(b) Describe with suitable calculations how the goodwill arising on the acquisition of Briars will be dealt with inthe group financial statements and how the loan to Briars should be treated in the financial statements ofBriars for the year ended 31 May 2006. (9 marks)
(b) Describe with suitable calculations how the goodwill arising on the acquisition of Briars will be dealt with in
the group financial statements and how the loan to Briars should be treated in the financial statements of
Briars for the year ended 31 May 2006. (9 marks)
相关考题：
(b) Explain how the non-payment of contributions and the change in the pension benefits should be treated inthe financial statements of Savage for the year ended 31 October 2005. (4 marks)
3 The directors of Panel, a public limited company, are reviewing the procedures for the calculation of the deferred taxprovision for their company. They are quite surprised at the impact on the provision caused by changes in accountingstandards such as IFRS1 ‘First time adoption of International Financial Reporting Standards’ and IFRS2 ‘Share-basedPayment’. Panel is adopting International Financial Reporting Standards for the first time as at 31 October 2005 andthe directors are unsure how the deferred tax provision will be calculated in its financial statements ended on thatdate including the opening provision at 1 November 2003.Required:(a) (i) Explain how changes in accounting standards are likely to have an impact on the provision for deferredtaxation under IAS12 ‘Income Taxes’. (5 marks)
(ii) Explain the accounting treatment under IAS39 of the loan to Bromwich in the financial statements ofAmbush for the year ended 30 November 2005. (4 marks)
(b) a discussion (with suitable calculations) as to how the directors’ share options would be accounted for in thefinancial statements for the year ended 31 May 2005 including the adjustment to opening balances;(9 marks)
(d) Player tradingAnother proposal is for the club to sell its two valuable players, Aldo and Steel. It is thought that it will receive atotal of $16 million for both players. The players are to be offered for sale at the end of the current football seasonon 1 May 2007. (5 marks)Required:Discuss how the above proposals would be dealt with in the financial statements of Seejoy for the year ending31 December 2007, setting out their accounting treatment and appropriateness in helping the football club’scash flow problems.(Candidates do not need knowledge of the football finance sector to answer this question.)
(iii) Tyre has entered into two new long lease property agreements for two major retail outlets. Annual rentals are paidunder these agreements. Tyre has had to pay a premium to enter into these agreements because of the outlets’location. Tyre feels that the premiums paid are justifiable because of the increase in revenue that will occurbecause of the outlets’ location. Tyre has analysed the leases and has decided that one is a finance lease andone is an operating lease but the company is unsure as to how to treat this premium. (5 marks)Required:Advise the directors of Tyre on how to treat the above items in the financial statements for the year ended31 May 2006.(The mark allocation is shown against each of the above items)
(iv) Tyre recently undertook a sales campaign whereby customers can obtain free car accessories, by presenting acoupon, which has been included in an advertisement in a national newspaper, on the purchase of a vehicle.The offer is valid for a limited time period from 1 January 2006 until 31 July 2006. The management are unsureas to how to treat this offer in the financial statements for the year ended 31 May 2006.(5 marks)Required:Advise the directors of Tyre on how to treat the above items in the financial statements for the year ended31 May 2006.(The mark allocation is shown against each of the above items)
(c) Wader is reviewing the accounting treatment of its buildings. The company uses the ‘revaluation model’ for itsbuildings. The buildings had originally cost $10 million on 1 June 2005 and had a useful economic life of20 years. They are being depreciated on a straight line basis to a nil residual value. The buildings were revalueddownwards on 31 May 2006 to $8 million which was the buildings’ recoverable amount. At 31 May 2007 thevalue of the buildings had risen to $11 million which is to be included in the financial statements. The companyis unsure how to treat the above events. (7 marks)Required:Discuss the accounting treatments of the above items in the financial statements for the year ended 31 May2007.Note: a discount rate of 5% should be used where necessary. Candidates should show suitable calculations wherenecessary.
4 (a) Router, a public limited company operates in the entertainment industry. It recently agreed with a televisioncompany to make a film which will be broadcast on the television company’s network. The fee agreed for thefilm was $5 million with a further $100,000 to be paid every time the film is shown on the television company’schannels. It is hoped that it will be shown on four occasions. The film was completed at a cost of $4 million anddelivered to the television company on 1 April 2007. The television company paid the fee of $5 million on30 April 2007 but indicated that the film needed substantial editing before they were prepared to broadcast it,the costs of which would be deducted from any future payments to Router. The directors of Router wish torecognise the anticipated future income of $400,000 in the financial statements for the year ended 31 May2007. (5 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.
