There are two main approaches that a country could adopt in respect of corporate governance regulation - a rules based approach and a principles based approach. Match the following statements with the appropriate approach by placing either rules based or principles based against each of them.
Statements of financial position as at 31 December 20X8 for JK, LM and PQ are as follows:
[1] JK purchased 80% of LM's $1 equity shares on 1 January 20X8 for $260,000 when the retained earnings of JK were $110,000. At that date the non-controlling interest had a fair value of $63,000.
[2] JK purchased 25% of PQ's $1 equity shares on 1 January 20X8 for $90,000 when the retained earnings of PQ were $96,000.
[3] During the year JK sold goods to LM for $32,000 at a mark up of 33.33% on cost. Half of the goods were still in LM's inventory at 31 December 20X8.
[4] LM transferred $32,000 to JK on 30 December 20X8 in settlement of the inter-group trade. JK did not record the cash in its financial records until 2 January 20X9.
Calculate the goodwill arising on the acquisition LM.
Give your answer to the nearest $.
The following information relates to AA.
Extract of Trial Balance at 31 December 20X4;
Notes
(i) Inventory at 31 December 20X4 was valued at cost at $30.
(ii) The loan which was received on 1 July 20X4 is repayable in 20X9.
(iii) Corporate income tax represents an over-provision of tax for the year ended 31 December 20X3. AA reported a loss for tax purposes for the year ended 31 December 20X4 and a tax refund is expected amounting to $20.
(iv) Cost of sales, administration and distribution costs need to be adjusted for the following:
What figures should be entered in the Statement of Profit or Loss for the year ended 31 December 20X4 in relation to Administration and Distribution costs?
XY acquired 75% of the equity shares of CD on 1 January 20X2 for $230,000.
On 1 January 20X2 CD had the following balances:
XY uses the proportionate share of net assets method to value non controlling interest at acquisition.
Calculate the goodwill arising on the acquisition of CD.
Give your answer to nearest whole number.
UV has recently been having cash flow issues due to its credit customers paying after the credit period they have been granted.
UV is looking into factoring the receivables to a factoring company on a recourse basis to improve its cash flow.
Which TWO of the following will UV encounter as a result of employing the factoring company?
From the list below identify the item that appears in the statement of financial position.
The statement of profit or loss for PQ, ST and AB for the year ended 31 December 20X0 are shown below:
1. PQ acquired 80% of its subsidiary, ST, on 1 January 20X0 and 40% of its associate, AB, on 1 September 20X0.
2. Since acquistion PQ has sold goods to ST and AB for $20,000 and $30,000 respectively. At the year end both ST and AB have 50% of these goods remaining in inventory. PQ uses a mark-up of 20% on all of its sales.
3. Since acquisition the goodwill in respect of ST has been impaired by $8,000 and the investment in AB has been impaired by $2,000.
4. PQ uses the fair value method for non-controlling interest at acquisition.
What is the revenue figure to be included in PQ's consolidated statement of profit or loss for the year ended 31 December 20X0?
Which of the following would be the most immediate impact of overtrading?
T T T is an online retailer. It has 1,000 units of Product X in inventory at the year end. The following information relates to Product X:
c
What is the amount that should be included in the cost of TTT's inventory of Product X?
