QUESTION 1
Bean Ltd and Bag Ltd formed a group of companies through an acquisition of
80% interest in the ordinary shares of Bag Ltd on 30 April 2023. Bean Ltd
purchased this controlling interest for a cash amount of R1 000 200. The financial
year end of both companies is 31 May 2025.
Assumptions (based on available data and common practice)
Bean Ltd acquired 80% of the ordinary shares of Bag Ltd on 1 June 2023 (one year
before the start of the current financial year).
The acquisition was at net asset value (no goodwill or bargain purchase).
Intragroup skills‑hub payment: Bean Ltd recorded R125 000 as revenue included in
“Other income”, Bag Ltd recorded R125 000 as operating expense (included in
“Operating expenses”). Of this, R90 000 relates to a prepayment for 2026.
Tax rates and other missing items are derived from the given line items as shown
below.
a.) Consolidated statement of profit or loss and other comprehensive income for
the year ended 31 May 2025
Revenue (2 850 000 + 1 900 000) 4 750 000
Cost of sales (880 000 + 570 000) (1 450 000)
Gross profit 3 300 000
, Other income (113 300 + 218 500 – 35 000¹) 296 800
Operating expenses (290 700 + 372 000 – (627 700)
35 000¹)
Administration and depreciation (170 000 + (454 000)
284 000)
Profit before tax 2 515 100
Income tax expense (191 700 + 87 300) (279 000)
Profit for the year 2 236 100
Other comprehensive income – Revaluation 125 000
surplus (Bean Ltd)
Total comprehensive income for the year 2 361 100
Total comprehensive income attributable to:
Owners of the parent (balancing) 2 200 060
Bean Ltd and Bag Ltd formed a group of companies through an acquisition of
80% interest in the ordinary shares of Bag Ltd on 30 April 2023. Bean Ltd
purchased this controlling interest for a cash amount of R1 000 200. The financial
year end of both companies is 31 May 2025.
Assumptions (based on available data and common practice)
Bean Ltd acquired 80% of the ordinary shares of Bag Ltd on 1 June 2023 (one year
before the start of the current financial year).
The acquisition was at net asset value (no goodwill or bargain purchase).
Intragroup skills‑hub payment: Bean Ltd recorded R125 000 as revenue included in
“Other income”, Bag Ltd recorded R125 000 as operating expense (included in
“Operating expenses”). Of this, R90 000 relates to a prepayment for 2026.
Tax rates and other missing items are derived from the given line items as shown
below.
a.) Consolidated statement of profit or loss and other comprehensive income for
the year ended 31 May 2025
Revenue (2 850 000 + 1 900 000) 4 750 000
Cost of sales (880 000 + 570 000) (1 450 000)
Gross profit 3 300 000
, Other income (113 300 + 218 500 – 35 000¹) 296 800
Operating expenses (290 700 + 372 000 – (627 700)
35 000¹)
Administration and depreciation (170 000 + (454 000)
284 000)
Profit before tax 2 515 100
Income tax expense (191 700 + 87 300) (279 000)
Profit for the year 2 236 100
Other comprehensive income – Revaluation 125 000
surplus (Bean Ltd)
Total comprehensive income for the year 2 361 100
Total comprehensive income attributable to:
Owners of the parent (balancing) 2 200 060
