.
Answers (1)