On 1 July 2021 Alpha Ltd acquired a 40% share of Beta Ltd. At that date, the following assets had carrying amounts different to their fair values in Beta's books: $\begin{array}{|l|r|r|} \hline {\text { Asset }} & \text { Carrying amount } & \text { Fair value } \\ \hline \text { Inventories } & \$ 18000 & \$ 20000 \\ \hline \text { Plant } & \$ 30000 & \$ 35000 \\ \hline \end{array}$ All inventories were sold to third parties by 30 June 2022. On 1 July 2021, the plant had a remaining useful life of 2 years. The tax rate is 30%. The adjustment required to the Investment in Associate account at 30 June 2022 in relation to the above assets is:

A) $1 260 B) $1 400 C) $1 750 D) $3 150 A) $1 260 B) $1 400 C) $1 750 D) $3 150

On 1 July 2017 Fred Ltd acquired 30% of the shares of Barney Ltd for $240 000. At that date, the equity of Barney Ltd was $800 000, with all identifiable assets and liabilities being measured at fair value. Profits/(losses) made since the date of acquisition are as follows: $\begin{array}{|r|r|}\hline \text { Year ended }&\text { Profit/(Loss) } \\ \text { 30 June }& \$ \\ \hline 2018 & 40000 \\ \hline 2019 & (360000) \\ \hline 2020 & (500000) \\ \hline 2021 & 15000 \\ \hline 2022 & 44000 \\ \hline \end{array}$ There have been no dividends paid or movements in reserves since the date of acquisition. At 30 June 2021 the equity accounted balance of the investment in Barney was:

A) $0 B) $4 500 C) ($1 500) D) $240 000 A) $0 B) $4 500 C) ($1 500) D) $240 000

Exam 31: Associates and Joint Ventures

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Clove Ltd owns 40% of Bark Ltd. Bark Ltd's profit after tax for the year ended 30 June 2022 is $120 000. The tax rate is 30%. On 1 July 2020, Bark Ltd sold an item of plant to Clove Ltd for $164 000. The carrying amount of the asset on this date in Bark Ltd's records was $152 000. The plant had a remaining useful life of 4 years. Clove's share of Bark's profit for the year ended 30 June 2022 is:

(Multiple Choice)

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Question 21

On 1 July 2021 Alpha Ltd acquired a 40% share of Beta Ltd. At that date, the following assets had carrying amounts different to their fair values in Beta's books: Asset Carrying amount Fair value Inventories \ 18000 \ 20000 Plant \ 30000 \ 35000 All inventories were sold to third parties by 30 June 2022. On 1 July 2021, the plant had a remaining useful life of 2 years. The tax rate is 30%. The adjustment required to the Investment in Associate account at 30 June 2022 in relation to the above assets is:

(Multiple Choice)

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(85)

Question 22

On 1 July 2017 Fred Ltd acquired 30% of the shares of Barney Ltd for $240 000. At that date, the equity of Barney Ltd was $800 000, with all identifiable assets and liabilities being measured at fair value. Profits/(losses) made since the date of acquisition are as follows: Year ended Profit/(Loss) 30 June \ 2018 40000 2019 (360000) 2020 (500000) 2021 15000 2022 44000 There have been no dividends paid or movements in reserves since the date of acquisition. At 30 June 2021 the equity accounted balance of the investment in Barney was:

(Multiple Choice)

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Question 23

Where an investor sells inventories to an associate in a prior year and the inventories are sold by the associate during the current year the investment in associate account is:

(Multiple Choice)

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Question 24

For the purposes of equity accounting, significant influence is regarded as the power of an investor to:

(Multiple Choice)

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Question 25

Carnation Ltd purchased a 25% shareholding in Bloom Ltd on 1 January 2021 for $90 000. Bloom Ltd's assets were recorded at fair values and its owners' equity, totalling $350 000, was represented as follows: Share capital $100 000 General reserve $60 000 Asset revaluation surplus $50 000 Retained profits $140 000 During July 2021, Bloom Ltd paid an interim dividend of $15 000. At 31 December 2021, Bloom Ltd reported: Profit after tax for 2021 $64 000 Final dividend payable $30 000 A transfer to the general reserve $20 000 Increase of the asset revaluation surplus to $80 000 The equity carrying amount of the investment in Bloom Ltd at 31 December 2021 is:

(Multiple Choice)

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Question 26

Where an acquisition in an associate results in an excess, how is the excess accounted for in the year of acquisition?

(Multiple Choice)

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Question 27

Showing 21 - 27 of 27

Where an investor sells inventories to an associate in a prior year and the inventories are sold by the associate during the current year the investment in associate account is:

For the purposes of equity accounting, significant influence is regarded as the power of an investor to:

Where an acquisition in an associate results in an excess, how is the excess accounted for in the year of acquisition?

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Fair Value Measurement

Inventories

Property, Plant and Equipment

Intangible Assets

Impairment of Assets

Provisions, Contingent Liabilities and Contingent Assets

Employee Benefits

Leases

Financial Instruments

Income Taxes

Share Capital and Reserves

Share Based Payment

Revenue

Presentation of Financial Statements

Statement of Cash Flows

Accounting Policies and Other Disclosures

Earnings Per Share

Operating Segments

Related Party Disclosures

Sustainability and Corporate Social Responsibility Recording

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Foreign Currency Financial Statements

Business Combinations

Consolidation: Controlled Entities

Consolidation: Wholly Owned Entities

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Joint Arrangements

Insolvency and Liquidation

Accounting for Mineral Resources

Agriculture

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