The statements of comprehensive income and changes in equity for XY and its subsidiary, AZ for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The statements of comprehensive income and changes in equity for XY and its subsidiary, AZ for the year ended 31 December 2012 are shown below: XY AZ Statement of comprehensive income for the year ended 31 December 2012 S00 S00 Revenue 3200 2400 Cost of sales -1800 1400 Gross profit 1400 1000 Administrative expenses -350 -250 Distribution costs -300 -150 750 600 Investment income (note 5) 400 Finance costs 140 110 Profit betore tax 1010 490 Income tax expense -160 -150 Profit for the year 850 340 Other comprehersive income that will not be reclassified to profit or loss Revaluation of property, plant and equipment Tax effect of other comprehensive income 40 30 12 10 Other comprehensive income tor the year, net of tax 28 20 Total comprehensive income for the year Statement of changes in equity for the year ended 31 December 2012 878 360 XY AZ S000 Equity at 1 January 2012 12000 8200 Total comprehensive income 878 360 Dividends Equity at 31 December 2012 -600 -400 12278 8160 Notes: 1. XY acquired 80% of the 1 million $1 equity shares in AZ on 1 January 2009 when AZ's retained carnings were $5,000,000. The non-controlling interest was valued at its fair value of S1,350,000 at the acquisition date. The consideration for the acquisition con- sisted of the following: • Cash ot $1,593,000 paid on 1 lanuary 2009; • Cash of $1,000,000 paid on 1 lanuary 2011 (a discount rate of 8% was applied to value the liability in the financial statements of XY); and • The transfer of 1,000,000 shares in XY vwith a nominal value of $1 each and an agreed value on the date of acquisition of $3 each. 2. As at 1 lanuary 2009 the fair value of the net assets acquired was the same as the book value with the exception of property, plant and equipment that had a fair value that was $600,00 higher than its carrying value. The assets were assessed to have a remaining useful life of 6 years from the date of acquisition. Depreciation is charged to cost af sales 3. On 31 December 2012 the goodwill arising on the acquisition of AZ has been impaired by 20%. There have been no previous impairments and impairments are charged to administrative expenses. 4. In the year to 31 December 2012, AZ sold goods to XY with a sales value of $300,000. 20% of the items remain in XY's inventories at the year end. AZ earns 25% gross margin on all sales. 5. The investment income recorded in XY's financial statements relates to: • Dividend income from AZ, which has been correctly treated in XY's individual financial statements • Income from a trade investment in another entity, LM. XY has a 10% shareholding in LM. Required: (a) Prepare the consolidated statement of comprehensive income and the consolidated statement of changes in equity for the XY Group for the year ended 31 December 2012. (20 marks) On 1 February 2013, XY acquired a further investment in LM. XY now holds a total of 60% of the equity share capital of LM. (b) Explain how this additional acquisition will impact on the preparation ot the consolidated financial statements for the year to 31 December 2013. (5 marks) (Total for Question Six = 25 marks) The statements of comprehensive income and changes in equity for XY and its subsidiary, AZ for the year ended 31 December 2012 are shown below: XY AZ Statement of comprehensive income for the year ended 31 December 2012 S00 S00 Revenue 3200 2400 Cost of sales -1800 1400 Gross profit 1400 1000 Administrative expenses -350 -250 Distribution costs -300 -150 750 600 Investment income (note 5) 400 Finance costs 140 110 Profit betore tax 1010 490 Income tax expense -160 -150 Profit for the year 850 340 Other comprehersive income that will not be reclassified to profit or loss Revaluation of property, plant and equipment Tax effect of other comprehensive income 40 30 12 10 Other comprehensive income tor the year, net of tax 28 20 Total comprehensive income for the year Statement of changes in equity for the year ended 31 December 2012 878 360 XY AZ S000 Equity at 1 January 2012 12000 8200 Total comprehensive income 878 360 Dividends Equity at 31 December 2012 -600 -400 12278 8160 Notes: 1. XY acquired 80% of the 1 million $1 equity shares in AZ on 1 January 2009 when AZ's retained carnings were $5,000,000. The non-controlling interest was valued at its fair value of S1,350,000 at the acquisition date. The consideration for the acquisition con- sisted of the following: • Cash ot $1,593,000 paid on 1 lanuary 2009; • Cash of $1,000,000 paid on 1 lanuary 2011 (a discount rate of 8% was applied to value the liability in the financial statements of XY); and • The transfer of 1,000,000 shares in XY vwith a nominal value of $1 each and an agreed value on the date of acquisition of $3 each. 2. As at 1 lanuary 2009 the fair value of the net assets acquired was the same as the book value with the exception of property, plant and equipment that had a fair value that was $600,00 higher than its carrying value. The assets were assessed to have a remaining useful life of 6 years from the date of acquisition. Depreciation is charged to cost af sales 3. On 31 December 2012 the goodwill arising on the acquisition of AZ has been impaired by 20%. There have been no previous impairments and impairments are charged to administrative expenses. 