exercises first semesterpersonal.us.es/cabad/exercises first semester 0910 para... · 2009. 9....

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DEPARTAMENTO DE CONTABILIDAD Y ECONOMÍA FINANCIERA

ESCUELA UNIVERSITARIA DE ESTUDIOS EMPRESARIALES

FINANCIAL ACCOUNTING

(DIPLOMATURA EN CIENCIAS EMPRESARIALES, 2º CURSO, GRUPO 5)

2009-2010

EXERCISES

FIRST SEMESTER

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LESSON 1 CAPITAL GRANTS

EXERCISE 1 LESSON 1 The 30 of December of 2008 company SCE, Ltd. has received (in cash) a grant of 100,000 € from the local government for the acquisition of a new machinery with the same cost. The useful life of the machinery is 10 years (linear). The machinery is bought that same day. REQUIRED:

• Register the operations related to the grant in 2008, 2009 and 2010. • Which is the value of the capital grant in the Balance Sheet at the end of 2010?

EXERCISE 2 LESSON 1 Company FP, Ltd. has received at the beginning of 2008 a grant of 2,500,000 € from the regional government for the acquisition of new premises with a cost of 5,000,000 € (Constructions; 2,500,000 €; Land: 2,500,000 €). The useful life of the premises is 40 years (linear). The premises are bought the 4th of January and the subvention is collected in cash the 1st of February.

REQUIRED: Register the operations related to the grant in 2008 and 2009. SOLUTION Year 2008: - 02/01/01: Recognition of the grant as revenue directly in equity. Nº Accounts Debit Credit 4708 Receivable from public authorities (capital grants) 2.500.000 940 Revenues of official capital grants 2.500.000 - 04/01/01: Acquisition of the premises Nº Accounts Debit Credit 210 211

Land Constructions

2.500.000 2.500.000

572 Cash 5.000.000 - 01/02/01: Collection of the grant Nº Accounts Debit Credit 572 Cash 2.500.000 4708 Receivable from public authorities (capital grants) 2.500.000 31st of December: Treatment of operations related to the grant. - Depreciation of the premises 2.500.000/40=62.500 Nº Accounts Debit Credit 681 Tangible fixed assets depreciation expense 62.500 281 Tangible fixed assets accumulated depreciation 62.500

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- For the transfer of the grant to income for the year (the grant is only financing 50% of the construction and 50% of the land)

Nº Accounts Debit Credit 840 Transfers of official capital grants 31.250

746 Capital grants, donations and legacies transferred to income for the year 31.250

At the end of each of the years, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 940 Revenues of official capital grants 2.500.000 130 Official capital grants 2.500.000

Nº Accounts Debit Credit 130 Official capital grants 31.250 840 Transfers of official capital grants 31.250

Year 2009: 31st of December: Treatment of operations related to the grant. - Depreciation of the premises 2.500.000/40=62.500 Nº Accounts Debit Credit 681 Tangible fixed assets depreciation expense 62.500 281 Tangible fixed assets accumulated depreciation 62.500 - For the transfer of the grant to income for the year (the grant is only financing 50% of the

construction and 50% of the land) Nº Accounts Debit Credit 840 Transfers of official capital grants 31.250

746 Capital grants, donations and legacies transferred to income for the year 31.250

At the end of each of the years, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 130 Official capital grants 31.250 840 Transfers of official capital grants 31.250 EXERCISE 3 LESSON 1 Company INXS, Ltd. has received at the beginning of 2008 a grant of 40,000 € from the regional government for the acquisition of a new machinery with a cost of 50,000 €. The useful life of the machinery is 4 years (linear). The grant is collected in cash the 2th of January and the machinery is bought the day after. REQUIRED: • Register the operations related to the grant over the useful life of the asset. • Which is the value of the capital grant in the Balance Sheet at the end of 2010? Which is the net value of the machinery at the end of 2010?

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EXERCISE 4 LESSON 1 – From exam of course 0809 The 1st of October of 2008 company ABC, Ltd. received (in cash) a grant of 180,000 € from the local government for the acquisition of new equipment with a cost of 600,000 €. The useful life of the asset is 10 years (linear). The machinery is bought the 1st of November of 2008. REQUIRED:

• Register the operations related to the grant in 2008 and 2009. • Which is the value of the capital grant in the Balance Sheet at the end of 2010?

SOLUTION Year 2008: - 1/10/08: Recognition of the grant as revenue directly in equity. Nº Accounts Debit Credit 57 Cash 180,000 940 Revenues of official capital grants 180,000 - 1/11/08: Acquisition of the machinery Nº Accounts Debit Credit 213 Machinery 600,000 572 Cash 600,000 31st of December: Treatment of operations related to the grant. - Depreciation of the asset (600,000/10)*2/12=10,000 Nº Accounts Debit Credit 681 Tangible fixed assets depreciation expense 10,000 281 Tangible fixed assets accumulated depreciation 10,000 - For the transfer of the grant to income for the year the grant is only financing 180,000/600,000 = 30% of the asset 10,000 * 0,3 = (180,000/10)*2/12 = 3,000 Nº Accounts Debit Credit 840 Transfers of official capital grants 3,000

746 Capital grants, donations and legacies transferred to income for the year 3,000

At the end of each of the year, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 940 Revenues of official capital grants 180,000 130 Official capital grants 180,000

Nº Accounts Debit Credit 130 Official capital grants 3,000 840 Transfers of official capital grants 3,000

Year 2009: 31st of December: Treatment of operations related to the grant. - Depreciation of the asset 600,000/10=60,000 Nº Accounts Debit Credit

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681 Tangible fixed assets depreciation expense 60,000 281 Tangible fixed assets accumulated depreciation 60,000 - For the transfer of the grant to income for the year the grant is only financing 180,000/600,000 = 30% of the asset 60,000 * 0,3 = 180,000/10 = 18,000 Nº Accounts Debit Credit 840 Transfers of official capital grants 18,000

746 Capital grants, donations and legacies transferred to income for the year 18,000

At the end of each of the years, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 130 Official capital grants 18,000 840 Transfers of official capital grants 18,000

• Which is the value of the capital grant in the Balance Sheet at the end of 2010?

(130) Grants, donations and legacies 3,000 transfer 2008 18,000 transfer 2009 18,000 transfer 2010

180,000 grant received 2008

141,000 Final Balance Value of the grant at the end of 2010

EXERCISE 5 LESSON 1 – From exam of course 0809 The 1st of July of 2008 company ABC, Ltd. has received (in cash) a grant of 800,000 € from the local government for the acquisition of a new machinery with a cost of 1,000,000 €. The useful life of the machinery is 5 years (linear). The machinery is bought that same day. REQUIRED:


EXERCISE 6 LESSON 1 – From exam of course 0809 The 1st of October of 2008 company ABC, Ltd. has received (in cash) a grant of 25,000 € from the local government for the acquisition of a new machinery with a cost of 50,000 €. The useful life of the machinery is 10 years (linear). The machinery is bought that same day. REQUIRED:


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LESSON 2 FINANCIAL INSTRUMENTS

EXERCISE 1 LESSON 2 Company HTM, Ltd. has acquired, the 1st of January of X5, a portfolio of bonds that are intended to be held until maturity. The nominal value in the moment of acquisition was 500,000 €, with a discount at emission of 5%. The commission paid to the dealer at the acquisition was 100 €. The bond yields no interest and the reimbursement value, the 1st of January of X10, is 600,000 €. REQUIRED: Register the operation in years X5, X6, X7 and X8, and indicate which the amortised cost of the financial asset is at the end of X8. EXERCISE 2 LESSON 2 Company FP, Ltd has performed the following transactions with financial instruments: Year 200X-1: 30th of January: Acquisition of 1,000 shares of FCC at a price of 60.5 € per share. The shares are paid in cash.

31st of December: The market price of the FCC’s shares is 65 €. Year 200X: 30th of June: The shares of FCC are sold in cash at a price of 68 €.

REQUIRED: Register the operations, considering the following options: A) The shares are classified by the company in the portfolio of “held for trading” financial assets. B) The shares are classified by the company in the portfolio of “available for sale” financial assets. EXERCISE 3 LESSON 2 Company ECPN, Ltd. has performed the following operations with financial instruments: Year 200X-1: 30th of June: Acquisition of 2 portfolios of shares of companies X and Y. The shares are paid in cash and bought with the purpose of holding them over the long term. The values of these equity holdings at that date are the following:

o Shares of company X: 1,000,000 o Shares of company Y: 10,000

31st of December: The fair value of the equity holdings is the following:

o Shares of company X: 1,500,000 o Shares of company Y: 9,000

Year 200X:

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31st of December: The information regarding the equity holdings is the following: o Shares of company X: these shares are sold in cash at a price of 1,600,000 o Shares of company Y: fair value 9,500

REQUIRED: Register the operations. EXERCISE 4 LESSON 2 Company Failed, Ltd. has received a loan from the BSCH Bank with the following conditions:

Principal amount: 100,000 € Date of settlement = total amount in 3 years time.

