Appendix: Answers to Practice Questions

Appendix: Answers to Practice Questions

1. Acquisition & Goodwill:
   Goodwill = 5,000,000 – (4,500,000 × 80%) = 5,000,000 – 3,600,000 = 1,400,000
   Consolidation entry: Dr Identifiable net assets 4,500,000 Dr Non-controlling interest 900,000 Cr Investment in S 5,000,000 Cr Goodwill 1,400,000
2. Bargain Purchase:
   Gain = 3,500,000 – 3,000,000 = 500,000
   Entry: Dr Identifiable net assets 3,500,000 Cr Gain on bargain purchase 500,000 Cr Investment in Y 3,000,000
3. Fair‑Value Uplift & DTL:
   Extra dep’n = 300,000 ÷ 15 = 20,000
   DTL = 300,000 × 20% = 60,000
   Deferred tax expense = 20,000 × 20% = 4,000
   Dr Depreciation expense 20,000 Cr Accumulated depreciation 20,000 Dr Deferred tax expense 4,000 Cr Deferred tax liability 4,000
4. PPE Depreciation:
   Dep’n = (2,000,000 ÷ 10) + (500,000 ÷ 10) = 200,000 + 50,000 = 250,000
5. Inventory FIFO COGS:
   Opening 200@10, next 150@12, then 0@? → COGS = (200×10)+(150×12)=2,000+1,800=3,800
   Ending inv = 50 units @12 = 600
6. Weighted Average & NRV:
   WAC = (150×8 + 150×11) ÷ 300 = (1,200+1,650)÷300 = 2,850÷300 = 9.50
   COGS = 180×9.50 = 1,710
   Ending inv = 120×9.50 = 1,140
   Write-down = (9.50–9)×120 = 0.50×120 = 60
7. IFRS 9 ECL (12‑month):
   Provision = 1,200,000 × 2.5% = 30,000 Dr Credit loss expense 30,000 Cr Allowance for ECL 30,000
8. IFRS 9 Lifetime ECL:
   Provision = 800,000 × 5% = 40,000 Dr Credit loss expense 40,000 Cr Allowance for ECL 40,000
9. Intercompany Sales Elimination:
   Cost = 400,000 ÷ 1.20 = 333,333; GP = 66,667; Unrealized = 66,667 × 0.30 = 20,000 Dr Interco revenue 400,000 Cr Interco COGS 333,333 Cr Interco profit (P/L) 66,667 Dr Interco profit (inventory)20,000 Cr Inventory 20,000
10. Dividend Elimination: Dr Retained earnings 250,000 Cr Dividend income 250,000
11. Standalone Statements: Prepare per standard templates; ensure BS ties after depreciation and adjustments.
12. Consolidated Statements: Aggregate P&L and BS, eliminate Q1 & Q9 items, recognise goodwill/NCI.
13. Current & Quick Ratios:
    Current = 6,800,000 ÷ 3,000,000 = 2.27×
    Quick = (6,800,000–2,100,000)÷3,000,000 = 4,700,000÷3,000,000 = 1.57×
14. Gross Margin & ROA:
    Gross margin = 6,000,000÷15,000,000=40%
    ROA = 2,700,000÷18,000,000=15%
15. ROE & Debt‑Equity:
    ROE = 2,700,000÷12,000,000=22.5%
    D/E = 4,000,000÷? (Equity) assume 9,000,000 → 44.4%
16. Equity Method:
    Dr Investment 600,000
    Cr Cash 600,000
    Dr Investment 60,000
    Cr Share of profit 60,000
    Dr Cash 15,000
    Cr Investment 15,000
17. Sale & Leaseback:
    Gain = 550,000–450,000=100,000
    Entries:
    Dr Cash 550,000; Cr PPE 450,000; Cr Gain 100,000
    Dr ROU asset 550,000; Cr Lease liability 550,000
18. Lease Classification:
    80% test met → finance lease.
    Dr ROU asset; Cr Lease liability = FV of asset
19. IAS 36 Impairment:
    Loss = 800,000–650,000=150,000; reversal = 50,000
    Dr Impairment loss 150,000; Cr Accum. impairment 150,000
    Dr Accum. impairment 50,000; Cr Reversal income 50,000
20. IFRS 5 Held for Sale:
    Recognise asset at FV less cost to sell = 900,000 under current assets; cease depreciation.