(b) Router has a number of film studios and office buildings. The office buildings are in prestigious areas whereasthe film studios are located in ‘out of town’ locations. The management of Router wish to apply the ‘revaluationmodel’ to the office buildings and the ‘cost model’ to the film studios in the year ended 31 May 2007. At presentboth types of buildings are valued using the ‘revaluation model’. One of the film studios has been converted to atheme park. In this case only, the land and buildings on the park are leased on a single lease from a third party.The lease term was 30 years in 1990. The lease of the land and buildings was classified as a finance lease eventhough the financial statements purport to comply with IAS 17 ‘Leases’.The terms of the lease were changed on 31 May 2007. Router is now going to terminate the lease early in 2015in exchange for a payment of $10 million on 31 May 2007 and a reduction in the monthly lease payments.Router intends to move from the site in 2015. The revised lease terms have not resulted in a change ofclassification of the lease in the financial statements of Router. (10 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.
(c) At 1 June 2006, Router held a 25% shareholding in a film distribution company, Wireless, a public limitedcompany. On 1 January 2007, Router sold a 15% holding in Wireless thus reducing its investment to a 10%holding. Router no longer exercises significant influence over Wireless. Before the sale of the shares the net assetvalue of Wireless on 1 January 2007 was $200 million and goodwill relating to the acquisition of Wireless was$5 million. Router received $40 million for its sale of the 15% holding in Wireless. At 1 January 2007, the fairvalue of the remaining investment in Wireless was $23 million and at 31 May 2007 the fair value was$26 million. (6 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.
(d) Additionally Router purchased 60% of the ordinary shares of a radio station, Playtime, a public limited company,on 31 May 2007. The remaining 40% of the ordinary shares are owned by a competitor company who owns asubstantial number of warrants issued by Playtime which are currently exercisable. If these warrants areexercised, they will result in Router only owning 35% of the voting shares of Playtime. (4 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.
(b) One of the hotels owned by Norman is a hotel complex which includes a theme park, a casino and a golf course,as well as a hotel. The theme park, casino, and hotel were sold in the year ended 31 May 2008 to Conquest, apublic limited company, for $200 million but the sale agreement stated that Norman would continue to operateand manage the three businesses for their remaining useful life of 15 years. The residual interest in the businessreverts back to Norman after the 15 year period. Norman would receive 75% of the net profit of the businessesas operator fees and Conquest would receive the remaining 25%. Norman has guaranteed to Conquest that thenet minimum profit paid to Conquest would not be less than $15 million. (4 marks)Norman has recently started issuing vouchers to customers when they stay in its hotels. The vouchers entitle thecustomers to a $30 discount on a subsequent room booking within three months of their stay. Historicalexperience has shown that only one in five vouchers are redeemed by the customer. At the company’s year endof 31 May 2008, it is estimated that there are vouchers worth $20 million which are eligible for discount. Theincome from room sales for the year is $300 million and Norman is unsure how to report the income from roomsales in the financial statements. (4 marks)Norman has obtained a significant amount of grant income for the development of hotels in Europe. The grantshave been received from government bodies and relate to the size of the hotel which has been built by the grantassistance. The intention of the grant income was to create jobs in areas where there was significantunemployment. The grants received of $70 million will have to be repaid if the cost of building the hotels is lessthan $500 million. (4 marks)Appropriateness and quality of discussion (2 marks)Required:Discuss how the above income would be treated in the financial statements of Norman for the year ended31 May 2008.
(b) Discuss how management’s judgement and the financial reporting infrastructure of a country can have asignificant impact on financial statements prepared under IFRS. (6 marks)Appropriateness and quality of discussion. (2 marks)
19 Which of the following statements about intangible assets in company financial statements are correct accordingto international accounting standards?1 Internally generated goodwill should not be capitalised.2 Purchased goodwill should normally be amortised through the income statement.3 Development expenditure must be capitalised if certain conditions are met.A 1 and 3 onlyB 1 and 2 onlyC 2 and 3 onlyD All three statements are correct
(ii) Explain how the inclusion of rental income in Coral’s UK income tax computation could affect theincome tax due on her dividend income. (2 marks)You are not required to prepare calculations for part (b) of this question.Note: you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year to31 March 2007 will continue to apply for the foreseeable future.