Opening fees = 2,000 €. Annual interest rate = 5%. Required: Register the transactions related to the loan. EXERCISE 5 LESSON 2 The following information about transactions of company SCE, Ltd. is available: Year 200X-1: 15th of January: During the year the company has sold a portfolio of shares of company Z classified as “available for sale” for a price of 18,000 € received in cash. The accounting value at the end of 200X-1 was 18,000 €. There were positive adjustments in value of 5,000 € for this asset that had been recognized directly in equity in year X-2. This was the only increase/decrease in value recognized for these stocks since it acquisition in year X-3.

30th of June: Acquisition of a portfolio of shares of company X for 15,000 €. The shares are paid in cash and classified by the company in the portfolio of “available for sale” financial assets.

31st of December: The fair value of the equity holdings (shares of company X) is 14,500 €. Año 200X: 31st of December: The fair value of the equity holdings (shares of company X) is 13,000 €.

REQUIRED: Register the operations. Which is the value of the accounts “Long-term holdings in equity” and “Adjustments for changes in value” in the Balance Sheet at the end of 200X-1 and 200X?

SOLUTION Year 200X-1: 15th of January: Sale of portfolio of shares of company Z.

Nº Accounts Debit Credit 572 Cash 18,000 250 Long term holdings in equity instruments 18,000 Transfer of the profit that was recognized in equity in previous years: Nº Accounts Debit Credit 802 Transfer of profits from available for sale financial assets 5,000 7632 Profits from available for sale portfolio 5,000 30th of June: Acquisition of a portfolio of shares of company X.

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Nº Accounts Debit Credit 250 Long term holdings in equity instruments (shares of Y) 15,000 572 Cash 15,000 31st of December: Valuation at fair value.

Nº Accounts Debit Credit 800 Losses from available for sale financial assets 500 250 Long term holdings in equity instruments (shares of X) 500 At the end of each of the year, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 1330 Adjustments for changes in value of financial instruments

available for sale 5,000

802 Transfer of profits from available for sale financial assets 5,000 Nº Accounts Debit Credit 1330 Adjustments for changes in value of financial instruments

available for sale 500

800 Losses from available for sale financial assets 500 Year 200X: 31st of December: Valuation at fair value.

Nº Accounts Debit Credit 800 Losses from available for sale financial assets 1,500 250 Long term holdings in equity instruments (shares of X) 1,500 At the end of each of the year, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 1330 Adjustments for changes in value of financial instruments


800 Losses from available for sale financial assets 1,500 Value of the accounts “Long-term holdings in equity” and “Adjustments for changes in value” in the Balance Sheet at the end of 200X-1:

(250) Long term holdings in equity

18,000 Initial value 15,000 Purchase

18,000 Sale 500 Adjustment

14,500 Final balance (133) Adjustments for changes in value 5,000 sale 500 ∇FV

5,000 Initial value

500 Final balance Value of the accounts “Long-term holdings in equity” and “Adjustments for changes in value” in the Balance Sheet at the end of 200X:

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(250) Long term holdings in equity 14,500 Initial value 1,500 Adjustment

13,000 Final balance (133) Adjustments for changes in value

500 Initial value 1,500 ∇FV

2,000 Final balance EXERCISE 6 LESSON 2 – From exam of course 0708 Company XYZ, Ltd. has prepared the following financial Statements at the end of 2009: ASSETS 2009 2008 LIABILITIES 2009 2008

A) NON-CURRENT ASSETS 27.150 21.050 A) EQUITY 26.352 19.975

I. Intangible assets. 3.000 3.050 A-1) Shareholders' equity. 24.327 18.425

3. Intelectual property, trademarks and others. 3.000 3.050 I. Capital. 20.000 14.700

II. Tangible fixed assets. 20.800 13.500 1. Registered capital. 20.000 20.000

1. Land and structures. 5.800 2.500 2. (Uncalled subscribed capital). - - 5.300

2. Plant and machinery, tools, furniture and other. 15.000 11.000 III. Reserves. 3.300 2.800

III. Investment property. 1.900 2.000 1. Legal and statutory. 1.800 1.800

2. Structures. 1.900 2.000 2. Other reserves. 1.500 1.000

V. Long-term financial investments. 1.450 2.500 VII. Income for the year. 1.027 925

1. Holdings in equity. 1.450 2.500 A-2) Adjustments for changes in value. 225 50

B) CURRENT ASSETS 3.222 4.025 I. Financial instruments available for sale. 225 50

II. Inventories. 1.400 900 A-3) Grants, donations and legacies received. 1.800 1.500

1. Commercial (goods for sale). 1.400 900 B) NON-CURRENT LIABILITIES 1.500 2.500

III. Trade accounts receivables and other receivables. 440 500 I. Long-term provisions. 500 500

1. Trade accounts receivables for sale and services. 100 200 2. Environmental actions. 500 500

3. Sundry accounts receivables. 300 250 II. Long-term debt. 1.000 2.000

4. Employee receivables. 40 50 2. Long-term debt payable to credit institutions. 1.000 2.000

V. Short-term financial investments. 60 1.050 C) CURRENT LIABILITIES 2.520 2.600

1. Holdings in equity. 600 500 III. Short-term debt. 2.010 2.010

2. Loans to companies. 550 2. Short-term debt payable to credit institutions. 2.010 2.010

VI. Accrual accounts. 10 20 V. Trade accounts payables and other. 510 590

VII. Cash and cash equivalents. 772 1.555 1. Trade accounts payables for purchases & s. 80 50

TOTAL ASSETS 30.372 25.075 3. Sundry accounts payable. 50 20

5. Liability for current tax. 300 200

6. Other payables to public authorities. 80 220

7. Customer advances. - 100

TOTAL LIABILITIES 30.372 25.075

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2009 A) CONTINUING OPERATIONS 1. Net turnover. 4.500 a) Sales. 4.500 4. Procurements. - 1.150 a) Consumption of goods for sale. - 1.250 d) Impairment of goods for sale, raw materials and other consumables. 100 5. Other operating revenues. 350 a) Accesory and other ordinary income. 200 b) Operating subventions included in income for the year. 150 6. Personnel expenses. - 650 a) Wages, salaries and similar expenses. - 500 b) Employee welfare expenses. - 150 7. Other operating expenses. - 450 a) Outside services. - 450 8. Fixed assets depreciation expense. - 2.100 9. Transfer of grants of non-financial non-current assets and others. 500 11. Impairment and income from disposal of non-current assets. 350 a) Impairment and losses - 50 b) Income from disposals and others. 400 A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 1.350 12. Financial revenues. 75 a) From holdings in equity instruments. 50 a2) Of third parties. 50 b) From marketable securities and other financial instruments. 25 b 2) Of third parties. 25 13. Financial expenses. - 111 b) Of third parties. - 111 14. Change in fair value of financial instruments. 25 b) Transfer to income for the year for available for sale financial instruments. 25 16. Impairment and income from disposal of financial instruments. 150 b) Income from disposals and others. 150 A.2) FINANCIAL INCOME (12+13+14+15+16) 139 A.3) INCOME BEFORE TAXES (A.1+A.2) 1.489 17. Income tax. - 462 A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 1.027 A.5) INCOME FOR THE YEAR (A.4+18) 1.027

Additional information (transactions of 2009): 1. Short-term holdings in equity are a portfolio of stocks classified as “held for trading”. There has been

no profit or loss due to a change in the fair value of these stocks. 2. Long-term holdings in equity are a portfolio of stocks classified as “available for sale”.

The portfolio includes 100 shares acquired in October of 2008 for a price of 24,5 m.u. per share. The fair value at the end of 2008 was 25 m.u. In June of 2009 half of the portfolio has been sold for a price of 28 m.u. per share. The fair value at the end of 2009 is 29 m.u.

REQUIRED: • Register the operations of 2009 described in the additional information.

SOLUTION

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Short-term holdings in equity are a portfolio of stocks classified as “held for trading”. There has been no profit or loss due to a change in the fair value of these stocks. Not relevant Long-term holdings in equity are a portfolio of stocks classified as “available for sale”. The portfolio includes 100 shares acquired in October of 2008 for a price of 24,5 m.u. per share. The fair value at the end of 2008 was 25 m.u. In June of 2009 half of the portfolio has been sold for a price of 28 m.u. per share.The fair value at the end of 2009 is 29 m.u.

