Question I (80%) TechNova Inc. (TN) is the leading manufacturer of smart home hubs, while MicroTech Corp. (MT) is the primary supplier of microprocessors essential for the production of these hubs. The statements of financial position (balance sheets) of TN and MT as of 31 December 2023, are presented below: TN $'000 MT $'000 Tangible fixed assets Land and building Property, Plant and machinery 31,200 8,000 26,000 4.000 57,200 12,000 Investments Investment in MT 8,400 Other investments 2,000 10,400 Current assets Inventory Trade receivables 1,600 800 800 400 Current account with MT 5,200 Cash 9,600 6,000 17,200 7,200 Current liabilities Trade payables (4,800) (1,600) Current account with TN (3,200) Dividends payable (4,000) (1,600) (8,800) 8,400 (6,400) 800 Total net assets 76,000 12,800 Share capital ** 53,200 8,000 Retained earnings 22,800 4,800 Total equity 76,000 12,800 ** 53,200,000 shares and 8,000,000 shares were issued by TN and MT respectively. All shares were fully paid. The following additional information is available: 1. TN acquired 60% of the share capital of MT on 1 January 2020 by an exchange of one share in TN plus $0.25 for every share in TN when the retained earnings of MT were $1,200,000. The market price of each TN's share and MT's share at the date of acquisition were $1.5 and $1.2 respectively. 2. On 31 December 2023, MT sent a cheque to TN for $2,000,000. The cheque was not received by TN until 1 January 2024. 3. During the year 2023, MT declared interim dividends of $1,600,000 which had no been settled as of 31 December 2023. TN has not included any entries in its accou relating to the dividend receivable from MT. 4. No goodwill is to be written off as an impairment loss on 31 December 2023 according to the impairment test of goodwill. 200 (b) Prepare the adjusting entries and consolidation journal entries for TN & (24 marks) MT. Use the fair value approach to assess the non-controlling interest (NCI). Show clearly the steps and calculation of goodwill and the non- controlling interest in a separate schedule. (c) Prepare a consolidated statement of financial position (balance sheet) for TN as at 31 December 2023. Show your workings clearly. (32 marks)

Question I (80%) TechNova Inc. (TN) is the leading manufacturer of smart home hubs, while MicroTech Corp. (MT) is the primary supplier of microprocessors essential for the production of these hubs. The statements of financial position (balance sheets) of TN and MT as of 31 December 2023, are presented below: TN $'000 MT $'000 Tangible fixed assets Land and building Property, Plant and machinery 31,200 8,000 26,000 4.000 57,200 12,000 Investments Investment in MT 8,400 Other investments 2,000 10,400 Current assets Inventory Trade receivables 1,600 800 800 400 Current account with MT 5,200 Cash 9,600 6,000 17,200 7,200 Current liabilities Trade payables (4,800) (1,600) Current account with TN (3,200) Dividends payable (4,000) (1,600) (8,800) 8,400 (6,400) 800 Total net assets 76,000 12,800 Share capital 53,200 8,000 Retained earnings 22,800 4,800 Total equity 76,000 12,800 53,200,000 shares and 8,000,000 shares were issued by TN and MT respectively. All shares were fully paid. The following additional information is available: 1. TN acquired 60% of the share capital of MT on 1 January 2020 by an exchange of one share in TN plus $0.25 for every share in TN when the retained earnings of MT were $1,200,000. The market price of each TN's share and MT's share at the date of acquisition were $1.5 and $1.2 respectively. 2. On 31 December 2023, MT sent a cheque to TN for $2,000,000. The cheque was not received by TN until 1 January 2024. 3. During the year 2023, MT declared interim dividends of $1,600,000 which had no been settled as of 31 December 2023. TN has not included any entries in its accou relating to the dividend receivable from MT. 4. No goodwill is to be written off as an impairment loss on 31 December 2023 according to the impairment test of goodwill. 200 (b) Prepare the adjusting entries and consolidation journal entries for TN & (24 marks) MT. Use the fair value approach to assess the non-controlling interest (NCI). Show clearly the steps and calculation of goodwill and the non- controlling interest in a separate schedule. (c) Prepare a consolidated statement of financial position (balance sheet) for TN as at 31 December 2023. Show your workings clearly. (32 marks)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.10P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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