3 You are the manager responsible for the audit of Volcan, a long-established limited liability company. Volcan operatesa national supermarket chain of 23 stores, five of which are in the capital city, Urvina. All the stores are managed inthe same way with purchases being made through Volcan’s central buying department and product pricing, marketing,advertising and human resources policies being decided centrally. The draft financial statements for the year ended31 March 2005 show revenue of $303 million (2004 – $282 million), profit before taxation of $9·5 million (2004– $7·3 million) and total assets of $178 million (2004 – $173 million).The following issues arising during the final audit have been noted on a schedule of points for your attention:(a) On 1 May 2005, Volcan announced its intention to downsize one of the stores in Urvina from a supermarket toa ‘City Metro’ in response to a significant decline in the demand for supermarket-style. shopping in the capital.The store will be closed throughout June, re-opening on 1 July 2005. Goodwill of $5·5 million was recognisedthree years ago when this store, together with two others, was bought from a national competitor. It is Volcan’spolicy to write off goodwill over five years. (7 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Volcan for the year ended31 March 2005.NOTE: The mark allocation is shown against each of the three issues.
(b) You are an audit manager with specific responsibility for reviewing other information in documents containingaudited financial statements before your firm’s auditor’s report is signed. The financial statements of Hegas, aprivately-owned civil engineering company, show total assets of $120 million, revenue of $261 million, and profitbefore tax of $9·2 million for the year ended 31 March 2005. Your review of the Annual Report has revealedthe following:(i) The statement of changes in equity includes $4·5 million under a separate heading of ‘miscellaneous item’which is described as ‘other difference not recognized in income’. There is no further reference to thisamount or ‘other difference’ elsewhere in the financial statements. However, the Management Report, whichis required by statute, is not audited. It discloses that ‘changes in shareholders’ equity not recognized inincome includes $4·5 million arising on the revaluation of investment properties’.The notes to the financial statements state that the company has implemented IAS 40 ‘Investment Property’for the first time in the year to 31 March 2005 and also that ‘the adoption of this standard did not have asignificant impact on Hegas’s financial position or its results of operations during 2005’.(ii) The chairman’s statement asserts ‘Hegas has now achieved a position as one of the world’s largestgenerators of hydro-electricity, with a dedicated commitment to accountable ethical professionalism’. Auditworking papers show that 14% of revenue was derived from hydro-electricity (2004: 12%). Publiclyavailable information shows that there are seven international suppliers of hydro-electricity in Africa alone,which are all at least three times the size of Hegas in terms of both annual turnover and population supplied.Required:Identify and comment on the implications of the above matters for the auditor’s report on the financialstatements of Hegas for the year ended 31 March 2005. (10 marks)
(b) You are the audit manager of Johnston Co, a private company. The draft consolidated financial statements forthe year ended 31 March 2006 show profit before taxation of $10·5 million (2005 – $9·4 million) and totalassets of $55·2 million (2005 – $50·7 million).Your firm was appointed auditor of Tiltman Co when Johnston Co acquired all the shares of Tiltman Co in March2006. Tiltman’s draft financial statements for the year ended 31 March 2006 show profit before taxation of$0·7 million (2005 – $1·7 million) and total assets of $16·1 million (2005 – $16·6 million). The auditor’sreport on the financial statements for the year ended 31 March 2005 was unmodified.You are currently reviewing two matters that have been left for your attention on the audit working paper files forthe year ended 31 March 2006:(i) In December 2004 Tiltman installed a new computer system that properly quantified an overvaluation ofinventory amounting to $2·7 million. This is being written off over three years.(ii) In May 2006, Tiltman’s head office was relocated to Johnston’s premises as part of a restructuring.Provisions for the resulting redundancies and non-cancellable lease payments amounting to $2·3 millionhave been made in the financial statements of Tiltman for the year ended 31 March 2006.Required:Identify and comment on the implications of these two matters for your auditor’s reports on the financialstatements of Johnston Co and Tiltman Co for the year ended 31 March 2006. (10 marks)
(b) Seymour offers health-related information services through a wholly-owned subsidiary, Aragon Co. Goodwill of$1·8 million recognised on the purchase of Aragon in October 2004 is not amortised but included at cost in theconsolidated balance sheet. At 30 September 2006 Seymour’s investment in Aragon is shown at cost,$4·5 million, in its separate financial statements.Aragon’s draft financial statements for the year ended 30 September 2006 show a loss before taxation of$0·6 million (2005 – $0·5 million loss) and total assets of $4·9 million (2005 – $5·7 million). The notes toAragon’s financial statements disclose that they have been prepared on a going concern basis that assumes thatSeymour will continue to provide financial support. (7 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Seymour Co for the year ended30 September 2006.NOTE: The mark allocation is shown against each of the three issues.