(250) Long term holdings in equity 2,450 Purchase 50 Adjustment 150 Adjustment 200 Adjustment

1,250 Sale

1.450 Final balance

(133) Adjustments for changes in value 175 Transfer

50 150 ∆ FV 200 ∆ FV

225 Final balance 2009 transactions: June: valuation at fair value of ½ of the portfolio (50 shares) Nº Accounts Debit Credit 250 Long term holdings in equity 150 900 Profits from available for sale financial assets 150 Sale: Nº Debit Credit 572 Cash 1,400 250 Long term holdings in equity 1,400 Transfer of the profits (50 shares) Nº Debit Credit 802 Transfers of profits from available for sale financial

assets 175

7632 Profits from available for sale portfolio 175 Change in fair value (50 shares that remain): Nº Debit Credit 250 Long term holdings in equity 200 900 Profits from available for sale financial assets 200 Regularization of group 8 & 9 accounts: Nº Debit Credit 1330 Adjustments for changes in value of financial instruments


802 Transfers of profits from available for sale financial assets

175

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Nº Debit Credit 900 Profits from available for sale financial assets 350 1330 Adjustments for changes in value of financial instruments


EXERCISE 7 LESSON 2 The following financial instruments are shown in the Balance Sheet of company FI Associated, Ltd. at the end of 2010: Long-term holdings in equity = 60,000 € Short-term holdings in equity= 58,000 € Long-term debts with credit institutions = 29,167.79 € The following information is available regarding these financial instruments:

a) In November of 2010 the company acquired a portfolio of 1,000 shares of company FA United, Ltd. with the purpose of speculating with them in the stock market during 3 months. The acquisition price of each share was 50 €. At the end of the year the price in the stock market was 58 €.

b) In April of 2009 the company acquired a portfolio of 10,000 shares of company FL Brothers, Ltd. in order to invest a cash surplus and have the possibility of selling the shares in some future year if necessary. The acquisition price of each share was 15 €. The fair value of each share is 13 € at the end of 2009. In October 2010, half of the portfolio (5,000 shares) was sold for a price of 13 €. The fair value of each share is 12 € at the end of 2010.

c) The 1st of January of 2009 the company received a loan of 30,000 € from Wells Fargo Bank, amount that has to be paid back at the end of 2012. The opening fees were 1,500 € and the annual interest rate (payable at the end of each year) is 10%. The effective interest rate is 11,6335%.

REQUIRED:

1. Register the operations related to all the financial instruments in years 2009 and 2010. 2. Which is the formula for the calculation of the effective interest rate of the debt with

credit institutions? 3. Which was the value of each of the financial instruments at the end of 2009?

SOLUTION 1. Register the operations related to all the financial instruments in years 2009 and 2010. a) In November of 2010 the company acquired a portfolio of 1,000 shares of company FA United, Ltd.

with the purpose of speculating with them in the stock market during 3 months. The acquisition price of each share was 50 €. At the end of the year the price in the stock market was 58 €.

SHORT TERM HOLDINGS IN EQUITY: November 2010: Nº Accounts Debit Credit 540 Short term holdings in equity instruments 50,000 572 Cash 50,000

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31/12/2010: Nº Accounts Debit Credit 540 Short term holdings in equity instruments 8,000 7630 Profits from held for trading portfolio 8,000 b) In April of 2009 the company acquired a portfolio of 10,000 shares of company FL Brothers, Ltd. in

order to invest a cash surplus and have the possibility of selling the shares in some future year if necessary. The acquisition price of each share was 15 €. The fair value of each share is 13 € at the end of 2009. In October 2010, half of the portfolio (5,000 shares) was sold for a price of 13 €. The fair value of each share is 12 € at the end of 2009.

LONG TERM HOLDINGS IN EQUITY: April 2009: Nº Accounts Debit Credit 250 Long term holdings in equity instruments 150,000 572 Cash 150,000 31/12/2009: FV of the portfolio = 130,000 Nº Accounts Debit Credit 800 Losses from available for sale financial assets 20,000 250 Long term holdings in equity instruments 20,000 Accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 1330 Adjustments for changes in value of financial instruments


800 Losses from available for sale financial assets 20,000 October 2010: 5,000 shares are sold for 65,000 €. Their value at the end of 2009 was 65,000 €. Nº Accounts Debit Credit 57 Cash 65,000 250 Long term holdings in equity instruments 65,000 Accumulated losses for 5,000 shares = 5,000 * 2 (∇FV) = 10,000 Nº Accounts Debit Credit 6632 Losses from valuation at fair value of available for sale financial

instruments 10,000

902 Transfer of losses from available for sale financial assets 10,000 31/12/2010: Fair value of the 5,000 shares that remain in the company = 5,000 * 12 = 60,000 Their value at the end of 2009 was 65,000 €. ∇FV = 5,000 Nº Accounts Debit Credit 800 Losses from available for sale financial assets 5,000 250 Long term holdings in equity instruments 5,000 Accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 902 Transfer of losses from available for sale financial assets 10,000 1330 Adjustments for changes in value of financial instruments


Nº Accounts Debit Credit 1330 Adjustments for changes in value of financial instruments


800 Losses from available for sale financial assets 5,000

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c) The 1st of January of 2009 the company received a loan of 30,000 € from Wells Fargo Bank, amount

that has to be paid back at the end of 2012. The opening fees were 1,500 € and the annual interest rate (payable at the end of each year) is 10%. The effective interest rate is 11,6335%.

LONG TERM DEBT WITH CREDIT INSTITUTIONS

Year Initial amortised cost (1) Interest expense (2)=(1)x11.6335 %

Interest payment(3)

Difference (4)=(2)-(3)

Final AC (5) = (1)+(4)

2009 28.500 3.315,54 3.000 315,54 28.815,54 2010 28.815,54 3.352,25 3.000 352,25 29.167,79 2011 29.167,79 3.393,23 3.000 393,23 29.561,02 2012 29.561,02 3.438,98 3.000 438,98 30.000 2012

30.000(principal

payment) 0

1/1/2009 28,500 (57) Cash to (170) Long-term debt with credit institutions 28,500 31/12/2009 3,315.54 (6623) Interest expense to (170) Long-term debt with credit institutions

(57) Cash 315.54 3,000

31/12/2010 3,352.25 (6623) Interest expense to (170) Long-term debt with credit institutions

(57) Cash 352.25 3,000

2. Which is the formula for the calculation of the effective interest rate of the debt with credit institutions?

4321 )1(000,33

)1(000,3

)1(000,3

)1(000,3500,280

iiii +−

++

−+

+−

++

−+=

3. Which was the value of each of the financial instruments at the end of 2009? Long-term holdings in equity = 130,000 € Short-term holdings in equity = 0 € Long-term debts with credit institutions = 28,815.54 € EXERCISE 8 LESSON 2 – From exam of course 0809 Company ABC, Ltd. has performed the following transactions with financial instruments: a) In May of 2008 the company acquired a portfolio of 1,000 shares of company XYZ, Ltd. with

the purpose of holding them over the long term. The acquisition price of each share was 55 €. The fair value of each share was 62 € at the end of 2008. In May 2009, half of the portfolio (500 shares) was sold for a share price of 62 €. The fair value of each share is 65 € at the end of 2009.

b) The 1st of January of 2008 the company received a loan of 100,000 € from Chase Manhattan

Bank, amount that has to be paid back at the end of 2010. The opening fees were 3,000 € and the annual interest rate (payable at the end of each year) is 8%. The effective interest rate is 9.1892%.

REQUIRED:

1. Register the operations related to all the financial instruments in years 2008 and 2009.

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2. Which is the formula for the calculation of the effective interest rate (9.1892%) of the debt with credit institutions? Which is the value of the debt in the Balance Sheet at the end of 2009?

3. Which was the value of the holdings in equity at the end of 2009? Which was the value of the “adjustments for changes in value” at the end of 2009?

SOLUTION Register the operations related to all the financial instruments in years 2008 and 2009. a) PORTFOLIO OF SHARES OF XYZ AVAILABLE FOR SALE FINANCIAL ASSETS 2008: Acquisition: Nº Accounts Debit Credit 250 Long term holdings in equity instruments 55,000 572 Cash 55,000 31st of December: The market price of the shares is 62 € ∆FV = 7*1,000 Nº Accounts Debit Credit 250 Long term holdings in equity instruments 7,000 900 Profits from available for sale financial assets 7,000 At the end of each of the years, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 900 Profits from available for sale financial assets 7,000 1330 Adjustments for changes in value of financial instruments


2009: Sale: Nº Accounts Debit Credit 572 Cash 31,000 250 Long term holdings in equity instruments 31,000 Nº Accounts Debit Credit 802 Transfer of profits from available for sale financial assets 3,500 7632 Profits from available for sale portfolio 3,500 31st of December 2009: The market price of the shares is 65 € ∆FV = 3*500 Nº Accounts Debit Credit 250 Long term holdings in equity instruments 1,500 900 Profits from available for sale financial assets 1,500 At the end of each of the years, accounts of group 8 and 9 are closed: Nº Accounts Debit Credit 1330 Adjustments for changes in value of financial instruments


802 Transfer of profits from available for sale financial assets 3,500 Nº Accounts Debit Credit 900 Profits from available for sale financial assets 1,500 1330 Adjustments for changes in value of financial instruments


