FAC3704
Exam Questions
(2013-2022)
*Contains Questions Only
,FAC3704
Exam Questions
(2013-2022)
*Contains Questions Only
, 5 FAC3704
January – February 2022 Examinations
QUESTION 1 (45 marks) (81 minutes)
The following are extracts from the trial balances of the entities in the Faf Ltd Group for the
year ended 31 December 2021:
Faf Imran Jonty
Ltd Ltd Ltd
Dr/(Cr) Dr/(Cr) Dr/(Cr)
R R R
Property, plant and equipment at cost price ......... 884 209 378 668 290 000
Investments in equity instruments:
- Imran Ltd at cost price ....................................... 153 000 - -
- Jonty Ltd at cost price ....................................... 60 000 - -
Trade and other receivables ................................. 31 895 21 366 28 020
Inventories ............................................................ 21 264 14 244 18 680
Cash and cash equivalents .................................. 12 500 22 890 76 200
Dividends paid – 31 December 2021 ................... 35 000 20 000 10 000
Share capital:
- 300 000 ordinary shares ................................... (300 000) - -
- 100 000 ordinary shares ................................... - (100 000) -
- 75 000 ordinary shares ................................... - - (75 000)
Retained earnings – 1 January 2021.................... (293 900) (151 500) (22 000)
Profit for the year .................................................. (218 808) (71 280) (100 800)
Accumulated depreciation .................................... (236 560) (91 048) (90 000)
Trade and other payables .................................... (53 600) (43 340) (44 100)
Long-term borrowings .......................................... (95 000) - (91 000)
- - -
Additional information
1. On 1 January 2017, Faf Ltd acquired 80 000 of the issued ordinary shares in Imran Ltd,
when the retained earnings of Imran Ltd amounted to R55 000. Faf Ltd obtained control
over Imran Ltd on this date. On 1 January 2017, there were no unidentified assets or
liabilities of Imran Ltd, and the fair values of all assets and liabilities were be equal to the
carrying amounts thereof.
2. On 1 April 2021, Faf Ltd sold machinery with a carrying amount of R40 000 to Imran Ltd
for R56 000. Imran Ltd depreciates machinery at 20% per annum using the straight-line
method. This is the same policy as used by the South African Revenue Service.
3. On 1 May 2021, Faf Ltd purchased an additional 5 000 ordinary shares in Imran Ltd from
the non-controlling shareholders for R15 000.
4. On 1 October 2021, Faf Ltd acquired 22 500 ordinary shares in Jonty Ltd. Faf Ltd
exercised significant influence over the financial and operating policies of Jonty Ltd from
this date. On the acquisition date, all of the assets and liabilities of Jonty Ltd were fairly
valued. Goodwill of R8 220 arose on the acquisition of Jonty Ltd.
, 6 FAC3704
January – February 2022 Examinations
QUESTION 1 (continued)
5. On 1 October 2021, Faf Ltd purchased inventory of R80 000 from Jonty Ltd. Jonty Ltd sold
the inventory at a profit margin of 15% on the selling price. Inventory purchased from Jonty
Ltd that was still on hand in the accounting records of Faf Ltd at 31 December 2021
amounted to R10 000.
6. Goodwill that arose on the acquisition of Imran Ltd was tested for impairment at
31 December 2021 and it was determined to be impaired by R4 000.
7. The income and expenses of Imran Ltd and Jonty Ltd were earned evenly during the
current financial year.
8. Faf Ltd measures its investments in subsidiaries and associates at cost price in their
separate financial statements in accordance with IAS 27, Separate Financial Statements.
9. The Faf Ltd Group accounts for investments in associates using the equity method in
accordance with IAS 28, Investments in Associates and Joint ventures.
10. The Faf Ltd Group measures non-controlling interests in an acquiree at their proportionate
share of the acquiree’s identifiable net assets at acquisition date.
11. The SA normal tax rate is 28% and capital gains tax is calculated at 80% thereof. You may
assume that the tax rate has remained unchanged since 1 January 2017.
12. Each share carries one vote and the issued share capital of all entities in the group has
remained unchanged since 1 January 2017.
