FAC3704
EXAM PACK
2023
QUESTIONS WITH ANSWERS
Email:
,FAC3704 exam
Pack 2023
LATEST QUESTIONS
AND ANSWERS
,QUESTION 1
The following balances appeared in the trial balances of the individual companies in the TWP
Group for the year ended 31 December 2014:
T W P
Limited Limited Limited
R R R
Credits
Share capital - 500 000 ordinary shares 500 000 - -
- 200 000 ordinary shares - 200 000 -
- 150 000 ordinary shares - - 150 000
Retained earnings - 1 January 2014 215 000 60 000 80 000
Mark-to-market reserve 27 520 6 880 -
Deferred tax on mark-to-market reserve 4 480 1 120
Accumulated depreciation 120 000 98 500 155 000
Trade and other payables 64 444 32 460 14 596
Revenue 950 000 710 000 350 000
Other income 22 450 15 750 2 300
Fair value adjustments (before tax) – other investments (2014 –
SoCI) 1 500 1 800 -
1 905 394 1 126 510 751 896
Debits
Property, plant and equipment 513 170 319 252 477 000
Investments: W Limited at fair value 215 000 - -
P Limited at fair value - 175 000 -
C Limited
- 40 000 ordinary shares at fair value 92 000 - -
- 10 000 preference shares at fair value 12 000 - -
Other investments - at fair value 50 000 20 000
Trade and other receivables 250 000 82 000 2 000
Inventories 50 000 19 000 12 000
Ordinary dividends paid - 31 December 2014 6 500 5 000 9 000
Cost of sales 430 000 350 000 150 000
Other expenses 188 500 70 900 62 850
Income tax expense 98 224 85 358 39 046
1 905 394 1 126 510 751 896
Additional information
The directors of the TWP Limited Group decided to expand the company’s operations and the details of
the acquisitions follow hereunder.
1. W Limited
On 1 January 2011 T Limited acquired 166 000 of the ordinary shares of W Limited for R210 000. On
that date the retained earnings of W Limited amounted to R40 000 and the mark-to-market reserve
relating to other investments amounted to R3 855. There were no other reserves on that date.
On the acquisition date of W Limited, no unidentified assets, liabilities or contingent liabilities existed
and the fair value of all the assets, liabilities and contingent liabilities were confirmed to be equal to
the carrying amounts thereof.
, 2. P Limited
W Limited acquired 75% of the ordinary share capital in P Limited on 1
January 2014 for R175 000.
At the date of acquisition of P Limited a portion of land that was stated in the records of P
Limited at R322 000 was valued by a sworn appraiser by R10 000 more. Therevaluation was not
recorded in the records of P Limited. This was the only item in the records of P Limited that
had a fair value that was not equal to its carrying amount at the date of acquisition. At this date,
no unidentified assets, liabilities or contingent liabilities existed.
3. Q Limited
On 1 January 2013, T Limited acquired 40% of the issued share capital of Q Limited when the
retained earnings of RaspC Limited amounted to R20 000. The cost price of the investment in
RaspC Limited amounted to R92 000. On the same date T Limited acquired a
20% interest in the 10% non-redeemable preference share capital of RaspC Limited for R10 000.
Since that date T Limited has exercised significant influence over the financial and operating
policy decisions of Q Limited.
On the above acquisition dates, there were no unidentified assets, liabilities or contingent liabilities
and the fair value of all the assets, liabilities and contingent liabilities were confirmed to be equalto
the carrying amounts thereof.