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b) LONG-TERM DEBT WITH CREDIT INSTITUTIONS

Year Initial amortised cost (1) Interest expense (2)=(1)x9.1892 %

Interest payment (3)

Difference (4)=(2)-(3)

Final AC (5) = (1)+(4)

2008 296.000,00 15.922,83 15.000,00 922,83 296.922,83 2009 296.922,83 15.972,47 15.000,00 972,47 297.895,30 2010 297.895,30 16.024,79 15.000,00 1.024,79 298.920,09 2011 298.920,09 16.079,91 15.000,00 1.079,91 300.000,00

2011 300.000 (principal payment)

0

1/1/2008 296,000 (57) Cash to (170) Long-term debt with credit institutions 296,000 31/12/2008 15,922.83 (6623) Interest expense to (170) Long-term debt with credit institutions

(57) Cash 922,83 15,000

31/12/2009 15,972.47 (6623) Interest expense to (170) Long-term debt with credit institutions

(57) Cash 972.47 15,000


4321 )1(000,315

)1(000,15

)1(000,15

)1(000,15000,2960

iiii +−

++

−+

+−

++

−+=

Long-term debt with credit institutions = 98,910.92 € 3. Which was the value of the holdings in equity at the end of 2009? Which was the value of the “adjustments for changes in value” at the end of 2009? Long-term holdings in equity = 32,500 € Adjustments for changes in value = 5,000 € EXERCISE 9 LESSON 2 – From exam of course 0809 Company ABC, Ltd. has performed the following transactions with financial instruments: a) In May of 2008 the company acquired a portfolio of 100,000 shares of company XYZ, Ltd.

with the purpose of holding them over the long term. The acquisition price of each share was 8.02 €.

The fair value of each share was 8.52 € at the end of 2008. The fair value of each share decreased to 7 € at the end of 2009.

b) The 1st of January of 2008 the company received a loan of 300,000 € from Chase Manhattan Bank, amount that has to be paid back at the end of 2011. The opening fees were 4,000 € and the annual interest rate (payable at the end of each year) is 5%. The effective interest rate is 5.379%.

REQUIRED:

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1. Register the operations related to the portfolio of shares and the loan, in years 2008 and 2009.


3. Which was the value of the holdings in equity at the end of 2009? Which was the value of the “adjustments for changes in value” at the end of 2009?

EXERCISE 10 LESSON 2 – From exam of course 0809 The 1st of January of 2008 the company JNJL, Ltd. received a loan of 500,000 € from Chase Manhattan Bank, amount that has to be paid back at the end of 2012. The opening fees were 1% and the annual interest rate (payable at the end of each year) is 6%. The effective interest rate is 6.239%. REQUIRED:

1. Which is the formula for the calculation of the effective interest rate (6.239%)? 2. Register the operations related to the loan, in years 2008 and 2009. 3. Which is the value of the debt in the Balance Sheet at the end of 2009?

19

EXERCISES LESSON 3 BALANCE SHEET

EXERCISE 1 (LESSON 3) The following list of accounts for Company Risks Ltd. is available at the end of 200X.

Accounts payable for goods 132,000Accounts payable for services 40,000Accounts receivable, bill of exchange 10,000Accumulated depreciation of constructions 30,000Advances to suppliers 12,000Called subscribed capital receivable 3,000Capital grants 40,000Capital stock 150,000Cash 84,150Cash equivalents 500,000Constructions 120,000Expenses paid in advance 5,500Impairment of constructions 6,000Impairment of inventories of other supplies 400Income for the year 308,750Interest payable to credit institutions 3,000Inventories of other supplies 1,500Land 140,000Provisions for other responsibilities 20,000Salary paid in advance 3,000Short-term debt with credit institutions 150,000Short-term holdings in equity 6,000Tax liability for the VAT 5,000

REQUIRED: Prepare the Balance Sheet according to the normal model of the new PGC. EXERCISE 2 (LESSON 3) The following list of accounts for Company C.V. Ltd. is available at the end of 200X.

Long-term holdings in equity (1) 2,500 Shares in the entity held by the entity 1,000 Salary payable 20 Adjustments for changes in value of financial instruments available for sale 50 Accumulated depreciation of intangible assets 950 Accumulated depreciation of tangible fixed assets (2) 1,000 Customers advances 100 Cash 1,335 Capital stock 21,000 Accounts receivable 200

20

Constructions (3) 5,000 Constructions in progress 300 Short-term credit from the sale of tangible fixed assets 500 Impairment of inventories of goods for sale 100 Short-term debt with credit institutions 2,000 Long-term debt with credit institutions 2,000 Other owners’ contributions 200 Vehicles 4,000 Computers 2,000 Inventories of goods for sale 1,000 Short-term deposits and guarantees given 500 Expenses paid in advance 270 Tax liability for the VAT 220 Tax asset for tax overpayment (Income tax) 50 Interest payable to credit institutions 10 Interest receivable 50 Furniture 5,200 Income for the year 1,925 Intellectual property 4,000 Accounts payable for goods 50 Provisions for environmental actions 500 Prior years’ negative income 300 Legal reserve 1,600 Uncalled subscribed capital receivable 5,000 Capital grants 1,500

(1) These are shares that have been classified by the company as “available for sale”. (2) The breakdown of the accumulated depreciation is the following:

• Constructions: 500 • Furniture: 250 • Computers: 100 • Vehicles: 150

(3) A warehouse with a value of 2,000 (accumulated depreciation: 200) is not being used in the operations but being rented to another company. REQUIRED: Prepare the Balance Sheet according to the normal model of the new PGC.

SOLUTION ASSETS LIABILITIES

A) NON-CURRENT ASSETS 200X A) EQUITY 200X

I. Intangible assets. A-1) Shareholders' equity. 1. Research and development. I. Capital. 2. Administrative concesions. 1. Registered capital. 21.000 3. Intelectual property, trademarks and others. 3.050 2. (Uncalled subscribed capital). - 5.000 4. Goodwill. II. Additional paid-in capital. 5. Computer software. III. Reserves. 6. Other intangible assets. 1. Legal and statutory. 1.600 II. Tangible fixed assets. 2. Other reserves. 1. Land and structures. 2.700 IV. (Shares in the entity held by the entity). - 1.000

21

2. Plant and machinery, tools, furniture and other tangible assets. 10.700 V. Prior years' income.

3. Tangible fixed assets in progress and advances. 300 1. Non-distributed income. III. Investment property. 2. (Prior years' negative income). - 300 1. Land. VI. Other owners' contributions. 200 2. Structures. 1.800 VII. Income for the year. 1.925 IV. Long-term investments in subsidiaries and associated companies. VIII. (Dividends paid in advance). 1. Shares and long-term holdings in equity of subsidiaries and associated companies. IX. Other equity instruments.

2. Long-term loans to subsidiaries and associated companies. A-2) Adjustments for changes in value.

3. Other long-term investments. I. Financial instruments available for sale. 50 V. Long-term financial investments. II. Hedging operations. 1. Shares and long-term holdings in equity. 2.500 III. Other. 2. Long-term credits to companies. A-3) Grants, donations and legacies received. 1.500 3. Other long-term financial investments. B) NON-CURRENT LIABILITIES VI. Deferred tax assets. I. Long-term provisions. 1. Provisions for long-term employee benefits. B) CURRENT ASSETS 2. Environmental actions. 500 I. Non-current assets held for sale. 3. Provisions for reestructuring. II. Inventories. 4. Other provisions. 1. Commercial (goods for sale). 900 II. Long-term debt. 2. Raw materials and other supplies. 1. Debentures and other negotiable securities. 3. Work-in process. 2. Long-term debt payable to credit institutions. 2.000

4. Finished goods. 3. Other (deposits and guarantees, bills of exchange, etc.).

5. Auxiliary products, consumables and replacements. III. Long-term debt payable to subsidiaries and

associated companies.

6. Advances to suppliers. IV. Deferred tax liability. III. Trade accounts receivables and other receivables.

1. Trade accounts receivables for sale and services. 200 C) CURRENT LIABILITIES 2. Accounts receivables from subsidiaries and associated companies. I. Liabilities linked to non-current assets held for

sale.

3. Sundry accounts receivables. II. Short-term provisions. 4. Employee receivables. III. Short-term debt. 5. Assets for current tax. 50 1. Debentures and other negotiable securities. 6. Other receivables from public authorities. 2. Short-term debt payable to credit institutions. 2.010 7. Called subscribed capital receivable. 3. Short-term derivative financial instruments. IV. Short-term investments in subsidiaries and associated companies. 4. Other (deposits and guarantees, bills of exchange,

etc.).

1. Shares and short-term holdings in equity of subsidiaries and associated companies. IV. Short-term debt payable to subsidiaries and

associated companies.

2. Short-term loans to subsidiaries and associated companies. 1. Debt payable to subsidiaries and associated

companies.

