Question 4.

Select the correct option. The process when preparing the consolidated financial statements consists of the following steps amongst others:

a.

Add together the financial statement account balances of the parent and subsidiary at year-end, then eliminate common items and consolidate the remaining items.

b.

Add together the financial statement account balances of the parent and subsidiary at year-end, and then eliminate the profit or losses from intergroup transactions not yet realised outside the group, eliminate common items and consolidate the remaining items.

c.

Add together the financial statement account balances of the parent and subsidiary at year-end then eliminate all intragroup balances to determine the totals of assets and liabilities and consolidate the remaining items.

d.

Add together the financial statement account balances of the parent and subsidiary at year-end and then eliminate any goodwill arising on consolidation

Question 5 Total current assets amounts to:

a.

R2 204 500

b.

R2 292 800

c.

R1 436 600

d.

R 856 200

Additional information 1. At date of acquisition, the retained earnings amounted to R150 000 and other components of equity amounted to R135 000 in Hyking Ltd. The carrying amount of all other assets and liabilities of Hyking Lid were considered equal to the fair values thereof. Each ordinary share carries one vote and that voling rights alone determine control. The share capital of Gow Lld and Hyking Ltd remained the same since acquisition and throughout the current year. Hyking Lid revalued a property on 30 November 2018 and again on 30 November 20200 in accordance with a two-year revaluation policy. On 30 November 2018 , the revaluation amounted to R65 000. No revaluation was carried out in the books of Gow Ltd. The relained earnings balances on 1 January 20200 in Gow Ltd amounted to R 1509600 and R370 000 in Hyking Ltd. 2. Gow Ltd and Hyking Ltd have bank accounts ame banking inslitution, with no bank guarantees. 3. The profit for the current year for Hyking Lid is R1280000 and R435 800 for Gow Lid. Both companies declared dividends in the current year amounting to R35 000 for Hyking Lid and R85 000 for GowLtd. 4. It is the group's policy to disclose goodwill at cost less impaiment in the consolidated financial statements. Goodwill was not impaired during the current year. Gow Lid and Hyking Ltd are companies in the tourism industry. Gow Lid accuired 70% in Hyking Lld on the 1 August 2017 . The following data represents the slatements of financial position for the two companies on 31 December 2020