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:
Gold Silver
Ltd Ltd
Debits R R
Land and buildings 31 500 90 000 -
Machinery and equipment 10 000
Investment in Silver Limited at fair value (cost price: R160 000) Bank 160 000 -
Trade and other receivables 153 500 -
Inventories - 65 000
Taxation 500 112 000
Dividends paid 10 500 10 000
9 000 8 000
365 000 295 000
Credits
Ordinary share capital (R2 shares)
Retained earnings 150 000 160 000
Revaluation surplus Trade 31 500 34 000
and other payables Bank 21 200 -
Profit before tax 125 600 23 750
Dividends received - 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
R R
Ordinary share capital - R5 shares 200 000 150 000
Revaluation of land and buildings 220 000 100 000
Distributable reserve - Retained earnings 266 000 174 000
Long-term loan - Rams Limited -400 100 000
Property, plant and equipment 000 500 000
Investment in Alo Limited
- 22 500 ordinary shares - 280 000 -
loan 112 000 -
Trade and other payables 201 000 116 000
Trade and other receivables 35 000 56 000
Inventories 60 000 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.
, QUESTION 3
The following represented the abridged statements of financial position of Cape Limited and its subsidiary:
STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2015
Cape Port Ltd
Ltd
R
R
ASSETS 140 000
Property at valuation 450 000 152 000
Plant at carrying amount 124 000
Investment in Port Ltd – 37 500 ordinary shares at fair value -
(cost price R180 000) 180 000 40 000
Loan - Cape Ltd -Inventory 140 000
100 000 -
Bank - Chili Bank 80 000 Trade 48 000
and other receivables 10 000
520 000
Total assets 944 000
EQUITY AND LIABILITIES 100 000 -
Ordinary shares of R2 each 400 000 164 000
Revaluation of property 100 000 164 000
Retained earnings 192 000
Long-term borrowings 200 000 -
164 000
Loan - Port Ltd 20 000 Other
180 000 22 000
70 000
Trade and other payables 52 000
Bank overdraft - Chili Bank - 520 000
Total equity and liabilities 944 000
Additional information
1. Cape Ltd acquired its interest in Port Ltd on 1 March 2012. At that date the retained earnings of Port
Ltd amounted to R64 000. On that date the property of Port Ltd was revalued at R200 000. The
books were not adjusted accordingly and no purchases or sale of property took place since that
date.
2. On 26 February 2015Cape Ltd mailed a cheque of R20 000 to Port Ltd. Port Ltd received the cheque
on 6 March 2015.
3. Cape Ltd sold a machine to Port Ltd on 31 August 2014 at a profit of R20 000. The group provides
for depreciation at 20% per annum according to the straight-line method.
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:
Gold Silver
Ltd Ltd
Debits R R
Land and buildings 31 500 90 000 -
Machinery and equipment 10 000
Investment in Silver Limited at fair value (cost price: R160 000) Bank 160 000 -
Trade and other receivables 153 500 -
Inventories - 65 000
Taxation 500 112 000
Dividends paid 10 500 10 000
9 000 8 000
365 000 295 000
Credits
Ordinary share capital (R2 shares)
Retained earnings 150 000 160 000
Revaluation surplus Trade 31 500 34 000
and other payables Bank 21 200 -
Profit before tax 125 600 23 750
Dividends received - 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
R R
Ordinary share capital - R5 shares 200 000 150 000
Revaluation of land and buildings 220 000 100 000
Distributable reserve - Retained earnings 266 000 174 000
Long-term loan - Rams Limited -400 100 000
Property, plant and equipment 000 500 000
Investment in Alo Limited
- 22 500 ordinary shares - 280 000 -
loan 112 000 -
Trade and other payables 201 000 116 000
Trade and other receivables 35 000 56 000
Inventories 60 000 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.
, QUESTION 3
The following represented the abridged statements of financial position of Cape Limited and its subsidiary:
STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2015
Cape Port Ltd
Ltd
R
R
ASSETS 140 000
Property at valuation 450 000 152 000
Plant at carrying amount 124 000
Investment in Port Ltd – 37 500 ordinary shares at fair value -
(cost price R180 000) 180 000 40 000
Loan - Cape Ltd -Inventory 140 000
100 000 -
Bank - Chili Bank 80 000 Trade 48 000
and other receivables 10 000
520 000
Total assets 944 000
EQUITY AND LIABILITIES 100 000 -
Ordinary shares of R2 each 400 000 164 000
Revaluation of property 100 000 164 000
Retained earnings 192 000
Long-term borrowings 200 000 -
164 000
Loan - Port Ltd 20 000 Other
180 000 22 000
70 000
Trade and other payables 52 000
Bank overdraft - Chili Bank - 520 000
Total equity and liabilities 944 000
Additional information
1. Cape Ltd acquired its interest in Port Ltd on 1 March 2012. At that date the retained earnings of Port
Ltd amounted to R64 000. On that date the property of Port Ltd was revalued at R200 000. The
books were not adjusted accordingly and no purchases or sale of property took place since that
date.
2. On 26 February 2015Cape Ltd mailed a cheque of R20 000 to Port Ltd. Port Ltd received the cheque
on 6 March 2015.
3. Cape Ltd sold a machine to Port Ltd on 31 August 2014 at a profit of R20 000. The group provides
for depreciation at 20% per annum according to the straight-line method.