4. In the year to 31 December 2012, AZ sold goods to XY with a sales value of $300,000. 20% of the items remain in XY's inventories at the year end. AZ earns 25% gross margin on all sales. 5. The investment income recorded in XY's financial statements relates to: • Dividend income from AZ, which has been correctly treated in XY's individual financial statements • Income from a trade investment in another entity, LM. XY has a 10% shareholding in LM. Required: (a) Prepare the consolidated statement of comprehensive income and the consolidated statement of changes in equity for the XY Group for the year ended 31 December 2012. (20 marks) On 1 February 2013, XY acquired a further investment in LM. XY now holds a total of 60% of the equity share capital of LM. (b) Explain how this additional acquisition will impact on the preparation ot the consolidated financial statements for the year to 31 December 2013. (5 marks) (Total for Question Six = 25 marks)
Expert Answer:
Answer rating: 100% (QA)
A Consolidated statement of comprehensive income Consolidated statement of comprehensive income for the year ended 31 December 2012 for the XY Group all workings in 000 000 Revenue 3200 2400 300 W1 53... View the full answer
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
Students also viewed these accounting questions
-
Prepare the journal entries to record the transactions (1) through (11) in the general journal. Review the accounts as shown in the General Ledger and Trial Balance tabs. Assume BSS uses perpetual...
-
Prepare General Journal entries to record the following August 2014 transactions of a new business called The Pixel Shop. Aug. 1 Joseph Eetok, the owner, invested $20,000 cash and photography...
-
Prepare General Journal entries to record the following periodic system merchandising transactions for Schafer Merchandising. Use a separate account for each receivable and payable: Oct. 1. Purchased...
-
At the beginning of the current season, the ledger of Highland Tennis Shop showed Cash $2,500; Inventory $1,700; and Common Stock $4,200. The following transactions were completed during April. Apr....
-
List the different types of charts available in Excel, and explain characteristics of data sets that make each chart most appropriate to use.
-
What learning interventions do you think would be useful for your personal development as a global professional to demonstrate cultural sensitivity in managing the HR function of an overseas...
-
0.3409 Use the Standard Normal Table or technology to find the z-score that corresponds to the cumulative area or percentile. Table 4-Standard Normal Distribution Arca Z 0 Z .09 .08 .07 .06 .05 .04...
-
Create class diagrams that describe the classes and relationships depicted in the following scenarios: Researchers are placed into a database that is maintained by the state of Georgia. Information...
-
Explain: Standard cost ideal standard vs practical standard Talk about Flexible budget+ (+ Variances actual) Do you will use ideal standard in the accounting computation? Target costing (pricing) +...
-
The file P02_07.xlsx includes data on 204 employees at the (fictional) company Beta Technologies. For this problem, consider this data set as the population frame. a. Using the method in this section...
-
The demand x for a handheld electronic organizer is given by 7 p = 000 1 7+ e-0.007x where p is the price in dollars. Find the demand x for a price of p = $200 and p = $100. (Round your answers to...
-
What is the term used to describe the assessment of the difference between the actual value in a profit and loss statement and the budgeted value?v
-
Becky owns a bridal accessories store. Her total revenue last year was $173,000. Her rent was $10,000, she paid workers $75,000, and her overhead expenses were $20,000. Becky knows that she could...
-
Mother dies intestate only a few years after Marc graduates from University of Wisconsin. Her estate totals $36,000. Her only heirs are her three children and the proper document has been signed. How...
-
What is the maximum penalty for using money for other purposes or incorrectly accounting for client monies under Section 211, Offences of the PSA Act 2002: What is the maximum penalty for using money...
-
Discuss the business environment at Xerox and the factors that may have motivated fraudulent activity and evaluate the alleged accounting errors and the materiality of each. Discuss whether or not...
-
Cultural appropriation is the subject of a viral debate across various media and social dia platforms. This topic remains trending because of the numerous scenarios that certain. Why is it that...
-
For Problem estimate the change in y for the given change in x. y = f(x), f'(12) = 30, x increases from 12 to 12.2
-
List the general rights of common stockholders.
-
Recall the chapters opening feature involving Chance Claxton and Lynn Julian, and their company, Kids Konserve. Assume that Chance and Lynn, partners in Kids Konserve, decide to expand their business...
-
Palmer Companys first weekly pay period of the year ends on January 8. On that date, the column totals in Palmers payroll register indicate its sales employees earned $69,490, its office employees...
-
T/F: BOs are internally stable and externally adaptable.
-
T/F: BOs is the middle layer of stability model.
-
T/F: BOs are semi-tangible and mostly conceptual.
Study smarter with the SolutionInn App