Acca F7 Int Kit Supplement Dec 08

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PAPER F7
FINANCIAL REPORTING (INTERNATIONAL) SUPPLEMENT TO PRACTICE AND REVISION KIT (JANUARY 2008 EDITION) FOR DECEMBER 2008 EXAM

QUESTIONS AND ANSWERS UPDATED FOR REVISED IFRS 3

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We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions. The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated.

© BPP Learning Media Ltd 2008

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Contents

Contents
Page Questions 28 to 44............................................................................................................................................................1 Answers 28 to 44 ............................................................................................................................................................27 Mock Exam 1: question 1................................................................................................................................................77 Mock Exam 1: answer 1 ..................................................................................................................................................79 Mock Exam 2: question 1................................................................................................................................................83 Mock Exam 2: answer 1 ..................................................................................................................................................85 Mock Exam 3 (December 2007 exam): question 1 ..........................................................................................................89 Mock Exam 3 (December 2007 exam): answer 1.............................................................................................................91

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QUESTIONS

28 Preparation question with helping hands: Simple consolidation Boo has owned 80% of Goose's equity since its incorporation. On 31 December 20X8 it despatched goods which cost $80,000 to Goose, at an invoiced cost of $100,000. Goose received the goods on 2 January 20X9 and recorded the transaction then. The two companies' draft accounts as at 31 December 20X8 are shown below. INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 20X8 Boo $'000 5,000 2,900 2,100 1,700 400 130 270 $'000 2,000 500 650 390 1,540 3,540 Goose $'000 1,000 600 400 320 80 25 55 $'000 200 120 40 35 195 395

Revenue Cost of sales Gross profit Other expenses Profit before tax Income tax expense Profit for the year STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20X8 Assets Non-current assets Current assets Inventories Trade receivables Bank and cash Total assets Equity and liabilities Equity Share capital Retained earnings Current liabilities Trade payables Tax Total equity and liabilities Required

2,000 500 2,500 910 130 1,040 3,540

100 240 340 30 25 55 395

Prepare a draft consolidated statement of financial position and income statement. It is the group policy to value the non-controlling interest at acquisition at its proportionate share of the fair value of the subsidiary's identifiable net assets.

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QUESTIONS

Helping hands 1 2 3 4 5 6 This is a very easy example to ease you into the technique of preparing consolidated accounts. There are a number of points to note. Inventory in transit should be included in the statement of financial position and deducted from cost of sales at cost to the group. Similarly, the intra-group receivable and sale should be eliminated as a consolidation adjustment. Boo Co must have...
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