3. Other short-term investments. 2. Subscribtions to share capital called. V. Short-term financial investments. V. Trade accounts payable and other payable. 1. Shares and short-term holdings in equity. 1. Trade accounts payable for purchases and services. 50

2. Short-term credits to companies. 550 2. Accounts payable to subsidiaries and associated companies.

3. Short-term derivative financial instruments. 3. Sundry accounts payable.

22

4. Other short-term financial investments. 500 4. Salary payable. 20 VI. Accrual accounts. 270 5. Liability for current tax. VII. Cash and cash equivalents. 6. Other payable to public authorities. 220 1. Cash. 1.355 7. Customer advances. 100 2. Cash equivalents. VI. Accrual accounts. TOTAL ASSETS 24.875 TOTAL LIABILITIES 24.875

EXERCISE 3 (LESSON 3) The following list of accounts for Company Y Ltd. is available at the end of 200X.

ACCOUNT AMOUNTAccounts payable for goods 170,000Accounts payable for services 80,000Accounts receivable 95,000Accumulated depreciation of intangible assets 40,000Accumulated depreciation of tangible fixed assets and investment property (1)

80,000

Additional paid in capital 30,000Advances to suppliers 5,000Capital grants 45,000Capital stock 300,000Cash 2,000Computer hardware 130,000Computer software 90,000Containers and packaging returnable by customers 20,000Dividend receivable 18,000Doubtful accounts receivable 12,000Furniture 25,000Goodwill 200,000Impairment of accounts receivables 12,000Impairment of inventories of goods for sale 3,000Impairment of investment property (land) 15,000Income for the year (profits) 45,000Interest payable 1,000Inventory of goods for sale 38,000Investments in constructions 100,000Investments in land 60,000Long term credits to employees 40,000Long term debt with credit institutions 120,000Long term deposits in financial institutions 70,000Long term deposits and guarantees received 75,000Long term holdings in equity (initial balance) (2) 215,000Tax liability for the income tax 10,000Social security payable 18,000Tax liability for the VAT 29,000Provision for other responsibilities 120,000Revenues received in advance 35,000Short term credits 6,000Short term debt with credit institutions 36,000Short term debt with suppliers of fixed assets 12,000Short term holdings in equity 150,000

23

Sundry accounts receivables 55,000Uncalled subscribed capital receivable 75,000Vehicles 180,000Voluntary reserve 270,000 • The breakdown of the accumulated depreciation is the following:

(1) Furniture: 5,000 (2) Computer hardware: 25,000 (3) Vehicles: 30,000 (4) Investments in constructions: 20,000

• These are shares that have been classified by the company as “available for sale”. There are two groups of shares:

• Holdings in company A: Book value (1/1/2007): 42,000 Market value (31/12/200X): 50,000

• Holdings in company B: Book value (1/1/2007): 173,000 Market value (31/12/200X): 150,000

These holdings have not yet been valued at fair value. REQUIRED:

1) Register the valuation at fair value of the long term holdings in equity. 2) Prepare the Balance Sheet according to the normal model of the new PGC.

EXERCISE 4 (LESSON 3) The 1st of January of 2008 company A, Ltd. guaranteed company B. During the year, company A has become aware of the fact that company B has broken some of the obligations that were guaranteed by company A. When the guarantee is executed, company A will have to pay an estimated amount of 300,000 euros in an expected time horizon of 2 years. At the beginning of 2010 the guarantee is executed and the company has to pay 310,000 euros. REQUIRED: Register the operations described, considering a discount rate of 3%. SOLUTION 01-01-01 282.778,77

(678) Excepcional expense a (142) Provision for other responsibilities

282.778,77

31-12-01 8483,36 (669) Other financial expenses A (142) Provision for other

responsibilities 8483,36

291.262,13

(142) Provisión for other responsibilities

a (5222) Short-term provision for other responsibilities

291.262,13

31-12-02

24

8737,87 (669) Other financial expenses A (5222) Short-term provision for other responsibilities

8737,87

300.000 (5222) Short-term provision for

other responsibilities

10.000 (678) Excepcional expense a Cash 310.000 EXERCISE 5 (LESSON 3) The following list of accounts for Company Y Ltd. is available at the end of 2008.

Advances from customers 3.150 Short term debt with credit institutions 29.890 Accounts receivable, bill of exchange 118.600 Interest payable to credit institutions 600 Short term debt with credit institutions from the discounting of bills of exchange 46.400

Long-term debt payable to suppliers of fixed assets 48.920

Salary payable 800 Voluntary reserve 103.881 Adjustments for changes in value of financial instruments available for sale 2.550

Short-term debt payable to suppliers of fixed assets 11.420

Salary paid in advance 2.100 Computer software10.000 Capital stock 370.000 Constructions 460.000 Uncalled subscribed capital receivable 20.000 Machinery 200.000 Legal reserve 50.000 Plant and equipment 100.000 Accumulated depreciation of intangible assets 2.400 Inventory of raw materials 2.100 Accumulated depreciation of tangible fixed assets (1) 80.000

Inventory of finished goods 8.100

Impairment of plant and equipment 8.590 Inventory of work-in process 2.700 Called subscribed capital receivable 1.260 Capital grants 5.600 Cash 146.060 Provision for other responsibilities 95.000 Machinery classified as held for sale 30.000 Tax liability for the income tax 49.855 Debt with suppliers of fixed assets (of the machinery held for sale) 10.000

Expenses paid in advance 1.800

Accounts payable 7.800 Tax liability for the VAT 10.400 Long term holdings in equity 7.000 Income for the year ¿? Impairment of inventory of finished goods 600

(1) The breakdown of the accumulated depreciation is the following:

a. Constructions: 50,000 b. Machinery: 20,000 c. Plant and equipment: 10,000

REQUIRED: Prepare the Balance Sheet according to the normal model of the new PGC. SOLUTION ASSETS LIABILITIES

A) NON-CURRENT ASSETS 200X A) EQUITY 200X

I. Intangible assets. A-1) Shareholders' equity. 1. Development. I. Capital. 2. Administrative concesions. 1. Registered capital. 370.000 3. Intelectual property, trademarks and others. 2. (Uncalled subscribed capital). - 20.000

25

4. Goodwill. II. Additional paid-in capital (share premium).

5. Computer software. 7.600 III. Reserves.

6. Other intagible assets. 1. Legal and statutory. 50.000 II. Tangible fixed assets. 2. Other reserves. 103.881

1. Land and structures. 410.000

IV. (Shares and holding in equity of the company/Shares in the entity held by the entity).

2. Plant and machinery, tools, furniture and other tangible assets.

261.410 V. Prior years' income.

3. Tangible fixed assets in progress and advances. 1. Non-distributed income.

III. Investment property. 2. (Prior years' negative income). 1. Land. VI. Other owners' contributions. 2. Structures. VII. Income for the year. 171.864 IV. Long-term investments in subsidiaries and associated companies. VIII. (Dividends paid in advance).

1. Holdings in equity. IX. Other equity instruments. 2. Loans to companies. A-2) Adjustments for changes in value. 3. Debt instruments. I. Financial instruments held for sale. 2.550 4. Derivative financial instruments. II. Hedging operations. 5. Other financial assets. III. Other. V. Long-term financial investments. A-3) Grants, donations and legacies received. 5.600

1. Holdings in equity. 7.000 B) NON-CURRENT LIABILITIES

2. Loans to companies. I. Long-term provisions. 3. Debt instruments. 1. Provisions for long-term employee benefits. 4. Derivative financial instruments. 2. Environmental actions. 5. Other financial assets. 3. Provisions for reestructuring. VI. Deferred tax assets. 4. Other provisions. 95.000 II. Long-term debt. B) CURRENT ASSETS 1. Debentures and other negotiable securities. I. Non-current assets held for sale. 30.000 2. Long-term debt payable to credit institutions. II. Inventories. 3. Long-term debt from leasing contracts. 1. Commercial (goods for sale). 4. Derivative financial instruments. 2. Raw materials and other supplies. 2.100 3. Other financial liabilities. 48.920

3. Work-in process. 2.700 III. Long-term debt payable to subsidiaries and associated companies.

4. Finished goods. 7.500 IV. Deferred tax liability. 5. Auxiliary products, consumables and replacements. V. Long-term accrual accounts.

6. Advances to suppliers. III. Trade accounts receivables and other receivables. C) CURRENT LIABILITIES

1. Trade accounts receivables for sale and services. 118.600 I. Liabilities linked to non-current assets held for sale 10.000 2. Accounts receivables from subsidiaries and associated companies. II. Short-term provisions.

