Zambia Institute of Chartered Accountants (ZICA)
CA Professional Programme Examinations
PAPER: CA 3.1 - ADVANCED FINANCIAL REPORTING
TIME ALLOWED: 3 HOURS
Instructions to Candidates
1. This paper is divided into TWO sections:
- Section A: One compulsory question (50 marks).
- Section B: Four questions. Answer any TWO (25 marks each).
2. Show all relevant workings clearly.
3. Ensure you refer to the relevant International Financial Reporting Standards (IFRS) and the ZICA Code of
Ethics where applicable.
4. All amounts are in Zambian Kwacha (K) unless otherwise stated.
Section A (Compulsory) - 50 Marks
Question 1: The Luangwa Group
You are the Group Financial Controller for Luangwa PLC, a listed entity in Lusaka. You are preparing the
consolidated financial statements for the year ended 31 December 2025.
The Acquisition: On 1 January 2025, Luangwa PLC acquired 80% of the equity shares of Kafue Ltd for K450
million. At that date, the fair value of Kafue's net assets was K400 million.
The Associate: Luangwa also holds a 30% interest in Zambezi Ltd, acquired three years ago, which is
accounted for using the equity method.
The Issue: During the year, Kafue Ltd sold goods to Luangwa PLC for K20 million at a margin of 20%. Half of
these goods remain in Luangwa's closing inventory.
Ethics: The CFO has suggested that a looming legal claim against the group (estimated at K10 million)
should not be disclosed in the notes, fearing it might impact the share price before a planned rights issue.
Required:
1. Calculate the Goodwill arising on the acquisition of Kafue Ltd using the full goodwill method (Fair value of
NCI was K110 million). (10 marks)
CA Professional Programme Examinations
PAPER: CA 3.1 - ADVANCED FINANCIAL REPORTING
TIME ALLOWED: 3 HOURS
Instructions to Candidates
1. This paper is divided into TWO sections:
- Section A: One compulsory question (50 marks).
- Section B: Four questions. Answer any TWO (25 marks each).
2. Show all relevant workings clearly.
3. Ensure you refer to the relevant International Financial Reporting Standards (IFRS) and the ZICA Code of
Ethics where applicable.
4. All amounts are in Zambian Kwacha (K) unless otherwise stated.
Section A (Compulsory) - 50 Marks
Question 1: The Luangwa Group
You are the Group Financial Controller for Luangwa PLC, a listed entity in Lusaka. You are preparing the
consolidated financial statements for the year ended 31 December 2025.
The Acquisition: On 1 January 2025, Luangwa PLC acquired 80% of the equity shares of Kafue Ltd for K450
million. At that date, the fair value of Kafue's net assets was K400 million.
The Associate: Luangwa also holds a 30% interest in Zambezi Ltd, acquired three years ago, which is
accounted for using the equity method.
The Issue: During the year, Kafue Ltd sold goods to Luangwa PLC for K20 million at a margin of 20%. Half of
these goods remain in Luangwa's closing inventory.
Ethics: The CFO has suggested that a looming legal claim against the group (estimated at K10 million)
should not be disclosed in the notes, fearing it might impact the share price before a planned rights issue.
Required:
1. Calculate the Goodwill arising on the acquisition of Kafue Ltd using the full goodwill method (Fair value of
NCI was K110 million). (10 marks)
