about tma b326 advanced financial accounting tma spring 2023 2024 v 1
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About TMA:
B326: Advanced Financial Accounting
TMA - Spring 2023-2024 V.1
Cut-Off Date: As decided by the Deanship
The TMA covers the advanced accounting concepts and practices in the businesses. It is marked
out of 100 and is worth 15% of the overall assessment component. This TMA requires you to apply the
course concepts. The TMA is intended to:
Assess students' understanding of key learning points within chapter 1, 3, 4 and 5.
Increase the students' knowledge about the reality of the advanced accounting issues.
Develop students' communication skills, such as memo writing, essay writing, analysis and
presentation of material.
Develop the students' ability to understand and analyze different issues that corporations might
face in real world.
➤ Develop basic ICT skills such as using the internet.
The TMA requires you to:
1- Review various study chapters in addition to supplementary materials.
2- Conduct a deep information search using the internet and your E-Library. You are expected
to use E-library sources to support your answers. A minimum of 3 sources is required.
3- It's imperative that you write your answer using your own words. Plagiarism will be penalized
depending on its severity and according to AOU plagiarism policy.
4- You should use a Microsoft Office Word and Times New Roman Font of 12 points.
5- You should use Harvard referencing style for in-text citation and list of references.
For Cut-off date: Check LMS
Criteria for Grade Distribution:
Content
Criteria
Part A
Part B
Part C
Referencing
& E-library
Marks
40
30
30
(5)
Structure and
Presentation
of ideas
Total
marks
(5)
100 PART A
The TMA Questions:
Access Avolta (Previously known as: Dufry) Company website and download: the annual report
for 2022. Note: this file is available at:
https://www.avoltaworld.com/system/files/2023-03/Annual%20Report_2022.pdf
From 2022 annual report, answer the following questions:
1. Determine the total amount of non-controlling interest in 2021 & 2022 and state in which
statement it is disclosed and in which section.
2. State the amount of controlling interest share and non-controlling interest share in Dufry
Company's profit and Non-controlling interest share in dividends for 2021 & 2022
3. State in details the amounts of goodwill and other intangible assets as it appears in the annual
report for 2021 and 2022
4. State Dufry Company acquisitions during 2022 and the aggregated goodwill resulted from
these acquisitions.
5. State the amounts of impairment losses of goodwill & other intangible assets in 2022. In
addition, state which cash generating unit/division/segment suffered an impairment loss
related to goodwill in 2021 and the amounts of that impairment.
6. How did Dufry reflect the 2022 impairment of intangible assets in its financial statements?
7. Dufry Company prepared its consolidated financial statements in accordance with the
International Financial Reporting Standards (“IFRS”), as mentioned in its annual report.
Assuming that it was not mentioned in the annual report that the company is following IFRS;
provide evidence from annual report (related to course subjects studied) that indicate that the
company is following IFRS and not following GAAP?
Write your answer in the space provided in the following table:
1-
2 -
3-
4-
5-
6-
7-
Answer
*** Answers not provided in a tabular format will be disregarded
Page(s) in
Annual report
(40 marks) PART B
1) Provide one example from the real world for unsuccessful merger/consolidation/ acquisition
case in recent years and state the specific reasons behind their failure.
Notes:
■
Do not provide general reasons behind failure [as it will not be considered]
▪ Write your answer in the space provided in the following table:
Unsuccessful
Merger/Consolidation/
Acquisition
Names of the companies
And
Detailed information about
this business combination
Reasons for failure
* Answers not provided in a tabular format will be disregarded.
**Examples dated before 2007 will not be considered.
2) What are the different types of synergies in mergers and acquisitions?
▪ Write your answer in the space provided in the following table:
(10 Marks)
(10 Marks)
Type:
Synergies
.....
. Synergies
Explanation:
Synergies
* Answers not provided in a tabular format will be disregarded.
3) There are differences between the IFRS and GAAP (after FASB issued ASU 2021-04 to
simplify the accounting for goodwill impairment) regarding the following:
-
Assignment/allocation of goodwill. (i.e., The levels at which goodwill is assigned
/allocated)
· Impairment of goodwill and test(s) applied and its steps (i.e., Methods of determining
impairment of goodwill)
How impairment loss is recognized and allocated. (i.e., impairment loss[charge] calculation
and allocation)
Amortization and impairment of intangible assets other than goodwill
Discuss the accounting treatment of the preceding points under GAAP only. (Comparison
is not required)
▪ Write your answer in the space provided in the following table: GAAP
Assignment/allocation of goodwill
Impairment of goodwill
How impairment loss is recognized
and allocated
Amortization and impairment of
intangible assets other than goodwill
(You must support your answer in this question with quality and up to date references.)
(10 Marks)
PART C
On January 1, 2022, Porto Corporation acquired 80% of the voting stock of Sardinia Corporation
for $12,000 when Sardinia had Capital Stock of $5,000 and Retained Earnings of $4,000. On
this date, the book value of Sardinia's assets and liabilities was equal to the fair value, except for
inventories, which were understated on the books by $500 and were sold in 2022, land which
was undervalued by $1,000, and equipment with a remaining useful life of 5 years under the
straight-line method which was undervalued by $1,500. Any remainder was assigned to
goodwill.
Financial statements for the two corporations at the end of the fiscal year ended December 31,
2023 appear in the first two columns of the partially completed consolidation working papers.
Porto has accounted for its investment in Sardinia using the equity method of accounting. Porto
Corporation owed Sardinia Corporation $100 on open account at the end of the year. Dividends
receivable in the amount of $450 payable from Sardinia to Porto is included in Porto's net
receivables.
Required:
1) Prepare the elimination entries required for consolidation on December 31, 2023. Show all your
calculations.
2) Complete the consolidation working papers for Porto Corporation and Subsidiary for the
year ended December 31, 2023.
3) State which items have been amortized and which have not in 2023, and why?
(30 Marks) Porto Sardinia
INCOME STATEMENT
Sales
10,000 6,500
Income from Sardinia
960
Cost of Sales
(4,000) (3300)
Depreciation Expense
(1,000) (1000)
Other expenses
(1,800) (700)
Non controlling Interest Share
Net income
4,160
1,500
Retained Earnings 1/1
2,510
5,000
Add: Net income
4,160
1,500
Less: Dividends
(2,000) (1,000)
Retained Earnings 12/31
4,670
5,500
BALANCE SHEET
Cash
1,440
1,900
Receivables net
1,100
600
Inventories
1,500 1,200
Land
1,000
1,600
Equipment and Buildings-net
7,500
6,700
Investment in Sardinia Corp
12,320
Goodwill
Unamortized Excess
TOTAL ASSETS
24,860
12,000
LIAB. & EQUITY
Accounts Payable
4,190
1,000
Dividends Payable
2,000
500
Capital Stock
14,000 5,000
Ret. Earnings
4,670
5,500
Nonctl Interest 1/1
Nonctl. Interest 12/31
LIAB. & EQUITY
24,860
12,000
Eliminations
Debit Credit
Consolidated