3. Sundry accounts receivables. III. Short-term debt. 4. Employee receivables. 2.100 1. Debentures and other negotiable securities. 5. Assets for current tax. 2. Short-term debt payable to credit institutions. 76.890

26

6. Other receivables from public authorities. 3. Short-term debt from leasing contracts. 7. Called subscribed capital receivable. 1.260 4. Derivative financial instruments. IV. Short-term investments in subsidiaries and associated companies. 3. Other financial liabilities. 11.420

1. Holdings in equity. IV. Short-term debt payable to subsidiaries and associated companies.

2. Loans to companies. V. Trade accounts payables and other payables. 3. Debt instruments. 1. Trade accounts payables for purchases and services. 7.800

4. Derivative financial instruments. 2. Accounts payables to subsidiaries and associated companies.

5. Other financial assets. 3. Sundry accounts payable. V. Short-term financial investments. 4. Salary payable. 800 1. Holdings in equity. 5. Liability for current tax. 49.855 2. Loans to companies. 6. Other payables to public authorities. 10.400 3. Debt instruments. 7. Customer advances. 3.150 4. Derivative financial instruments. VI. Short term accrual accounts. 5. Other financial assets. VI. Accrual accounts. 1.800 VII. Cash and cash equivalents. 1. Cash. 146.060 2. Cash equivalents.

TOTAL ASSETS 998.130 TOTAL LIABILITIES 998.130

EXERCISE 6 (LESSON 3) - From exam of course 0708 Company Smith, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 2008. Accounts payable 2,410Accounts receivable 5,186Accumulated depreciation of administrative concessions 500Accumulated depreciation of computer software 30Accumulated depreciation of plant and machinery, tools, furniture and other tangible assets 1,016Accumulated depreciation of structures (fixed assets) 2,616Additional paid-in capital 1,408Administrative concessions 1,355Capital grants 1,036Capital stock 3,686Cash 2,911Computer hardware 663Computer software 371Constructions in progress 1,880Customer advances 1,411Doubtful accounts receivable 683Expenses paid in advance 24Furniture 432Goodwill 819Impairment of trade accounts receivable 316Impairment of vehicles 127Income for the year 3,464Intellectual property 2

27

Investment in land 331Land 2,609Legal reserve 6,015Long-term debt with credit institutions 464Long-term financial investments in equity instruments (*) ?Machinery 1,428Tax liability for the income tax 211Provision for decommissioning, restoration or rehabilitation of fixed assets. 36Tax asset for tax overpayment (VAT) 1,199Salary paid in advance 421Salary payable 337Short-term credit from the sale of tangible fixed assets 20Short-term credit to employees 551Short-term debt with credit institutions 2,648Short-term debt with suppliers of fixed assets 486Structures 5,000Vehicles 2,216(*) These are shares that were bought at the beginning of the year and have been classified by the company as “available for sale”. Their value at the beginning and at the end of the year has been the following:

Book value (1/1/2008): 116 Market value (31/12/2008): 200

These holdings have not yet been valued at fair value. REQUIRED: a) Register the valuation at fair value of the long term holdings in equity. b) Prepare the Balance Sheet according to the format established by the P.G.C. 2007. a) Register the valuation at fair value of the long term holdings in equity.

84 (250) Long-term holdings in equity instruments

to (900) Profits from available for sale financial assets

84

84 (900) Profits from

available for sale financial assets

to (133) Adjustments for changes in value of financial instruments held for sale

84

28

b) Prepare the Balance Sheet according to the format established by the P.G.C. 2007. ASSETS LIABILITIESA) NON-CURRENT ASSETS 200X A) EQUITYI. Intangible assets. A-1) Shareholders' equity. 1. Development. I. Capital. 2. Administrative concesions. 855 1. Registered capital. 3.686 3. Intelectual property, trademarks and others. 2 2. (Uncalled subscribed capital). 4. Goodwill. 819 II. Additional paid-in capital (share premium). 1.408 5. Computer software. 341 III. Reserves. 6. Other intagible assets. 1. Legal and statutory. 6.015 II. Tangible fixed assets. 2. Other reserves. 1. Land and structures. 4.993 IV. Shares in the entity held by the entity. 2. Plant and machinery, tools, furniture and other tangible assets. 3.596 V. Prior years' income. 3. Tangible fixed assets in progress and advances. 1.880 1. Non-distributed income. III. Investment property. 2. (Prior years' negative income). 1. Land. 331 VI. Other owners' contributions. 2. Structures. VII. Income for the year. 3.464 IV. Long-term investments in subsidiaries and associated companies. VIII. (Dividends paid in advance).

1. Holdings in equity. IX. Other equity instruments. 2. Loans to companies. A-2) Adjustments for changes in value.3. Debt instruments. I. Financial instruments available for sale. 84 4. Derivative financial instruments. II. Hedging operations. 5. Other financial assets. III. Other. V. Long-term financial investments. A-3) Grants, donations and legacies received. 1.036 1. Holdings in equity. 200 B) NON-CURRENT LIABILITIES 2. Loans to companies. I. Long-term provisions. 3. Debt instruments. 1. Provisions for long-term employee benefits.4. Derivative financial instruments. 2. Environmental actions. 5. Other financial assets. 3. Provisions for reestructuring. VI. Deferred tax assets. 4. Other provisions. 36

II. Long-term debt. B) CURRENT ASSETS 1. Debentures and other negotiable securities. I. Non-current assets held for sale. 2. Long-term debt payable to credit institutions. 464 II. Inventories. 3. Long-term debt from leasing contracts.1. Commercial (goods for sale). 4. Derivative financial instruments.2. Raw materials and other supplies. 5. Other financial liabilities.

3. Work-in process. III. Long-term debt payable to subsidiaries and associated companies.

4. Finished goods. IV. Deferred tax liability. 5. Auxiliary products, consumables and replacements. V. Long-term accrual accounts.6. Advances to suppliers.III. Trade accounts receivables and other receivables. C) CURRENT LIABILITIES1. Trade accounts receivables for sale and services. 5.553 I. Liabilities linked to non-current assets held for sale

2. Accounts receivables from subsidiaries and associated companies. II. Short-term provisions.

3. Sundry accounts receivables. III. Short-term debt. 4. Employee receivables. 972 1. Debentures and other negotiable securities. 5. Assets for current tax. 2. Short-term debt payable to credit institutions. 2.648 6. Other receivables from public authorities. 1.199 3. Short-term debt from leasing contracts.7. Called subscribed capital receivable. 4. Derivative financial instruments.IV. Short-term investments in subsidiaries and associated companies. 5. Other financial liabilities. 486


2. Loans to companies. V. Trade accounts payables and other payables. 3. Debt instruments. 1. Trade accounts payables for purchases and services. 2.410 4. Derivative financial instruments. 2. Accounts payables to subsidiaries and associated companies.5. Other financial assets. 3. Sundry accounts payable. V. Short-term financial investments. 4. Salary payable. 337 1. Holdings in equity. 5. Liability for current tax. 211 2. Loans to companies. 20 6. Other payables to public authorities. 3. Debt instruments. 7. Customer advances. 1.411 4. Derivative financial instruments. VI. Short term accrual accounts. 5. Other financial assets.VI. Accrual accounts. 24 VII. Cash and cash equivalents. 1. Cash. 2.911 2. Cash equivalents. TOTAL ASSETS 23.696 TOTAL LIABILITIES 23.696

29

EXERCISE 7 (LESSON 3) – From exam of course 0708 Company Smith, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 2008. Accounts payable for goods 70,000Accounts payable for services 80,000Accounts receivable 90,000Additional paid-in capital 10,000Advances from customers 10,000Advances to suppliers 5,000Capital stock 500,000Cash 40,000Cash equivalents 4,000Computer hardware 70,000Computer software 5,000Development 200,000Doubtful accounts receivable 2,000Expenses paid in advance 35,000Furniture 25,000Impairment of inventory of goods for sale 3,000Impairment of investments in constructions 15,000Impairment of tangible fixed assets (machinery) 6,000Impairment of trade accounts receivable 2,000Income for the year (profits) 30,000Intangible fixed assets accumulated depreciation (2) 80,000Intellectual property 55,000Interest payable to credit institutions 2,000Inventory of goods for sale 8,000Investments in constructions 80,000Investments in land 30,000Legal reserve 85,000Long term credits to employees 10,000Long term deposits in financial institutions 75,000Long term guarantees given 25,000Long-term credit with buyers of tangible fixed assets 10,000Long-term debt with credit institutions 120,000Long-term holdings in equity (3) 200,000Machinery 20,000Tax liability for the income tax 7,000Social security payable 18,000Tax liability for the VAT 9,000Prior years negative income 5,000Provision for environmental actions 20,000Revenues received in advance 5,000Short term credits 6,000Short-term debt with credit institutions 6,000Short-term debt with suppliers of fixed assets 2,000Short-term holdings in equity 20,000Tangible fixed assets accumulated depreciation (1) 30,000Uncalled subscribed capital receivable 60,000Vehicles 30,000 (4) The breakdown of the accumulated depreciation of tangible fixed assets (30,000) is the following:

