Financial Reporting and Ethics - The Institute of Chartered ...

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FINANCIAL REPORTING AND ETHICSCreditors amount falling due after more than one year; (600,000)7% Debenture (secured on Land and Building) 1,440,000Net AssetsFinanced by:Ordinary share capital 900,000Preference share capital 500,0001,400,000Reserves: 40,000Capital Reserve 1,440,0003.10 SUMMARY AND CONCLUSIONSThis chapter discussed business combinations and reasons why separatebusinesses may decide to come together by way of amalgamation or absorption.The accounting procedure for business combination and steps involved inclosing the books of the discontinuing business were given in details.Refer to Comprehensive Questions and Suggested Solutions in Appendix II,page 269.3.11 REVISION QUESTIONS3.11.1 MULTIPLE CHOICE QUESTIONS1. The balancing figure in the capital reduction and capital re-constructionaccounts is transferred to as:A. Revenue reservesB. Capital redemption reservesC. Capital reservesD. Revaluation reservesE. Unappropriated reserves2. The purchase consideration agreed during business combinations is settledby(i) issue of debentures(ii) issue of bonus shares(iii) issue of ordinary shares(iv) cashA. i and iiB. i and ivC. i, ii and ivD. i, iii, and ivE. i, ii, iii and iv3. Given that the agreed purchase consideration for the acquisition of 60%holding in a company is N3.6 million to be satisfied by issue of ordinaryshares of N0.50per share at a premium of N 0.30 per share, calculate thenumber of ordinary shares to be issued.A. 18 millionB. 12 millionC. 7.2 millionD. 4.5 millionE. 2.88 million64
AMALGAMATION, ABSORPTION AND RECONSTRUCTION4. Where the liability of a business being absorbed is taken over by theacquiring company the double entry is.A. Dr. Liability accountCr. Acquiring Company AccountB. Dr. Liability AccountCr. Liability AccountC. Dr. Realisation AccountCr. Liability AccountD. Dr. Bank AccountCr. Liability AccountE. Dr. Liability AccountCr. Bank Account5. Which of the following is not a form of business combination?A. Sole trader acquires another sole trader.B. Partnership acquires sole trader.C. Partnership converts to limited liability company.D. Partnership buys another partnership.E. Two or more sole trades form a partnership.3.11.2 SHORT ANSWER QUESTIONS1. On the completion of a scheme of capital reduction the capitalreconstruction account is expected to show a ............................balance.Use the following information to answer questions 2 - 4Big-Head Plc. absorbed Small Mind Ltd. at an agreed purchase price whichis to be settled by the issuance of ordinary shares with N25million andDebentures worth N12.5million. The balance is to be paid in cash. Bighead is to take over all the assets of Small-Mind Ltd. except the bankbalance. Extracts from the books of Small-Mind Ltd. are detailed below:Assets Book value Takeover valueN‘000 N’000Fixed Assets 29,030 34,775Other Current Assets 10,970 10,225Bank Balance 1,345 --Small Mind Ltd. incurred realisation expenses of N1.26 million. Big-HeadPlc is expected to have a negative goodwill of N2.5million after absorption.2. What is the value of the purchase consideration?3. What is the profit or loss that accrued to Small-Mind Limited on the takeover?4. How much of the purchase consideration will be settled in cash?5. In amalgamation all the assets of the discontinuing companies aretransferred to the realisation account at ___________ value.Refer to Suggested Solutions in Appendix I, Page 263.65
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FINANCIAL REPORTING AND ETHICS1.3.3
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ACCOUNTING AND REPORTING POLICIESsu
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7THE ENVIRONMENT: CORPORATE,PROFESS
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8PROFESSIONAL ETHICS8. 0 LEARNING O
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PROFESSIONAL ETHICSobjectivity are
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PROFESSIONAL ETHICSabout conflicts
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PROFESSIONAL ETHICS(d)(e)Confidenti
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PROFESSIONAL ETHICSA. III onlyB. II
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9DECISION MAKING IN ETHICS9. 0 LEAR
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DECISION MAKING IN ETHICS9.2 A FRAM
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ETHICAL THREATS AND SAFEGUARDS(d)We
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DECISION MAKING IN ETHICS4. A perso
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10ETHICAL THREATS TS AND SAFEGUARDS
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ETHICAL THREATS AND SAFEGUARDS(iv)(
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ETHICAL THREATS AND SAFEGUARDSto th
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ETHICAL THREATS AND SAFEGUARDSpayab
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ETHICAL THREATS AND SAFEGUARDS(a)Fi
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ETHICAL THREATS AND SAFEGUARDSimmin
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ETHICAL THREATS AND SAFEGUARDSHowev
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ETHICAL THREATS AND SAFEGUARDS(iii)
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11CORPORATE GOVERNANCE11.0 LEARNING
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CORPORATE GOVERNANCE11.3.1 Nature(a
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CORPORATE GOVERNANCEThe company sho
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CORPORATE GOVERNANCEtrust, possible
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CORPORATE GOVERNANCEAn agent has im
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CORPORATE GOVERNANCE(a)(b)(c)(d)(e)
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CORPORATE GOVERNANCE11.6.1 The law
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CORPORATE GOVERNANCEimitated. They
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CORPORATE GOVERNANCE(a)(b)Greenbury
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CORPORATE GOVERNANCE11.9.2 Boards d
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CORPORATE GOVERNANCErelationship wi
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CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
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CORPORATE GOVERNANCE(vi)Inquisitive
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CORPORATE GOVERNANCE(e)ConsultancyA
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CORPORATE GOVERNANCEThe incoming au
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12SOCIAL AND ENVIRONMENTALISSUES IN
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APPENDIX ISUGGESTED SOLUTIONS TO RE
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SUGGESTED SOLUTIONS TO REVISION QUE
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SUGGESTED SOLUTIONS TO REVISION QUE
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APPENDIX IICOMPREHENSIVE QUESTIONS
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COMPREHENSIVE QUESTIONS AND SUGGEST
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APPENDIX IIICASE STUDY 1Karsashi, a
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CASE STUDIES(iii)(iv)The floor sale
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CASE STUDIESShare price and dividen
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CASE STUDIESSUGGESTED SOLUTION(A) A
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CASE STUDY 3The following informati
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CASE STUDIESCASE STUDY 4Ologobojo i
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APPENDIX IVTable 1:SUMMARY OF INTER
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SUMMARY OF INTERNATIONAL ACCOUNTING
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APPENDIX VGLOSSARY OF TERMSAbsorpti
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GLOSSARY OF TERMSEthical Objectivis
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APPENDIX VIBIBLIOGRAPHYChambers Ham
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APPENDIX VIISTUDY AND EXAMINATION T
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STUDY AND EXAMINATION TECHNIQUES7.3
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INDEXAAbsorption, 17, 19, 39, 40, 4
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INDEXProfessional Behaviour, 136, 1
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