(ii) On 1 July 2006 Petrie introduced a 10-year warranty on all sales of its entire range of stainless steelcookware. Sales of stainless steel cookware for the year ended 31 March 2007 totalled $18·2 million. Thenotes to the financial statements disclose the following:‘Since 1 July 2006, the company’s stainless steel cookware is guaranteed to be free from defects inmaterials and workmanship under normal household use within a 10-year guarantee period. No provisionhas been recognised as the amount of the obligation cannot be measured with sufficient reliability.’(4 marks)Your auditor’s report on the financial statements for the year ended 31 March 2006 was unmodified.Required:Identify and comment on the implications of these two matters for your auditor’s report on the financialstatements of Petrie Co for the year ended 31 March 2007.NOTE: The mark allocation is shown against each of the matters above.
(d) Wader has decided to close one of its overseas branches. A board meeting was held on 30 April 2007 when adetailed formal plan was presented to the board. The plan was formalised and accepted at that meeting. Letterswere sent out to customers, suppliers and workers on 15 May 2007 and meetings were held prior to the yearend to determine the issues involved in the closure. The plan is to be implemented in June 2007. The companywish to provide $8 million for the restructuring but are unsure as to whether this is permissible. Additionally therewas an issue raised at one of the meetings. The operations of the branch are to be moved to another countryfrom June 2007 but the operating lease on the present buildings of the branch is non-cancellable and runs foranother two years, until 31 May 2009. The annual rent of the buildings is $150,000 payable in arrears on31 May and the lessor has offered to take a single payment of $270,000 on 31 May 2008 to settle theoutstanding amount owing and terminate the lease on that date. Wader has additionally obtained permission tosublet the building at a rental of $100,000 per year, payable in advance on 1 June. The company needs adviceon how to treat the above under IAS37 ‘Provisions, Contingent Liabilities and Contingent Assets’. (7 marks)Required:Discuss the accounting treatments of the above items in the financial statements for the year ended 31 May2007.Note: a discount rate of 5% should be used where necessary. Candidates should show suitable calculations wherenecessary.
听力原文：M: There are several reasons why careful analysis of financial statements is necessary. What are they?W: First, financial statements are general-purpose statements. Secondly, the relationships between amounts on successive financial statements are not obvious without analysis. And thirdly, users of financial statements may be interested in seeing how well a company is performing.Q: What are they talking about?(17)A．The methods of financial statements.B．The necessity of careful analysis of financial statementsC．The relationship among financial statements.D．The purpose of financial statements.
