Financial Reporting: Problem Sets
Answers
Fundamentals Level – Skills Module, Paper F7 (INT)
Financial Reporting (International)
1
(a)
December 2008 Answers
Pedantic
Consolidated income statement for the year ended 30 September 2008
$’000
98,000
(72,000)
–––––––
26,000
(3,000)
(7,600)
(500)
–––––––
14,900
(5,400)
–––––––
9,500
–––––––
Revenue (85,000 + (42,000 x 6/12) – 8,000 intra-group sales)
Cost of sales (w (i))
Gross profit
Distribution costs (2,000 + (2,000 x 6/12))
Administrative expenses (6,000 + (3,200 x 6/12))
Finance costs (300 + (400 x 6/12))
Profit before tax
Income tax expense (4,700 + (1,400 x 6/12))
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interest (((3,000 x 6/12) – (800 URP + 200 depreciation)) x 40%)
(b)
9,300
200
–––––––
9,500
–––––––
Consolidated statement of financial position as at 30 September 2008
Assets
Non-current assets
Property, plant and equipment (40,600 + 12,600 + 2,000 – 200 depreciation adjustment (w (i)))
Goodwill (w (ii))
Current assets (w (iii))
Total assets
Equity and liabilities
Equity attributable to owners of the parent
Equity shares of $1 each ((10, 000 + 1,600) w (ii))
Share premium (w (ii))
Retained earnings (w (iv))
55,000
4,500
–––––––
59,500
21,400
–––––––
80,900
–––––––
11,600
8,000
35,700
–––––––
55,300
6,100
–––––––
61,400
Non-controlling interest (w (v))
Total equity
Non-current liabilities
10% loan notes (4,000 + 3,000)
7,000
Current liabilities (8,200 + 4,700 – 400 intra-group balance)
12,500
–––––––
80,900
–––––––
Total equity and liabilities
Workings (figures in brackets in $’000)
(i) Cost of sales
Pedantic
Sophistic (32,000 x 6/12)
Intra-group sales
URP in inventory
Additional depreciation (2,000/5 years x 6/12)
$’000
63,000
16,000
(8,000)
800
200
–––––––
72,000
–––––––
The unrealised profit (URP) in inventory is calculated as ($8 million – $5·2 million) x 40/140 = $800,000.
Fundamentals Level – Skills Module, Paper F7 (INT)
Financial Reporting (International)
1
(a)
December 2008 Answers
Pedantic
Consolidated income statement for the year ended 30 September 2008
$’000
98,000
(72,000)
–––––––
26,000
(3,000)
(7,600)
(500)
–––––––
14,900
(5,400)
–––––––
9,500
–––––––
Revenue (85,000 + (42,000 x 6/12) – 8,000 intra-group sales)
Cost of sales (w (i))
Gross profit
Distribution costs (2,000 + (2,000 x 6/12))
Administrative expenses (6,000 + (3,200 x 6/12))
Finance costs (300 + (400 x 6/12))
Profit before tax
Income tax expense (4,700 + (1,400 x 6/12))
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interest (((3,000 x 6/12) – (800 URP + 200 depreciation)) x 40%)
(b)
9,300
200
–––––––
9,500
–––––––
Consolidated statement of financial position as at 30 September 2008
Assets
Non-current assets
Property, plant and equipment (40,600 + 12,600 + 2,000 – 200 depreciation adjustment (w (i)))
Goodwill (w (ii))
Current assets (w (iii))
Total assets
Equity and liabilities
Equity attributable to owners of the parent
Equity shares of $1 each ((10, 000 + 1,600) w (ii))
Share premium (w (ii))
Retained earnings (w (iv))
55,000
4,500
–––––––
59,500
21,400
–––––––
80,900
–––––––
11,600
8,000
35,700
–––––––
55,300
6,100
–––––––
61,400
Non-controlling interest (w (v))
Total equity
Non-current liabilities
10% loan notes (4,000 + 3,000)
7,000
Current liabilities (8,200 + 4,700 – 400 intra-group balance)
12,500
–––––––
80,900
–––––––
Total equity and liabilities
Workings (figures in brackets in $’000)
(i) Cost of sales
Pedantic
Sophistic (32,000 x 6/12)
Intra-group sales
URP in inventory
Additional depreciation (2,000/5 years x 6/12)
$’000
63,000
16,000
(8,000)
800
200
–––––––
72,000
–––––––
The unrealised profit (URP) in inventory is calculated as ($8 million – $5·2 million) x 40/140 = $800,000.