30

• Furniture: 10,000 • Computers: none. • Vehicles: 10,000 • Machinery: 10,000

(5) The breakdown of the accumulated depreciation of intangible fixed assets (80,000) is the following: • Development: 58,000 • Computer software: 2,000 • Intellectual property: 20,000

(3) These are shares that were bought at the beginning of the year and have been classified by the company as “available for sale”. Their value at the beginning and at the end of the year has been the following:

Book value (1/1/2008): 200,000 Market value (31/12/2008): 175,000

These holdings have not yet been valued at fair value. REQUIRED: a) Register the valuation at fair value of the long term holdings in equity. b) Prepare the Balance Sheet according to the format established by the P.G.C. 2007. EXERCISE 8 (LESSON 3) – From exam of course 0708 Company XYZ, Ltd. shows the following list of accounts in its adjusted trial balance at the end of 2009:

Shares in the entity held by the entity (in special situations) 90,000Short-term debt from leasing contracts 25,000Long- term debt from leasing contracts 75,000Accounts payables for services 58,000Adjustments for changes in value of financial instruments available for sale ¿? Accumulated depreciation of computer software 5,500Accumulated depreciation of structures 113,750Accumulated depreciation of computer hardware 17,500Accumulated depreciation of furniture 11,700Salary paid in advance 17,800Advances for intangible fixed assets 2,000Computer software 11,000Cash 971,321 Capital stock 900,000Accounts receivable 65,000Accounts receivable, factoring operations 10,000Structures 350,000Long-term credits 12,000Impairment of investments in land 75,000Short-term debt for withdrawn credit 8,500Long-term debt with credit institutions 300,000Sundry accounts receivables 9,500Dividend payable 23,500Computer hardware 25,000Tax liability for the income tax 14,000Tax liability for the VAT 3,200Interest received in advance 1,000Investments in land 450,000

31

Short-term holdings in equity instruments ¿? Long-term holdings in equity instruments ¿? Furniture 18,000Social security receivable 4,200Other equity instruments 35,000Short-term debt with suppliers of fixed assets 45,000Provision for responsibilities 112,021Legal reserve 225,000Voluntary reserve 150,000Income for the year 47,000Land 200,000

Additional information: The company owns two portfolios of financial investments. The value of these portfolios has changed as follows:

Acquisition value Fair value 31/12/07 Fair value 31/12/08 Held for trading 3,500 € 3,700 3,850 Available for sale 6,000 € 5,800 5,600

REQUIRED: Prepare the Balance Sheet according to the format established by the P.G.C.. EXERCISE 9 (LESSON 3) Company BS, Brothers Associated shows the following list of accounts in its adjusted trial balance at the end of year 2008. Account Year 2008Long-term financial investments in equity instruments ¿?Intellectual property 6Short-term credit from the sale of tangible fixed assets 60Expenses paid in advance 72Accumulated depreciation of computer software 90Provision for decommissioning, restoration or rehabilitation of fixed assets. 108Impairment of vehicles 381Tax liability for the income tax 633Impairment of trade accounts receivable 948Investment in land 993Salary payable 1,011Computer software 1,113Salary paid in advance 1,263Furniture 1,296Long-term debt with credit institutions 1,392Short-term debt with suppliers of fixed assets 1,458Accumulated depreciation of administrative concessions 1,500Short-term credit to employees 1,653Computer hardware 1,989Doubtful accounts receivable 2,049Goodwill 2,457Accumulated depreciation of plant and machinery, tools, furniture and other tangible assets 3,048Capital grants 3,108Tax asset for tax overpayment (VAT) 3,597Administrative concessions 4,065Additional paid-in capital 4,224Customer advances 4,233Machinery 4,284

32

Constructions in progress 5,640Vehicles 6,648Accounts payable 7,230Land 7,827Accumulated depreciation of structures (fixed assets) 7,848Short-term debt with credit institutions 7,944Cash ¿?Income for the year 10,392Capital stock 11,058Structures 15,000Accounts receivable 15,558Legal reserve 18,045 The company owns a portfolio of financial investments that has been acquired to be held over the long term. The value of this portfolio has changed as follows:

Acquisition value Book value 1/1/2008 Fair value 31/12/08 348 348 600

These holdings have not yet been valued at fair value. REQUIRED: a) Register the valuation at fair value of the long term holdings in equity. b) Prepare the Balance Sheet according to the format established by the P.G.C. 2007. SOLUTION a) Register the valuation at fair value of the long term holdings in equity.

252 (250) Long-term holdings in equity instruments

to (900) Profits from available for sale financial assets

252

252 (900) Profits from

available for sale financial assets

to (133) Adjustments for changes in value of financial instruments held for sale

252

33

b) Prepare the Balance Sheet according to the format established by the P.G.C. 2007. ASSETS LIABILITIESA) NON-CURRENT ASSETS 200X A) EQUITYI. Intangible assets. A-1) Shareholders' equity. 1. Development. I. Capital. 2. Administrative concesions. 2.565 1. Registered capital. 11.058 3. Intelectual property, trademarks and others. 6 2. (Uncalled subscribed capital). 4. Goodwill. 2.457 II. Additional paid-in capital (share premium). 4.224 5. Computer software. 1.023 III. Reserves. 6. Other intagible assets. 1. Legal and statutory. 18.045 II. Tangible fixed assets. 2. Other reserves. 1. Land and structures. 14.979 IV. Shares in the entity held by the entity. 2. Plant and machinery, tools, furniture and other tangible assets. 10.788 V. Prior years' income. 3. Tangible fixed assets in progress and advances. 5.640 1. Non-distributed income. III. Investment property. 2. (Prior years' negative income). 1. Land. 993 VI. Other owners' contributions. 2. Structures. VII. Income for the year. 10.392 IV. Long-term investments in subsidiaries and associated companies. VIII. (Dividends paid in advance).

1. Holdings in equity. IX. Other equity instruments. 2. Loans to companies. A-2) Adjustments for changes in value.3. Debt instruments. I. Financial instruments available for sale. 252 4. Derivative financial instruments. II. Hedging operations. 5. Other financial assets. III. Other. V. Long-term financial investments. A-3) Grants, donations and legacies received. 3.108 1. Holdings in equity. 600 B) NON-CURRENT LIABILITIES 2. Loans to companies. I. Long-term provisions. 3. Debt instruments. 1. Provisions for long-term employee benefits.4. Derivative financial instruments. 2. Environmental actions. 5. Other financial assets. 3. Provisions for reestructuring. VI. Deferred tax assets. 4. Other provisions. 108

II. Long-term debt. B) CURRENT ASSETS 1. Debentures and other negotiable securities. I. Non-current assets held for sale. 2. Long-term debt payable to credit institutions. 1392II. Inventories. 3. Long-term debt from leasing contracts.1. Commercial (goods for sale). 4. Derivative financial instruments.2. Raw materials and other supplies. 5. Other financial liabilities.


4. Finished goods. IV. Deferred tax liability. 5. Auxiliary products, consumables and replacements. V. Long-term accrual accounts.6. Advances to suppliers.III. Trade accounts receivables and other receivables. C) CURRENT LIABILITIES1. Trade accounts receivables for sale and services. 16.659 I. Liabilities linked to non-current assets held for sale


3. Sundry accounts receivables. III. Short-term debt. 4. Employee receivables. 2.916 1. Debentures and other negotiable securities. 5. Assets for current tax. 2. Short-term debt payable to credit institutions. 7.944 6. Other receivables from public authorities. 3.597 3. Short-term debt from leasing contracts.7. Called subscribed capital receivable. 4. Derivative financial instruments.IV. Short-term investments in subsidiaries and associated companies. 5. Other financial liabilities. 1.458


2. Loans to companies. V. Trade accounts payables and other payables. 3. Debt instruments. 1. Trade accounts payables for purchases and services. 7.230 4. Derivative financial instruments. 2. Accounts payables to subsidiaries and associated companies.5. Other financial assets. 3. Sundry accounts payable. V. Short-term financial investments. 4. Salary payable. 1.011 1. Holdings in equity. 5. Liability for current tax. 633 2. Loans to companies. 60 6. Other payables to public authorities. 3. Debt instruments. 7. Customer advances. 4.233 4. Derivative financial instruments. VI. Short term accrual accounts. 5. Other financial assets.VI. Accrual accounts. 72 VII. Cash and cash equivalents. 1. Cash. 8.733 2. Cash equivalents. TOTAL ASSETS 71.088 TOTAL LIABILITIES 71.088

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EXERCISE 10 (LESSON 3) – From exam of course 0809 The following list of accounts for Company Boss Ltd. is available at the end of 2008.

