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FAC2602: Selected Accounting Standards
and Simple Group Structures
Comprehensive Exam Revision Guide
May/June 2025 • May/June 2023
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Financial Accounting – UNISA
Exam Revision Guide
FAC2602
Module Code:
Selected Accounting Standards and Simple
Module Name: Group Structures
May/June 2025 & May/June 2023
Papers Covered:
100 marks per paper
Total Marks:
3 hours 20 minutes (2025); 3 hours (2023)
Duration:
Use this guide to revise thoroughly. Focus on understanding, not memorisation. All
calculations must be shown in the exam.
Exam Revision Notes | FAC2602 | UNISA | 2025
,FAC2602 | Exam Revision Selected Accounting Standards & Group Structures
PART A: MAY/JUNE 2025 EXAMINATION
FAC2602 – 100 Marks – 3 Hours 20 Minutes
Questions: 3 | Examiners: Ms KA Nkome, Ms C Wolfaardt, Ms N Mahommed, Mr V Booi
Key Concept
2025 Exam Structure:
• Question 1 – Pro-forma journals and discussion 35 marks / 70 minutes
• Question 2 – Consolidation of group financial statements 43 marks / 86 minutes
• Question 3 – Statement of cash flows (direct method) 22 marks / 44 minutes
All questions compulsory. Show all calculations. Round to the nearest Rand. Ignore tax
on unrealised profits unless stated.
Page 2 of 37
,FAC2602 | Exam Revision Selected Accounting Standards & Group Structures
Question 1 (2025) – Pro-Forma Journals and Discussion 35 marks | 70 minutes
Question: The following scenario relates to the Whole Ltd Group for the year ended 31
October 2023.
Background: On 1 June 2022, Whole Ltd acquired 70% interest in the ordinary shares
and 40% interest in the cumulative preference shares of Ness Ltd. On the acquisition
date, the retained earnings and revaluation surplus of Ness Ltd were R762 300 and
R200 000 respectively. The issued share capital of both companies remained unchanged
since incorporation. No preference dividends were in arrears at acquisition or up to 1
November 2022. The preference shares are classified as equity. On the acquisition date,
the carrying amounts of assets and liabilities equalled their fair values.
Relevant information includes:
• Intragroup inventory sales: Whole Ltd sells inventory to Ness Ltd at a mark-up of
20% on cost. During the year, inventory costing R600 000 (selling price R720 000)
was sold. Ness Ltd had R120 000 (at transfer price) of this inventory on hand at 31
October 2023. The prior year closing inventory from Whole Ltd held by Ness Ltd was
R96 000 at transfer price.
• Intragroup machinery sale: On 1 May 2022, Ness Ltd sold machinery with carrying
amount R180 000 to Whole Ltd for R240 000. Depreciation is charged at 20% per
annum on the straight-line method.
• Revaluation surplus: Land in Ness Ltd was revalued upward by R50 000 during the
current year.
• Non-controlling interest (NCI) is measured at the proportionate share of net assets.
• Goodwill is not impaired.
• Preference dividend declared by Ness Ltd: R30 000 (cumulative, for the current year).
Required: Draft the following pro-forma consolidation journal entries of the Whole Ltd
Group for the year ended 31 October 2023:
(a) Elimination of the unrealised profit in the opening and closing inventory from the
intragroup sale of inventory.
(b) Elimination of the unrealised profit on the intragroup sale of machinery, including the
related depreciation adjustments for all years since the date of sale.
(c) Record the NCI share in the revaluation surplus of Ness Ltd for the current year.
(d) Record the dividend declared to the NCI from ordinary shares.
(e) Discuss how the intragroup sale of inventory would be treated if Ness Ltd were an
associate of Whole Ltd instead of a subsidiary (Whole Ltd holds 25% interest).
Page 3 of 37
, FAC2602 | Exam Revision Selected Accounting Standards & Group Structures
Answer:
Key Concept
Ownership structure: Whole Ltd holds 70% ordinary shares in Ness Ltd. NCI
= 30% of ordinary equity. Preference shares: 40% held by Whole Ltd; 60% by
NCI (preference). Acquisition date: 1 June 2022. Year-end: 31 October 2023.
Current year = 2nd full year of consolidation (with a stub year May–Oct 2022 in
year 1).
Key calculations before journalising:
Inventory unrealised profit:
Mark-up = 20% on cost, so the profit fraction in selling price = 20/120.
• Closing inventory held = R120 000 at transfer price.
Unrealised profit in closing inventory = R120 000 × 20/120 = R20 000
• Opening inventory held = R96 000 at transfer price.
Unrealised profit in opening inventory = R96 000 × 20/120 = R16 000
Machinery unrealised profit and depreciation:
Selling price = R240 000; Carrying amount = R180 000; Unrealised profit = R60 000
Sale date: 1 May 2022. Depreciation rate: 20% p.a. straight-line.
Annual excess depreciation = R60 000 × 20% = R12 000/year.
Period from 1 May 2022 to 31 October 2022 (stub, 6 months) = R6 000.
Year ended 31 October 2023 (full year) = R12 000.
Total excess depreciation reversed to date of current year-end = R6 000 + R12 000 =
R18 000.
