Test 1 - 2022 08 17

FACULTY COMMERCE, MANAGEMENT AND LAW
DEPARTMENT SCHOOL OF ACCOUNTING
PROGRAMME B. ACC (HONOURS)
SUBJECT FINANCIAL ACCOUNTING 2B
SUBJECT CODE AFE 3782
DATE 17 AUGUST 2022 TIME 10:00
DURATION 54 MINUTES MARKS 30
Test 1
Instructions
1. The marks shown against the requirement(s) for each question should be taken as an
indication of the expected length and the required depth of the answer.
2. Answer the questions using: appropriate arrangement and presentation; clarity of
explanation; logical arguments; and clear and concise language.
3. Non-programmable calculators are allowed.
4. Clearly show all calculations.
5. Round to two decimal places unless stated otherwise.
6. You are not allowed to consult another student or any other resources, i.e. closed book
assessment
AFE 3782 – Test 1/3

QUESTION 1 30 MARKS
The following abridged financial statements of two companies are presented to you:
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021
LIONEL LTD VENTURE LTD

N$ N$
ASSETS
Non-current assets at carrying values 970 000 350 000
Property, plant and equipment 410 000 350 000
Investment in Venture Ltd (160 000 shares @ cost) 560 000 -
Current assets 340 000 520 000

Inventory at cost 174 000 312 000
Debtors 166 000 208 000
1 310 000 870 000
EQUITY AND LIABILITIES

Share capital and reserves 1 000 000 650 000
Share capital – ordinary shares of N$2.00 each 800 000 400 000
General reserve 80 000 100 000
Retained earnings 120 000 150 000
Non-current liabilities 150 000 20 000

Interest bearing loans 100 000 20 000
Other non-current liabilities 50 000 -
Current liabilities 160 000 200 000

Creditors 96 000 138 000
Inland Revenue 64 000 62 000
1 310 000 870 000
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2021
LIONEL LTD VENTURE LTD

N$ N$
Sales 800 000 485 000
Cost of sales (340 000) (275 000)
Gross Profit 460 000 210 000
Total overhead expenses
Salaries and wages 160 000 70 000
Depreciation Vehicles 68 572 30 000
Profit before taxation 231 428 110 000
Taxation (71 428) (40 000)
Profit for the year 160 000 70 000
AFE 3782 – Test 2/3

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021
General reserve Retained earnings Total

N$ N$ N$
Lionel Ltd
Balance 31/12/2020 20 000 100 000 120 000
Transfer to general reserve 60 000 (60 000) -
Dividends declared (80 000) (80 000)
Balance 31/12/2021 80 000 120 000 200 000
Venture Ltd
Balance 31/12/2020 80 000 100 000 180 000
Transfer to general reserve 20 000 (20 000) -
Balance 31/12/2021 100 000 150 000 250 000
Additional Information:
 Lionel Ltd (“Lionel”) acquired the interest in Venture Ltd (“Venture”) on 31 December 2018 when the
general reserve and retained earnings of Venture were N$ 40 000 and N$ 80 000 respectively. The
group has elected to use the proportionate method to value the NCI holding at acquisition date.
 With the exception of property, plant and equipment (which was valued at N$ 300 000), all the
identifiable assets of Venture were fairly valued in its books at the date of acquisition.
 From 1 January 2010, Lionel started buying goods from Venture. Venture sold the goods at a
markup of 25% on cost to Lionel. The total sales by Venture to Lionel for the year amounted to
N$ 180 000.
 On 31 December 2021 Lionel had inventory of N$ 12 500 on hand that they purchased from Venture.
 On 1 July 2021 Lionel bought a delivery vehicle from Venture for N$ 50 000. The carrying value of
the vehicle in the books of Venture amounted to N$ 45 000.
 Both companies depreciate vehicles at 20% per annum on a straight line basis with a residual value
of N$ nil.
 Please note that you should use the income tax figures indicated above and don’t recalculate the
income tax expense.
Required:
a) Prepare the pro-forma journals of the consolidated financial statements of Lionel Ltd and its
subsidiary for the year ending 31 December 2021. Journal narrations are not required. (12)
b) Prepare the equity and liabilities portion of the consolidated statement of financial position of
Lionel Ltd and its subsidiary as at 31 December 2021. (18)
Show all your workings.
AFE 3782 – Test 3/3

Test 1 - 2022 08 17

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FACULTY COMMERCE, MANAGEMENT AND LAW

DEPARTMENT SCHOOL OF ACCOUNTING

PROGRAMME B. ACC (HONOURS)

SUBJECT FINANCIAL ACCOUNTING 2B

SUBJECT CODE AFE 3782

DATE 17 AUGUST 2022 TIME 10:00

DURATION 54 MINUTES MARKS 30

AFE 3782 – Test 1/3

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021

LIONEL LTD VENTURE LTD

Current assets 340 000 520 000

EQUITY AND LIABILITIES

Non-current liabilities 150 000 20 000

Current liabilities 160 000 200 000

LIONEL LTD VENTURE LTD

AFE 3782 – Test 2/3

General reserve Retained earnings Total

Show all your workings.

AFE 3782 – Test 3/3

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