Exam Questions
(2013-2022)
*Contains Questions Only
,FAC3704
Exam Questions
(2013-2022)
*Contains Questions Only
, 5 FAC3704
January – February 2022 Examinations
QUESTION 1 (45 marks) (81 minutes)
The following are extracts from the trial balances of the entities in the Faf Ltd Group for the
year ended 31 December 2021:
Faf Imran Jonty
Ltd Ltd Ltd
Dr/(Cr) Dr/(Cr) Dr/(Cr)
R R R
Property, plant and equipment at cost price ......... 884 209 378 668 290 000
Investments in equity instruments:
- Imran Ltd at cost price ....................................... 153 000 - -
- Jonty Ltd at cost price ....................................... 60 000 - -
Trade and other receivables ................................. 31 895 21 366 28 020
Inventories ............................................................ 21 264 14 244 18 680
Cash and cash equivalents .................................. 12 500 22 890 76 200
Dividends paid – 31 December 2021 ................... 35 000 20 000 10 000
Share capital:
- 300 000 ordinary shares ................................... (300 000) - -
- 100 000 ordinary shares ................................... - (100 000) -
- 75 000 ordinary shares ................................... - - (75 000)
Retained earnings – 1 January 2021.................... (293 900) (151 500) (22 000)
Profit for the year .................................................. (218 808) (71 280) (100 800)
Accumulated depreciation .................................... (236 560) (91 048) (90 000)
Trade and other payables .................................... (53 600) (43 340) (44 100)
Long-term borrowings .......................................... (95 000) - (91 000)
- - -
Additional information
1. On 1 January 2017, Faf Ltd acquired 80 000 of the issued ordinary shares in Imran Ltd,
when the retained earnings of Imran Ltd amounted to R55 000. Faf Ltd obtained control
over Imran Ltd on this date. On 1 January 2017, there were no unidentified assets or
liabilities of Imran Ltd, and the fair values of all assets and liabilities were be equal to the
carrying amounts thereof.
2. On 1 April 2021, Faf Ltd sold machinery with a carrying amount of R40 000 to Imran Ltd
for R56 000. Imran Ltd depreciates machinery at 20% per annum using the straight-line
method. This is the same policy as used by the South African Revenue Service.
3. On 1 May 2021, Faf Ltd purchased an additional 5 000 ordinary shares in Imran Ltd from
the non-controlling shareholders for R15 000.
4. On 1 October 2021, Faf Ltd acquired 22 500 ordinary shares in Jonty Ltd. Faf Ltd
exercised significant influence over the financial and operating policies of Jonty Ltd from
this date. On the acquisition date, all of the assets and liabilities of Jonty Ltd were fairly
valued. Goodwill of R8 220 arose on the acquisition of Jonty Ltd.
, 6 FAC3704
January – February 2022 Examinations
QUESTION 1 (continued)
5. On 1 October 2021, Faf Ltd purchased inventory of R80 000 from Jonty Ltd. Jonty Ltd sold
the inventory at a profit margin of 15% on the selling price. Inventory purchased from Jonty
Ltd that was still on hand in the accounting records of Faf Ltd at 31 December 2021
amounted to R10 000.
6. Goodwill that arose on the acquisition of Imran Ltd was tested for impairment at
31 December 2021 and it was determined to be impaired by R4 000.
7. The income and expenses of Imran Ltd and Jonty Ltd were earned evenly during the
current financial year.
8. Faf Ltd measures its investments in subsidiaries and associates at cost price in their
separate financial statements in accordance with IAS 27, Separate Financial Statements.
9. The Faf Ltd Group accounts for investments in associates using the equity method in
accordance with IAS 28, Investments in Associates and Joint ventures.
10. The Faf Ltd Group measures non-controlling interests in an acquiree at their proportionate
share of the acquiree’s identifiable net assets at acquisition date.
11. The SA normal tax rate is 28% and capital gains tax is calculated at 80% thereof. You may
assume that the tax rate has remained unchanged since 1 January 2017.
12. Each share carries one vote and the issued share capital of all entities in the group has
remained unchanged since 1 January 2017.