(a) Elimination of unrealised profit in inventory:
Page 4 of 37
]]
FAC2602: Selected Accounting Standards
and Simple Group Structures
Comprehensive Exam Revision Guide
May/June 2025 • May/June 2023
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Financial Accounting – UNISA
Exam Revision Guide
FAC2602
Module Code:
Selected Accounting Standards and Simple
Module Name: Group Structures
May/June 2025 & May/June 2023
Papers Covered:
100 marks per paper
Total Marks:
3 hours 20 minutes (2025); 3 hours (2023)
Duration:
Use this guide to revise thoroughly. Focus on understanding, not memorisation. All
calculations must be shown in the exam.
Exam Revision Notes | FAC2602 | UNISA | 2025
,FAC2602 | Exam Revision Selected Accounting Standards & Group Structures
PART A: MAY/JUNE 2025 EXAMINATION
FAC2602 – 100 Marks – 3 Hours 20 Minutes
Questions: 3 | Examiners: Ms KA Nkome, Ms C Wolfaardt, Ms N Mahommed, Mr V Booi
Key Concept
2025 Exam Structure:
• Question 1 – Pro-forma journals and discussion 35 marks / 70 minutes
• Question 2 – Consolidation of group financial statements 43 marks / 86 minutes
• Question 3 – Statement of cash flows (direct method) 22 marks / 44 minutes
All questions compulsory. Show all calculations. Round to the nearest Rand. Ignore tax
on unrealised profits unless stated.
Page 2 of 37
,FAC2602 | Exam Revision Selected Accounting Standards & Group Structures
Question 1 (2025) – Pro-Forma Journals and Discussion 35 marks | 70 minutes
Question: The following scenario relates to the Whole Ltd Group for the year ended 31
October 2023.
Background: On 1 June 2022, Whole Ltd acquired 70% interest in the ordinary shares
and 40% interest in the cumulative preference shares of Ness Ltd. On the acquisition
date, the retained earnings and revaluation surplus of Ness Ltd were R762 300 and
R200 000 respectively. The issued share capital of both companies remained unchanged
since incorporation. No preference dividends were in arrears at acquisition or up to 1
November 2022. The preference shares are classified as equity. On the acquisition date,
the carrying amounts of assets and liabilities equalled their fair values.
Relevant information includes:
• Intragroup inventory sales: Whole Ltd sells inventory to Ness Ltd at a mark-up of
20% on cost. During the year, inventory costing R600 000 (selling price R720 000)
was sold. Ness Ltd had R120 000 (at transfer price) of this inventory on hand at 31
October 2023. The prior year closing inventory from Whole Ltd held by Ness Ltd was
R96 000 at transfer price.
• Intragroup machinery sale: On 1 May 2022, Ness Ltd sold machinery with carrying
amount R180 000 to Whole Ltd for R240 000. Depreciation is charged at 20% per
annum on the straight-line method.
• Revaluation surplus: Land in Ness Ltd was revalued upward by R50 000 during the
current year.
• Non-controlling interest (NCI) is measured at the proportionate share of net assets.
• Goodwill is not impaired.
• Preference dividend declared by Ness Ltd: R30 000 (cumulative, for the current year).
Required: Draft the following pro-forma consolidation journal entries of the Whole Ltd
Group for the year ended 31 October 2023:
(a) Elimination of the unrealised profit in the opening and closing inventory from the
intragroup sale of inventory.
(b) Elimination of the unrealised profit on the intragroup sale of machinery, including the
related depreciation adjustments for all years since the date of sale.
(c) Record the NCI share in the revaluation surplus of Ness Ltd for the current year.
(d) Record the dividend declared to the NCI from ordinary shares.
(e) Discuss how the intragroup sale of inventory would be treated if Ness Ltd were an
associate of Whole Ltd instead of a subsidiary (Whole Ltd holds 25% interest).
Page 3 of 37
, FAC2602 | Exam Revision Selected Accounting Standards & Group Structures
Answer:
Key Concept
Ownership structure: Whole Ltd holds 70% ordinary shares in Ness Ltd. NCI
= 30% of ordinary equity. Preference shares: 40% held by Whole Ltd; 60% by
NCI (preference). Acquisition date: 1 June 2022. Year-end: 31 October 2023.
Current year = 2nd full year of consolidation (with a stub year May–Oct 2022 in
year 1).
Key calculations before journalising:
Inventory unrealised profit:
Mark-up = 20% on cost, so the profit fraction in selling price = 20/120.
• Closing inventory held = R120 000 at transfer price.
Unrealised profit in closing inventory = R120 000 × 20/120 = R20 000
• Opening inventory held = R96 000 at transfer price.
Unrealised profit in opening inventory = R96 000 × 20/120 = R16 000
Machinery unrealised profit and depreciation:
Selling price = R240 000; Carrying amount = R180 000; Unrealised profit = R60 000
Sale date: 1 May 2022. Depreciation rate: 20% p.a. straight-line.
Annual excess depreciation = R60 000 × 20% = R12 000/year.
Period from 1 May 2022 to 31 October 2022 (stub, 6 months) = R6 000.
Year ended 31 October 2023 (full year) = R12 000.
Total excess depreciation reversed to date of current year-end = R6 000 + R12 000 =
R18 000.
(a) Elimination of unrealised profit in inventory:
Page 4 of 37
