FAC2601 EXAM PACK EXAM REVISION PACK 2015 - $3.49   Add to cart

Exam (elaborations)

FAC2601 EXAM PACK EXAM REVISION PACK 2015

QUESTION 1 Gold Limited acquired 60 000 of the ordinary shares in Silver Limited on 1 March 2013. On this date Silver Limited had retained earnings of R15 000 and the carrying amounts of the assets and liabilities were equal to the fair values. The following represent the abridged trial balances of Gold Limited and Silver Limited at 28 February 2015: Debits Land and buildings Machinery and equipment Investment in Silver Limited at fair value (cost price: R160 000) Bank Trade and other receivables Inventories Taxation Dividends paid Credits Ordinary share capital (R2 shares) Retained earnings Revaluation surplus Trade and other payables Bank Profit before tax Dividends received Gold Silver Ltd Ltd R R 31 500 90 000 - 10 000 160 000 - 153 500 - - 65 000 500 112 000 10 500 10 000 9 000 8 000 365 000 295 000 150 000 160 000 31 500 34 000 21 200 - 125 600 23 750 - 48 250 30 700 29 000 6 000 - 365 000 295 000 REQUIRED: Draft the consolidated financial statements of Gold Limited and its subsidiary Silver Limited at 28 February 2015. Notes to the financial statements are not required. Show all calculations QUESTION 2 The following balances were taken from the books of Rams Limited and its subsidiary Alo Limited on 31 December 2014: Rams Ltd Alo Ltd Ordinary share capital - R5 shares Revaluation of land and buildings Distributable reserve - Retained earnings Long-term loan - Rams Limited Property, plant and equipment Investment in Alo Limited - 22 500 ordinary shares - loan Trade and other payables Trade and other receivables Inventories R 200 000 220 000 266 000 -400 000 280 000 112 000 201 000 35 000 60 000 R 150 000 100 000 174 000 100 000 500 000 - - 116 000 56 000 84 000 Additional information 1. Rams Limited acquired its interest in Alo Limited on 1 January 2008, on which date Alo Limited had retained earnings of R106 000. The carrying amounts of the assets and liabilities were equal to the fair values, except the value of the land and buildings which was deemed to be R100 000 more than the cost thereof. The accounting records were adjusted accordingly. 2. Since Rams Limited acquired its interest in Alo Limited, Alo Limited has purchased all its inventories from Rams Limited. On 1 January 2014 Alo Limited had R60 000 inventories on hand. Rams Limited sells all its inventories at cost plus 20%. Inventories to the value of R12 000 was on its way to Alo Limited at 31 December 2014. 3. The following decisions taken by the directors of the companies must still be accounted for: - R5 000 interest payable by Alo Limited to Rams Limited - A dividend of 10c per share must be declared by both companies on 31 December 2014. No entry in this regard was passed by any of the companies. REQUIRED: Draft the consolidated statement of financial position of Rams Limited and its subsidiary at 31 December 2014 in accordance with the requirements of the Companies Act, and Generally Accepted Accounting Practice. Ignore taxation on unrealised profits and/or losses as well as capital gains tax. Comparative figures and notes are not required. Show the consolidated journal entry at 31 December 2014 to eliminate the intercompany transactions regarding the inventory

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