InstituteofCertifiedManagementAccountantsofSriLanka

CorporateReporting&Analysis(CRA/ML2302)ManagerialLevel November2012Examination SuggestedAnswerScheme

Question 01 (30 marks) 1. = 50 =301 84 217 Gain (225-217) =8 RReserve (10x70%) =7 Total gain =15
100- .2(100+200-50)x115=5.750

100 x 6 / 12 Cv = 230+50+21 NCI = 280x30%=

2.

3.

CPLCGroup Rs.000 Revenue 88000 CostofSales (53000) GrossProfit 35000 OtherIncome 0 AdministrativeExpenditure (12000) DistributionCost (14000) Financecost (3000) 6000 KPLCshare5600x30%100x30%150 1500 Profitbeforetax 7500 Incometax (1000) Profitaftertax 6500 Exchangegain 320 Totalcomprehensiveincome 6820

 4. B group invest equityB reserv GWNCI FullGW C invest indire equity res NCI 4400 3200 800 400

Ppe

36+20+36

92000 6600 2,000 32000 12500 500 145600 20000 61600 14000 2000 26000 22000 145600

18000 12800 3200 2000 400 2400

FV

GW investmnts Stock Debt Cit

GW

Scap Res NCI contingentconsider Loan liabilities

10000 7200 5440 8160 3600 600 4200 6600

FV eq res

7000 2560 3840 600

fullgw ENTIRE

NCI FV 11400 investC 1800 reserves B 1200 reserves c 3200 Areerv 14000

group

4800 6800 50000 61600

 Question2

1. If the bank has provided a standard loan, no related party disclosure required. 2. i. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria: a) its reported revenue, from both external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments; or b) the absolute measure of its reported profit or loss is 10 per cent or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss; or c) its assets are 10 per cent or more of the combined assets of all operating segments.
(ii) Yes.Shouldbeincludedinsegmentresultwhichisthedifferencebetween segmentrevenueandexpense. Itisrequiredtoeliminateasitiswithinthesegment.Outofthesegmentnot required. Itisallowedtoreportasaseparatesegment.SLFRS8.

(iii)

(iv) Question03

1. 2mntobeprovidedimmediately. 2. i. A financial liability is any liability that is:

a contractual obligation: o to deliver cash or another financial asset to another entity; or o to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity; or a contract that will or may be settled in the entitys own equity instruments and is :

a non-derivative for which the entity is or may be obliged to deliver a variable number of the entitys own equity instruments; or o a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entitys own equity instruments.
ii. Yes,Hollandhasanobligationtopayinterestonspecificdates.Hence,itnotanequity component.
iii. Offsetting Possible Only; if it has a current right to set off the recognised amounts; and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

iv. Equitycomponent CF 100000 10000 10000 10000 10000 PVofdebt proceeds Equity portion Question4 Candidateshouldcalculateatleasttworatiosineachcategory:profitability,liquidityandefficiency. Thecompanyrunsoveritscapacity,candidateshouldidentifythesymptomsinthereport. Atleastfourlimitationsofratiosasananalyticaltechniqueexpected. Factor 0.6355 0.8928 0.7972 0.7117 0.6355 PV 63550 8928 7972 7117 6355 93922 100000 6078

Question 5

1. CSR 2. theyprovidemanagement,shareholdersandotheruserswithcomparableinformationfrom
periodtoperiod,relatingtotheunderlyingresultsofoperations,capitalmaintenanceand trendsinperformance; Theyenablemanagementtomakemorereliabledecisionsoncapitalexpenditureplans,as thefinancialstatementsaremorerelevant;and Theybecomemoreusefultointernationalinvestorsandotherusersoffinancialstatements inthattheyarecomparablewithotherundertakingsinthesameindustry. 3. Governance 4. Effective corporate governance is the need of the era for corporate sector. Past

failures and corporate scams like golden key amply prove this fact, and have forced regulators to review the existing regulations The Best Practice on Corporate Governance (ICASL) requires that the Board should maintain a sound system of internal control to safeguard shareholders investments and the Companys assets. Directors should, at least annually, conduct a review of the effectiveness system of internal controls, to be able to report to shareholders This could be made the responsibility of the Audit Committee. Companies, which do not have an internal audit function, should from time to time review the need for one. strong internal control would deliver accurate ,complete and timely information to the investor community and to the public . 2. The costs incurred during the growth of fish, should be written off in that period as the fair value is not reliable.