Page 562 - F2 Integrated Workbook STUDENT 2019

F2: Advanced Financial Reporting

(W1) Goodwill on acquisition of ERP
$000

Cost of investment 350
NCI @ acquisition (20% × 170) 34

All S’s NA’s @ acquisition (170)
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214

16.4 D

To determine the movements in group inventory, receivables and payables, the
balances at the start of the year will be taken from the balances at the end of
the year. The ERP balances held at the acquisition date would have been 100%
consolidated at acquisition so will need to be removed from the year-end
balances. The figures consolidated do not contribute to the operational
movements in inventory, receivables and payables and must be removed for
inclusion within the cash generated from operations working.

Movement in inventory (275,000 – 40,000) – 237,500 = $2,500 decrease
Movement in trade (471,500 – 55,000) – 400,000 = $16,500 increase
receivables
Movement in trade (310,000 – 35,000) – 265,000 = $10,000 increase
payables

16.5 $517,500

Reconciliation from profit before tax to cash generated from operations
$

Profit before tax 387,500
Add back non-cash expenses
impairment 134,000
Movement in working capital
Decrease in inventory 2,500

Increase in trade receivables (16,500)
Increase in trade payables 10,000
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517,500

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