案例分析题4、Almost all assets and liabilities have some level of uncertainty relating to them

案例分析题Background Banana is the parent of a listed group of companies which have a year end of 30 June 20X7. Banana has made a number of acquisitions and disposals of investments during the current financial year and the directors require advice as to the correct accounting treatment of these acquisitions and disposals. The acquisition of Grape On 1 January 20X7, Banana acquired an 80% equity interest in Grape. The following is a summary of Grapes equity at the acquisition date. The purchase consideration comprised 10 million of Bananas shares which had a nominal value of $1 each and a market price of $680 each. Additionally, cash of $18 million was due to be paid on 1 January 20X9 if the net profit after tax of Grape grew by 5% in each of the two years following acquisition. The present value of the total contingent consideration at 1 January 20X7 was $16 million. It was felt that there was a 25% chance of the profit target being met. At acquisition, the only adjustment required to the identifiable net assets of Grape was for land which had a fair value $5 million higher than its carrying amount. This is not included within the $70 million equity of Grape at 1 January 20X7. Goodwill for the consolidated financial statements has been incorrectly calculated as follows: The financial director did not take into account the contingent cash since it was not probable that it would be paid. Additionally, he measured the non-controlling interest using the proportional method of net assets despite the group having a published policy to measure non-controlling interest at fair value. The share price of Grape at acquisition was $425 and should be used to value the non-controlling interest. The acquisition and subsequent disposal of Strawberry Banana had purchased a 40% equity interest in Strawberry for $18 million a number of years ago when the fair value of the identifiable net assets was $44 million. Since acquisition, Banana had the right to appoint one of the five directors on the board of Strawberry. The investment has always been equity accounted for in the consolidated financial statements of Banana. Banana disposed of 75% of its 40% investment on 1 October 20X6 for $19 million when the fair values of the identifiable net assets of Strawberry were $50 million. At that date, Banana lost its right to appoint one director to the board. The fair value of the remaining 10% equity interest was $45 million at disposal but only $4 million at 30 June 20X7. Banana has recorded a loss in reserves of $14 million calculated as the difference between the price paid of $18 million and the fair value of $4 million at the reporting date. Banana has stated that they have no intention to sell their remaining shares in Strawberry and wish to classify the remaining 10% interest as fair value through other comprehensive income in accordance with IFRS 9 Financial Instruments. The acquisition of Melon On 30 June 20X7, Banana acquired all of the shares of Melon, an entity which operates in the biotechnology industry. Melon was only recently formed and its only asset consists of a licence to carry out research activities. Melon has no employees as research activities were outsourced to other companies. The activities are still at a very early stage and it is not clear that any definitive product would result from the activities. A management company provides personnel for Melon to supply supervisory activities and administrative functions. Banana believes that Melon does not constitutea business in accordance with IFRS 3 Business Combinations since it does not have employees nor carries out any of its own processes. Banana intends to employ its own staff to operate Melon rather than to continue to use the services of the management company. The directors of Banana therefore believe that Melon should be treated as an asset acquisition but are uncertain as to whether the International Accounting Standards Boards exposure draft Definition of a Business and Accounting for Previously Held Interests ED 2016/1 would revise this conclusion. The acquisition of bonds On 1 July 20X5, Banana acquired $10 million 5% bonds at par with interest being due at 30 June each year. The bonds are repayable at a substantial premium so that the effective rate of interest was 7%. Banana intended to hold the bonds to collect the contractual cash flows arising from the bonds and measured them at amortised cost. On 1 July 20X6, Banana sold the bonds to a third party for $8 million. The fair value of the bonds was $105 million at that date. Banana has the right to repurchase the bonds on 1 July 20X8 for $88 million and it is likely that this option will be exercised. The third party is obliged to return the coupon interest to Banana and to pay additional cash to Banana should bond values rise. Banana will also compensate the third party for any devaluation of the bonds. Required:

案例分析题Background Farham manufactures white goods such as washing machines, tumble dryers and dishwashers

案例分析题The introduction of a new accounting standard can have significant impact on an entity by changing the way in which financial statements show particular transactions or events

