QUESTION 1 (35 marks) Tortoise Ltd acquired a 60% controlling interest in Snail Ltd on 1 July 2021 when the retained earnings of Snail Ltd was R175 000 and its share capital R50 000.
Rabbit Ltd acquired a 75% controlling interest in Tortoise Ltd on 1 July 2022 when the retained earnings of Tortoise was R235 800 and its share capital R100 000.
The share capital (including the number of shares) of each entity has remained the same in each financial year since its inception.
Below are the final trial balances of the three entities for the financial year ended 30 June 2024:
| Trial balances | Rabbit Ltd | Tortoise Ltd | Snail Ltd | |||
| (R) | (R) | (R) | ||||
| DR | CR | DR | CR | DR | CR | |
| Ordinary share capital (R1 each) | 200 000 | 100 000 | 50 000 | |||
| Retained earnings: 1 July 2023 | 534 000 | 319 500 | 237 000 | |||
| Trade and other payables | 354 000 | 232 000 | 136 000 | |||
| Equipment (at carrying value) | 580 000 | 484 500 | 458 275 | |||
| Trade and other receivables | 804 000 | 467 000 | 310 725 | |||
| Investment in Tortoise Ltd (at cost) | 280 000 | – | – | |||
| Investment in Snail Ltd (at cost) | – | 152 000 | – | |||
| Profit for the year | 576 000 | 452 000 | 346 000 | |||
| 1 664 000 | 1 664 000 | 1 103 500 | 1 103 500 | 769 000 | 769 000 | |
Additional information:
• Rabbit Ltd and Tortoise Ltd account for investments in subsidiaries at cost in its separate financial statements.
• All the assets and liabilities of the respective subsidiaries were considered to be fairly valued at their respective acquisition dates.
• All companies of the Rabbit Ltd Group have a 30 June financial year-end.
• The Group elected to measure the non-controlling interest in the relevant subsidiary acquired at its proportionate share of identifiable net assets at the acquisition date.
• There was no other comprehensive income in the final trial balances of the three entities.
• Ignore Value Added Tax (VAT) and Dividend Tax.
• None of the companies are considered to be share traders for income tax purposes or investment entities as defined in IFRS 10 Consolidated Financial Statements.
REQUIRED:
Using the Excel template provided, together with your knowledge of Excel formulas and functions:
You are required to complete the Excel template i.e., all the cells in yellow to the best of your ability based on the information and instructions provided.
You need to make use of links to the trial balances, Excel functions, and formulas as far as possible.
PART A
Prepare the analysis of equity of Tortoise Ltd and Snail Ltd, i.e. Part A) AOEs, from their acquisition to the end of the financial year ended 30 June 2024.
Complete the cells marked in yellow. Note that some of the amounts needed to complete the workings sheet have already been populated for you. In addition, some of the sum formulas have already been typed in for you but the digits displayed may change based on your inputs which will change the totals summed. (31 marks)
PART B
Complete the Consolidated Statement of Changes in Equity of the Rabbit Ltd Group for the financial year ended 30 June 2024, i.e. complete Part B) CSCIE.
Some of the columns and sum formulas have already been completed and typed in. You need to complete only the cells marked in yellow.(4 marks)
Evidence required:
Please submit the following as part of your completed assignment:
• The completed excel template.
• The PDF version of two sheets [‘Part A) AOEs’ and ‘Part B) CSOCIE’] showing the amounts.
• The PDF version of two sheets [‘Part A) AOEs’ and ‘Part B) CSOCIE’] showing the formulas you used.
To get the formula view of each of your sheets, go to Formulas > Show Formulas. Your sheet will change so that all the cells where you entered formulas now display the actual formula that you entered. Take a screen print of the screen with all the formulas for assessment.
VERY IMPORTANT:
• Make sure to include your formulas in your submission, without the formula view of your assessment the assessment cannot be graded, as marks are allocated specifically to the formulas used in your assessment.
• Also, to allow for proper grading, when you take a screen print or save your Excel as PDF, ensure that all your information/formulas are shown clearly and can be read properly and that the information/formulas are not cut off and over more than one page.
• Please do not delete/add any columns or rows in the given worksheets as this will then change your formulas making it difficult to grade according to the memorandum.
Answers to Above Questions on Financial Management
Answer 1: The analysis of equity of Tortoise Ltd and Snail Ltd, i.e. Part A) AOEs, from their acquisition to the end of the financial year ended 30 June 2024 is performed as follows:
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