Search for question
Question

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