案例分析题4、(a) The existing Conceptual Framework has several notable omissions

案例分析题Section A THIS ONE question is compulsory and MUST be attempted 1、(a) The following draft statements of financial position relate to Bread and its subsidiary Butter, both public listed entities, as at 31 December 2017. The following information is relevant to the preparation of the group financial statements: 1. Bread acquired an 80% equity interest in Butter on 1 January 2014 for a consideration of $1,000 million. At this date the retained earnings and other components of equity were $344 million and $46 million respectively. The fair value of the identifiable net assets of Butter at 1 January 2014 was $1,070 million. The difference between the carrying amount and the fair value of the net assets at 1 January 2014 was due to unrecognised intangibles with a remaining useful life of five years. It is group policy to measure non-controlling interests using the proportional method of the fair value of the net assets. Goodwill has been reviewed annually for impairment and, as at 1 January 2016, none had occurred. The recoverable amount of the net assets of Butter at 31 December 2017 was estimated as $1,328 million. 2. Bread acquired all of the equity shares in Jam on 1 January 2015 for a consideration of $1,250 million. The carrying amount and fair value of the identifiable net assets at acquisition were $1,230 million. At 31 December 2017, Bread was in the process of selling its entire shareholding in Jam and so it was decided that Jam should be treated as a disposal group held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations at that date. The carrying amounts of Jams net assets before classification as held for sale at 31 December 2017 in the individual financial statements are as follows: The group has a policy of revaluing its property, plant and equipment in accordance with IAS 16 Property, Plant and Equipment. There have been no revaluations or any other gains or losses included within Jams other components of equity since the date of acquisition as the carrying amount was deemed to be a close enough approximation to fair value. However, at 31 December 2017, property with a carrying amount of $330 million was deemed to have a fair value of $340 million. No adjustment has yet been made for this fair value. The total fair value less costs to sell of the disposal group at 31 December was estimated to be $1,220 million. There have been no previous impairments to the goodwill of Jam. 3. Bread operates a defined benefit scheme which at 31 December 2016 was in deficit by $120 million. Details for the current year are as follows: The rate of interest applicable to good quality corporate bonds was 5% at 31 December 2016. The cash contributions for the scheme have been correctly accounted for in the financial statements for the year ended 31 December 2017. This is the only adjustment which has been made in respect of the scheme. 4. On 1 January 2016, Bread gave 10,000 of its employees 200 share options each conditional that they worked for Bread for a further three years. During 2016, 980 employees left and a figure was correctly recorded in the financial statements of $39 million for the year ended 31 December 2016. During 2017, a further 950 employees left and it was estimated that 920 would leave in the following year. Details of the fair value of each option are given below. Bread has not made any accounting entries in respect of the share option scheme for the year ended 31 December 2017. 5. Bread owns a 25% share in a manufacturing facility which had a total construction cost of $200 million and was completed and ready for use on 31 March 2017. The facility is expected to have a useful life of 20 years. All economic decisions concerning the facility require the unanimous consent of Bread and two other investors who own the remaining 75% of the facility. The investment in the manufacturing facility was correctly deemed to be a joint operation and trading from the facility started from 30 June 2017. Revenues earned from the facility for the period ended 31 December 2017 were $57 million. Production costs for goods sold and other operating costs were $36 million. Bread has not made any accounting entries for the year ended 31 December 2017 in relation to the facility, except for $50 million construction costs included within property, plant and equipment. It has been agreed that profits and losses should be split evenly across the three investors. Required: Prepare the consolidated statement of financial position of the Bread group for the year ended 31 December 2017. (35 marks) (b) The directors of Bread have been reviewing their classification of Jam as held for sale within IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Jam operates in the electricity generation industry which is highly regulated. It is thought that it is highly probable that a purchaser would be found for Jam shortly after 31 December 2017 but that any sale would be subject to regulatory approval which could extend the period beyond 31 December 2018. Actions required to comply with regulatory approval cannot be initiated until a purchase commitment is obtained from the prospective acquirer. In the meantime, Jam will continue to supply electricity to its existing customers. Bread intends to sell all of its shares to the new purchaser who would obtain all of Jams rights and obligations. The directors of Jam do not intend to sell off any significant assets on an individualbasis as this could impact on their supply of electricity to their customers and ultimately affect the sales price of the shares. Required: Discuss why the directors of Bread were correct to classify the proposed sale of Jam as a disposal group held for sale within the context of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. (6 marks) (c) The Bread group has always measured the non-controlling interest using the proportional share of the fair value of the net assets method. Bread, Butter and Jam are all listed and therefore have readily ascertainable market value for their shares. The directors of Bread are contemplating changing their policy retrospectively to measuring the non-controlling interest at fair value as a reliable and fair calculation of the non-controlling interest is obtainable. They are therefore proposing that they analyse the impact of the alternative valuations of the non-controlling interest on a subsidiary by subsidiary basis for current group members and any proposed future acquisitions. They believe that it is the directors responsibility to maximise the wealth of the entitys shareholders and intend to choose a valuation which will maximise profitability and equity. The directors of Bread have a history of changing accounting policies on a regular basis should they believe that it would have a positive impact on the financial statements. Required: Discuss whether the proposed change in accounting policy is permitted by International Accounting Standards and how it could impact on future group profitability ratios. Consider any ethical issues which may arise from the scenario. (9 marks)