On 1 April 2009 Pandar purchased 80% of the equity shares in Salva. The acquisition was through a share exchange of three shares in Pandar for every five shares in Salva. The market prices of Pandar’s and Salva’s shares at 1 April2009 were $6 per share and $3.20 respectively.On the same date Pandar acquired 40% of the equity shares in Ambra paying $2 per share.The summarised income statements for the three companies for the year ended 30 September 2009 are:The following information is relevant:(i) The fair values of the net assets of Salva at the date of acquisition were equal to their carrying amounts with the exception of an item of plant which had a carrying amount of $12 million and a fair value of $17 million. This plant had a remaining life of five years (straight-line depreciation) at the date of acquisition of Salva. All depreciation is charged to cost of sales.In addition Salva owns the registration of a popular internet domain name. The registration, which had anegligible cost, has a five year remaining life (at the date of acquisition); however, it is renewable indefinitely at a nominal cost. At the date of acquisition the domain name was valued by a specialist company at $20 million.The fair values of the plant and the domain name have not been reflected in Salva’s financial statements.No fair value adjustments were required on the acquisition of the investment in Ambra.(ii) Immediately after its acquisition of Salva, Pandar invested $50 million in an 8% loan note from Salva. All interest accruing to 30 September 2009 had been accounted for by both companies. Salva also has other loans in issue at 30 September 2009.(iii) Pandar has credited the whole of the dividend it received from Salva to investment income.(iv) After the acquisition, Pandar sold goods to Salva for $15 million on which Pandar made a gross profit of 20%. Salva had one third of these goods still in its inventory at 30 September 2009. There are no intra-group current account balances at 30 September 2009.(v) The non-controlling interest in Salva is to be valued at its (full) fair value at the date of acquisition. For thispurpose Salva’s share price at that date can be taken to be indicative of the fair value of the shareholding of the non-controlling interest.(vi) The goodwill of Salva has not suffered any impairment; however, due to its losses, the value of Pandar’sinvestment in Ambra has been impaired by $3 million at 30 September 2009.(vii) All items in the above income statements are deemed to accrue evenly over the year unless otherwise indicated.Required:(a) (i) Calculate the goodwill arising on the acquisition of Salva at 1 April 2009; (6 marks)(ii) Calculate the carrying amount of the investment in Ambra to be included within the consolidatedstatement of financial position as at 30 September 2009. (3 marks)(b) Prepare the consolidated income statement for the Pandar Group for the year ended 30 September 2009.(16 marks)
You are an audit manager at Rockwell Co, a firm of Chartered Certified Accountants. You are responsible for the audit of the Hopper Group, a listed audit client which supplies ingredients to the food and beverage industry worldwide.The audit work for the year ended 30 June 2015 is nearly complete, and you are reviewing the draft audit report which has been prepared by the audit senior. During the year the Hopper Group purchased a new subsidiary company, Seurat Sweeteners Co, which has expertise in the research and design of sugar alternatives. The draft financial statements of the Hopper Group for the year ended 30 June 2015 recognise profit before tax of $495 million (2014 – $462 million) and total assets of $4,617 million (2014: $4,751 million). An extract from the draft audit report is shown below:Basis of modified opinion (extract)In their calculation of goodwill on the acquisition of the new subsidiary, the directors have failed to recognise consideration which is contingent upon meeting certain development targets. The directors believe that it is unlikely that these targets will be met by the subsidiary company and, therefore, have not recorded the contingent consideration in the cost of the acquisition. They have disclosed this contingent liability fully in the notes to the financial statements. We do not feel that the directors’ treatment of the contingent consideration is correct and, therefore, do not believe that the criteria of the relevant standard have been met. If this is the case, it would be appropriate to adjust the goodwill balance in the statement of financial position.We believe that any required adjustment may materially affect the goodwill balance in the statement of financial position. Therefore, in our opinion, the financial statements do not give a true and fair view of the financial position of the Hopper Group and of the Hopper Group’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.Emphasis of Matter ParagraphWe draw attention to the note to the financial statements which describes the uncertainty relating to the contingent consideration described above. The note provides further information necessary to understand the potential implications of the contingency.Required:(a) Critically appraise the draft audit report of the Hopper Group for the year ended 30 June 2015, prepared by the audit senior.Note: You are NOT required to re-draft the extracts from the audit report. (10 marks)(b) The audit of the new subsidiary, Seurat Sweeteners Co, was performed by a different firm of auditors, Fish Associates. During your review of the communication from Fish Associates, you note that they were unable to obtain sufficient appropriate evidence with regard to the breakdown of research expenses. The total of research costs expensed by Seurat Sweeteners Co during the year was $1·2 million. Fish Associates has issued a qualified audit opinion on the financial statements of Seurat Sweeteners Co due to this inability to obtain sufficient appropriate evidence.Required:Comment on the actions which Rockwell Co should take as the auditor of the Hopper Group, and the implications for the auditor’s report on the Hopper Group financial statements. (6 marks)(c) Discuss the quality control procedures which should be carried out by Rockwell Co prior to the audit report on the Hopper Group being issued. (4 marks)