CAVENDISH UNIVERSITY ZAMBIA
SCHOOL OF BUSINESS AND INFORMATION TECHNOLOGY
DEPARTMENT OF BUSINESS
COURSE: (AC123) FINANCIAL ACCOUNTING 2
SEMESTER ASSIGNMENT ONE
DUE DATE: 31st MARCH, 2024, 24:00HRS
INSTRUCTIONS:
1. Your assignment should be 5-6 pages typed in new Times Roman, Font size 12 with 1.5
line spacing(separate from the cover and reference page)
2. Use Harvard referencing style
3. Clarity of though and in-text referencing style
4. Provide a list of references at the end of your assignment on a separate page
5. Your work will be subjected to turnitin anti plagiarism software, and once your work
goes beyond 30% of plagiarism, it will be thrown away.
Q1. In a group of companies Palo Plc acquired 80% of the shares of Pilo Plc on 1 January, 2012
when Pilo Plc had retained earnings of K16, 000. The market price of Pilo’s shares just before
the date of acquisition was K2.50. Palo Plc values non-controlling interest at fair value not at
market value. Good will is not impaired.
The statement of financial position of Palo Plc and Pilo Plc at 31 December, 2012 were as
follows:
PALO PLC PILO PLC
K K
Property, plant and equipment 70,000 60,000
Shares in Mix 68,000
128,000 50,000
Current assets 52,000 35,000
180,000 85,000
Share capital – K1 shares 100,000 50,000
Retained earnings 70,000 25,000
170,000 75,000
Current liabilities 10,000 10,000
180,000 85,000
Required:
a) Discuss the basic methods of preparing a consolidated statement of financial position.
(3marks)
b) Using the information in the case study above prepare a consolidated statement of
financial position as at 31 December 2012. (7marks)
Q2. The following information has been extracted from the draft financial statements of Moba
limited..
MOBA LIMITED
STATEMENTS OF FINANCIAL POSITION AS AT 31 JUNE
2021 2022
K'000 K'000 K'000 K'000
Non-current assets 4,600 2,700
Current assets
Inventory 580 500
Trade receivables 360 230
Bank 0 170
940 900
Total assets 5,540 3,600
Equity and liabilities
Equity
Ordinary share capital 3,500 2,370
Share premium 300 150
Retained earnings 1,052 470
4,852 2,990
Non-current liabilities
10% Loan note
(redeemable 31 June 2022) 0 100
Current liabilities
Trade payables 450 365
Taxation 180 145
Bank overdraft 58 0
688 510
5,540 3,600
Additional information
(a) The statement of profit or loss for the year ended 31 June 2022 shows the following.
K'000
Operating profit 1,042
Interest payable (10)
Profit before taxation 1,032
Taxation (180)
Profit for financial year 852
(b) During the year dividends paid were K270,000.
(c) Profit before taxation had been arrived at after charging K700,000 for depreciation on non-
current
assets.
(d) During the year non-current assets with a net book value of K200,000 were sold for
K180,000.
Required
a) Prepare a statement of cash flows for Moba Limited for the year ended 31 June 2022 in
accordance with IAS 7 Statement of cash flows, using the indirect method.
(10marks)
[Link] general manager and the operations director of Super Start Contractors Limited acquired
equipment on 1 April 2002 on a Finance Lease.
The Finance lease terms are:
-Lease for a 10 year period
-Each annual rental is K44, 000
-Rentals paid annually in areas on 31 March
-Original cost of the equipment was K248, 610
-The interest rate implicit in the lease is 12% per year
Required:
Calculate the amounts in respect of this finance lease that would be included in Super Start
Contractors Limited financial reports.
a) Statement of comprehensive income for the year ended 31 March 2003
b) Statement of Financial Position as at 31 March 2003
c) Statement of cash flows for the year ended 31March 2003
(10 Marks)
TOTAL:30 MARKS