案例分析题The International Accounting Standards Board (IASB) is undertaking a broad-based initiative to explore how disclosures in IFRS financial reporting can be improved. The Disclosure Initiative is made up of a number of implementation and research projects. The IASB has decided that the project should include a discussion on whether the definition of materiality should be changed and whether IAS 1 Presentation of Financial Statements should include additional guidance which clarifies the key characteristics of materiality. Materiality is a matter which has been debated extensively in the context of many forms of reporting, including the International Integrated Reporting Framework. There are difficulties in applying the concept of materiality in practice when preparing the financial statements and it is thought that these difficulties contribute to a disclosure problem, namely, that there is both too much irrelevant information in financial statements and not enough relevant information. Further, the IASB has published for public comment an Exposure Draft of proposed amendments to IAS 7 Statement of Cash Flows. The proposal responds to requests from investors for improved disclosures about an entitys financing activities and its cash and cash equivalents balances. Required:

案例分析题Section A THIS ONE question is compulsory and MUST be attempted The following information relates to the financial statements of the Weston Group: Weston Group: Statement of financial position as at 31 January Weston Group: Statement of profit or loss and other comprehensive income for the year ended 31 January 2016 Notes: (i) On 31 July 2015, Weston disposed of their entire 80% equity holding in Northern for cash. The shares had been acquired on 31 July 2011 for a consideration of $132 million when the fair value of the net assets was $124 million. This included a fair value uplift of $16 million in relation to plant with a remaining useful life of eight years. Deferred tax at 25% on the fair value adjustment was also correctly provided for in the group accounts and is included within the fair value of net assets. The fair value of the non-controlling interest at acquisition was $28 million. Goodwill, calculated under the full fair value method, was tested annually for impairment. At 31 January 2015, goodwill relating to Northern had been impaired by 75%. A goodwill impairment charge has been included within administration expenses for the current year but does not relate to Northern. The carrying values in the individual accounts of Northern at disposal are listed below. The fair value adjustment and subsequent deferred tax were not incorporated into the individual accounts of Northern. (ii) The loss for the period from discontinued operations in the consolidated statement of profit or loss and other comprehensive income relates to Northern and can be analysed as follows: (iii) Weston purchased a 40% interest in an associate for cash on 1 February 2015. The associate paid a dividend of $10 million in the year ended 31 January 2016. (iv) The retirement benefit liability relates to Weston as other companies in the group operate defined contribution schemes. The latest actuarial valuation is as follows: The benefits paid in the period by the trustees of the scheme were $7 million. Weston operates in a country which only allows tax relief when contributions are paid into the scheme. The tax base was therefore zero at 31 January 2015 and 31 January 2016. The tax rate paid by Weston is 25%. The defined benefit expense is included within administrative expenses. (v) On 1 February 2015, Weston commenced development expenditure on product Q. Product Q is expected to be launched during 2017. $7 million amortisation on other intangible assets is included within cost of sales. (vi) There were no disposals of property, plant and equipment during the year except on the sale of Northern. Depreciation for the year was $20m and is included within the cost of sales. (vii) The financial asset at amortised cost is a $20 million two-year loan which Weston gave to an unconnected company on 1 February 2015. Twelve month expected credit losses were estimated at $1 million and have been charged to administrative expenses. The coupon and effective rate of interest were both 8%. Interest was received on 31 January 2016 and recorded correctly in the consolidated financial statements despite a significant deterioration in economic conditions within the industry of the unconnected company. As a result, the investment is to be downgraded with an expected 40% chance of default on the remaining cash flows. No entry has yet been made to downgrade the investment in the consolidated financial statements. (viii) Included within the trade and other payables at 31 January 2015 was contingent consideration of $10 million. A discount rate of 10% was used to measure the fair value of this obligation. This arose on the acquisition of Eastern, a subsidiary acquired several years ago. The consideration to be paid was contingent on the profits of Eastern. Eastern did not perform as well as expected during the year and Weston paid $7 million in full and final settlement of the obligation on 31 January 2016. (ix) Weston did not pay a dividend to its shareholders during the year ended 31 January 2016. Required:

案例分析题3、(a) Medsupply operates in the medical supply industry and has a financial year end of 31 May 2018

问答题(b) Jocatt operates in the energy industry and undertakes complex natural gas trading arrangements, which involve exchanges in resources with other companies in the industry. Jocatt is entering into a long-term contract for the supply of gas and is raising a loan on the strength of this contract. The proceeds of the loan are to be received over the year to 30 November 2011 and are to be repaid over four years to 30 November 2015. Jocatt wishes to report the proceeds as operating cash flow because it is related to a long-term purchase contract. The directors of Jocatt receive extra income if the operating cash flow exceeds a predetermined target for the year and feel that the indirect method is more useful and informative to users of financial statements than the direct method. (i) Comment on the directors’ view that the indirect method of preparing statements of cash flow is more useful and informative to users than the direct method. (7 marks) (ii) Discuss the reasons why the directors may wish to report the loan proceeds as an operating cash flow rather than a financing cash flow and whether there are any ethical implications of adopting this treatment. (6 marks) Professional marks will be awarded in part (b) for the clarity and quality of discussion. (2 marks)