The trial balance for Q Limited for the year ended 31 December 2014 is as follows:
R
Credits
Share capital - 100 000 ordinary shares 100 000
Share capital - 10% 50 000 non-redeemable preference shares 50 000
Accumulated depreciation 17 000
Trade and other payables 6 000
Revenue 779 500
Other income 18 000
970 500
Debits
Property, plant and equipment 76 000
Accumulated loss 245 000
Trade and other receivables 81 416
Inventories 47 000
Ordinary dividends paid – 31 December 2014 12 000
Cost of sales 332 200
Other expenses 176 884
970 500
QUESTION 1 (continued)
The following additional information is relevant to the question:
(i) Mark-to-market reserve
The mark-to-market reserve and deferred tax on the mark-to-market reserve which is included in the
trial balance is made up as follows:
T W
Limited Limited
R R
Mark-to-market reserve:
Investments in group companies – 1 January 2014 6 020 -
Other investments – 1 January 2014 21 500 6 880
27 520 6 880
Deferred tax on mark-to-market reserve:
Investments in group companies – 1 January 2014 980 -
EXAM PACK
2023
QUESTIONS WITH ANSWERS
Email:
,FAC3704 exam
Pack 2023
LATEST QUESTIONS
AND ANSWERS
,QUESTION 1
The following balances appeared in the trial balances of the individual companies in the TWP
Group for the year ended 31 December 2014:
T W P
Limited Limited Limited
R R R
Credits
Share capital - 500 000 ordinary shares 500 000 - -
- 200 000 ordinary shares - 200 000 -
- 150 000 ordinary shares - - 150 000
Retained earnings - 1 January 2014 215 000 60 000 80 000
Mark-to-market reserve 27 520 6 880 -
Deferred tax on mark-to-market reserve 4 480 1 120
Accumulated depreciation 120 000 98 500 155 000
Trade and other payables 64 444 32 460 14 596
Revenue 950 000 710 000 350 000
Other income 22 450 15 750 2 300
Fair value adjustments (before tax) – other investments (2014 –
SoCI) 1 500 1 800 -
1 905 394 1 126 510 751 896
Debits
Property, plant and equipment 513 170 319 252 477 000
Investments: W Limited at fair value 215 000 - -
P Limited at fair value - 175 000 -
C Limited
- 40 000 ordinary shares at fair value 92 000 - -
- 10 000 preference shares at fair value 12 000 - -
Other investments - at fair value 50 000 20 000
Trade and other receivables 250 000 82 000 2 000
Inventories 50 000 19 000 12 000
Ordinary dividends paid - 31 December 2014 6 500 5 000 9 000
Cost of sales 430 000 350 000 150 000
Other expenses 188 500 70 900 62 850
Income tax expense 98 224 85 358 39 046
1 905 394 1 126 510 751 896
Additional information
The directors of the TWP Limited Group decided to expand the company’s operations and the details of
the acquisitions follow hereunder.
1. W Limited
On 1 January 2011 T Limited acquired 166 000 of the ordinary shares of W Limited for R210 000. On
that date the retained earnings of W Limited amounted to R40 000 and the mark-to-market reserve
relating to other investments amounted to R3 855. There were no other reserves on that date.
On the acquisition date of W Limited, no unidentified assets, liabilities or contingent liabilities existed
and the fair value of all the assets, liabilities and contingent liabilities were confirmed to be equal to
the carrying amounts thereof.
, 2. P Limited
W Limited acquired 75% of the ordinary share capital in P Limited on 1
January 2014 for R175 000.
At the date of acquisition of P Limited a portion of land that was stated in the records of P
Limited at R322 000 was valued by a sworn appraiser by R10 000 more. Therevaluation was not
recorded in the records of P Limited. This was the only item in the records of P Limited that
had a fair value that was not equal to its carrying amount at the date of acquisition. At this date,
no unidentified assets, liabilities or contingent liabilities existed.
3. Q Limited
On 1 January 2013, T Limited acquired 40% of the issued share capital of Q Limited when the
retained earnings of RaspC Limited amounted to R20 000. The cost price of the investment in
RaspC Limited amounted to R92 000. On the same date T Limited acquired a
20% interest in the 10% non-redeemable preference share capital of RaspC Limited for R10 000.
Since that date T Limited has exercised significant influence over the financial and operating
policy decisions of Q Limited.
On the above acquisition dates, there were no unidentified assets, liabilities or contingent liabilities
and the fair value of all the assets, liabilities and contingent liabilities were confirmed to be equalto
the carrying amounts thereof.
The trial balance for Q Limited for the year ended 31 December 2014 is as follows:
R
Credits
Share capital - 100 000 ordinary shares 100 000
Share capital - 10% 50 000 non-redeemable preference shares 50 000
Accumulated depreciation 17 000
Trade and other payables 6 000
Revenue 779 500
Other income 18 000
970 500
Debits
Property, plant and equipment 76 000
Accumulated loss 245 000
Trade and other receivables 81 416
Inventories 47 000
Ordinary dividends paid – 31 December 2014 12 000
Cost of sales 332 200
Other expenses 176 884
970 500
QUESTION 1 (continued)
The following additional information is relevant to the question:
(i) Mark-to-market reserve
The mark-to-market reserve and deferred tax on the mark-to-market reserve which is included in the
trial balance is made up as follows:
T W
Limited Limited
R R
Mark-to-market reserve:
Investments in group companies – 1 January 2014 6 020 -
Other investments – 1 January 2014 21 500 6 880
27 520 6 880
Deferred tax on mark-to-market reserve:
Investments in group companies – 1 January 2014 980 -
