Ramadan Al-Omari, FCCA / Faculty of Commerce
Time : One hour / Department of Accounting
Mid Term Second Semester 2012/2013
Question No1(10 Marks)
Real Madrid Ltd, an ice cream manufacturing company, operates in six different segments. Information concerning the operations of these segments for the year ended 30 April 2013 is as follows: (All figures are in Euros.)
Production PackagingExhibition Advertising TinningLogistics
Revenue - External 20,000 64,000 50,00010,000 26,000 12,000
Revenue – Internal 10,00014,000 12,00014,000 19,000 8,000
Operating Profit (loss) (9,800) 20,000 18,000(5,000) 5,800 6,000
Identifiable Assets 42,000 10,000 9,000 10,500 17,000 14,000
You are required to perform the necessary calculations to identify the reportable segments and to indicate whether the identified reportable segments represent a significant portion of the Company.
Question No 2(10 Marks)
Manchester United, a British firm that deals in sports equipment, entered into the following transactions during the month of January 2013. The firm’s fiscal year end is March 31. The reporting currency of the firm is the British Pound (GBP).
Jan10, Manchester United purchased inventory for Euro 300,000 from Bayern Munich, a German firm, payable on April10, 2013.
Jan 10, Manchester United enters into a forward contract with Milan Bank for the purchase and delivery of Euros 300,000 on April 10, 2013.
Feb 5, Manchester United sold inventory for JOD 100,000 to Al-Wihdat Sports Club in Jordan. This amount was agreed to be deposited at Manchester United’s bank account at the Arab Bank, Amman branch on April 5, 2013.
April 5, Manchester United received notice from the Arab Bank regarding the deposit of JOD 100,000 into the firms bank account.
April 10, Manchester United transfers the Euro 300,000 to Bayern Munich.
You are required to prepare the journal entries necessary to record the above transactions in the books of Manchester United, including those at year end.
Question No 3(10 Marks)
On April 1, 2012, Barcelona Professionals, a specialist training firm operating in Europe,purchased a controlling interest in The Ahli Sports Club, an Egyptian firm operating in Egypt. The financial statements for The Ahli Sports Club stated in Egyptian Pounds (EGP) at March 31, 2013, the firm’s year end, are given below:
Balance Sheet as at March 31, 2013Income Statement
For the year ended March 31, 2013
Cash and Receivables50,000Revenues80,000
Fixed Assets40,000Operating Expenses30,000
Total90,000Net Income50,000
=====Dividends 25,000
Accounts Payable10,000Retained Earnings25,000
Common Stock50,000=====
Retained Earnings30,000
Total90,000
=====
You are required to translate the year end income statement and balance sheet of the Egyptian subsidiary using the current rate method of translation. (All figures are to be rounded to the nearest EURO)
DateEGP for 1 EURO
April 1, 2013 10.20
March 31, 2013 10.50
Average for the year 10.30
Dividend payment date 10.30
GBP/EURO
DateSpot Rate Forward Rate
______(Euro for 1 GBP) (April 10, EUROs for 1 GBP)__
January10, 2013 1.18 1.20
March 31, 2013 1.19 1.21
April 10, 2013 1.22
GBP/JOD
Date Spot Rate Forward Rate
______(JOD for 1 GBP) (April 5, JOD for 1 GBP)__
Feb 5, 2013 1.07 1.10
March 31, 2013 1.12 1.13
April 5, 2013 1.15