Account 2008 Accounts payable for purchase of goods 4,820 Accounts receivable for sale of goods 10,372 Accounts receivable, bill of exchange 1,298 Accumulated depreciation of administrative concessions 1,000 Accumulated depreciation of computer software 60 Accumulated depreciation of constructions 5,232 Accumulated depreciation of plant and machinery, tools, furniture and other tangible fixed assets 2,032

Additional paid-in capital 7,372 Administrative concessions 2,710 Advances from customers 2,822 Advances to suppliers 3,760 Capital stock 2,698 Cash 1,204 Computer hardware 1,326 Computer software 742 Constructions 10,000 Deferred tax asset 660 Doubtful accounts receivable 1,366 Expenses paid in advance 48 Furniture 864 Goodwill 1,174 Impairment of accounts receivable 632 Impairment of non-current assets held for sale 120 Impairment of vehicles 254 Income for the year 6,928 Intellectual property 468 Investments in land 662 Land 5,218 Legal reserve 12,030 Long-term debt with credit institutions 928 Long-term holdings in equity 232 Machinery 2,856 Machinery classified as held for sale 2,598 Non-distributed income 468 Official capital grants 1,540 Tax liability for the VAT 422 Provision for decommissioning, restoration or rehabilitation of fixed assets 72 Tax asset for tax overpayment (income tax) 2,398 Salary paid in advance 842 Salary payable 674 Short-term credit to employees 1,102 Short-term credit with buyers of fixed assets 40 Short-term debt with credit institutions 5,296 Short-term debt with suppliers of fixed assets 972 Vehicles 4,432

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REQUIRED: Prepare the Balance Sheet according to the normal model of the new PGC.

ASSETS LIABILITIES

A) NON-CURRENT ASSETS 200X A) EQUITY

I. Intangible assets. A-1) Shareholders' equity.

1. Development. I. Capital.

2. Administrative concesions. 1.710 1. Registered capital. 2.698

3. Intelectual property, trademarks and others. 468 2. (Uncalled subscribed capital).

4. Goodwill. 1.174 II. Additional paid-in capital (share premium). 7.372

5. Computer software. 682 III. Reserves.

6. Other intagible assets. 1. Legal and statutory. 12.030

II. Tangible fixed assets. 2. Other reserves.

1. Land and structures. 9.986 IV. Shares in the entity held by the entity. 2. Plant and machinery, tools, furniture and other tangible assets. 7.192 V. Prior years' income. 3. Tangible fixed assets in progress and advances. 1. Non-distributed income.

468

III. Investment property. 2. (Prior years' negative income).

1. Land. 662 VI. Other owners' contributions.

2. Structures. VII. Income for the year. 6.928

IV. Long-term investments in subsidiaries and associated companies. VIII. (Dividends paid in advance).

1. Holdings in equity. IX. Other equity instruments.

2. Loans to companies. A-2) Adjustments for changes in value.

3. Debt instruments. I. Financial instruments available for sale.

4. Derivative financial instruments. II. Hedging operations.

5. Other financial assets. III. Other.

V. Long-term financial investments. A-3) Grants, donations and legacies received. 1.540

1. Holdings in equity. 232 B) NON-CURRENT LIABILITIES

2. Loans to companies. I. Long-term provisions.

3. Debt instruments. 1. Provisions for long-term employee benefits.

4. Derivative financial instruments. 2. Environmental actions.

5. Other financial assets. 3. Provisions for reestructuring.

VI. Deferred tax assets. 660 4. Other provisions. 72

II. Long-term debt.

B) CURRENT ASSETS 1. Debentures and other negotiable securities.

I. Non-current assets held for sale. 2.478 2. Long-term debt payable to credit institutions. 928

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II. Inventories. 3. Long-term debt from leasing contracts.

1. Commercial (goods for sale). 4. Derivative financial instruments.

2. Raw materials and other supplies. 5. Other financial liabilities.


4. Finished goods. IV. Deferred tax liability. 5. Auxiliary products, consumables and replacements. V. Long-term accrual accounts.

6. Advances to suppliers. 3.760 III. Trade accounts receivables and other receivables. C) CURRENT LIABILITIES

1. Trade accounts receivables for sale and services. 12.404

I. Liabilities linked to non-current assets held for sale


3. Sundry accounts receivables. III. Short-term debt.

4. Employee receivables. 1.944 1. Debentures and other negotiable securities.

5. Assets for current tax. 2.398 2. Short-term debt payable to credit institutions. 5.296

6. Other receivables from public authorities. 3. Short-term debt from leasing contracts.

7. Called subscribed capital receivable. 4. Derivative financial instruments. IV. Short-term investments in subsidiaries and associated companies. 5. Other financial liabilities.

972


2. Loans to companies. V. Trade accounts payables and other payables.

3. Debt instruments. 1. Trade accounts payables for purchases and services.

4.820

4. Derivative financial instruments. 2. Accounts payables to subsidiaries and associated companies.

5. Other financial assets. 3. Sundry accounts payable.

V. Short-term financial investments. 4. Salary payable. 674

1. Holdings in equity. 5. Liability for current tax.

2. Loans to companies. 40 6. Other payables to public authorities. 422

3. Debt instruments. 7. Customer advances. 2.822

4. Derivative financial instruments. VI. Short term accrual accounts.

5. Other financial assets.

VI. Accrual accounts. 48

VII. Cash and cash equivalents.

1. Cash. 1.204

2. Cash equivalents.

TOTAL ASSETS 47.042 TOTAL LIABILITIES 47.042

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EXERCISE 11 (LESSON 3) – From exam of course 0809 The following list of accounts for Company Central Park Ltd. is available at the end of 2008.

Account 2008Accounts payable 5,061 Accounts receivable 108,906 Accumulated depreciation of administrative concessions 105 Accumulated depreciation of computer software 630 Accumulated depreciation of plant and machinery, tools, furniture and other tangible assets 21,336 Accumulated depreciation of structures (fixed assets) 54,936 Additional paid-in capital 29,568 Administrative concessions 28,455 Capital grants 21,756 Capital stock 77,406 Cash ¿? Computer hardware 13,923 Computer software 7,791 Constructions in progress 3,948 Customer advances 29,631 Doubtful accounts receivable 14,343 Expenses paid in advance 504 Furniture 9,072 Goodwill 17,199 Impairment of trade accounts receivable 6,636 Impairment of vehicles 2,667 Income for the year 72,744 Intellectual property 42 Investment in land 6,951 Land 54,789 Legal reserve 126,315 Long-term debt with credit institutions 9,744 Long-term financial investments in equity instruments 4,200 Machinery 29,988 Tax liability for the income tax 4,431 Provision for decommissioning, restoration or rehabilitation of fixed assets. 756 Tax asset for tax overpayment (VAT) 25,179 Salary paid in advance 8,841 Salary payable 7,077 Short-term credit from the sale of tangible fixed assets 420 Short-term credit to employees 11,571 Short-term debt with credit institutions 55,608 Short-term debt with suppliers of fixed assets 10,206 Structures 105,000 Vehicles 46,536 REQUIRED: Prepare the Balance Sheet according to the normal model of the PGC.

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SOLUTION ASSETS LIABILITIES A) NON-CURRENT ASSETS 200X A) EQUITY I. Intangible assets. A-1) Shareholders' equity. 1. Development. I. Capital. 2. Administrative concesions. 28.350 1. Registered capital. 77.406 3. Intelectual property, trademarks and others. 42 2. (Uncalled subscribed capital).

4. Goodwill. 17.199 II. Additional paid-in capital (share premium). 29.568

5. Computer software. 7.161 III. Reserves. 6. Other intagible assets. 1. Legal and statutory. 126.315 II. Tangible fixed assets. 2. Other reserves. 1. Land and structures. 104.853 IV. Shares in the entity held by the entity. 2. Plant and machinery, tools, furniture and other tangible assets. 75.516 V. Prior years' income.

3. Tangible fixed assets in progress and advances. 3.948 1. Non-distributed income. III. Investment property. 2. (Prior years' negative income). 1. Land. 6.951 VI. Other owners' contributions. 2. Structures. VII. Income for the year. 72.744 IV. Long-term investments in subsidiaries and associated companies. VIII. (Dividends paid in advance). 1. Holdings in equity. IX. Other equity instruments. 2. Loans to companies. A-2) Adjustments for changes in value.

3. Debt instruments. I. Financial instruments available for sale.

4. Derivative financial instruments. II. Hedging operations. 5. Other financial assets. III. Other.

V. Long-term financial investments. A-3) Grants, donations and legacies received. 21.756

1. Holdings in equity. 4.200 B) NON-CURRENT LIABILITIES 2. Loans to companies. I. Long-term provisions.

3. Debt instruments. 1. Provisions for long-term employee benefits.

4. Derivative financial instruments. 2. Environmental actions. 5. Other financial assets. 3. Provisions for reestructuring. VI. Deferred tax assets. 4. Other provisions. 756 II. Long-term debt.

1. Debentures and other negotiable securities.

2. Long-term debt payable to credit institutions. 9.744

3. Long-term debt from leasing contracts. 4. Derivative financial instruments. 5. Other financial liabilities.

III. Long-term debt payable to subsidiaries and associated companies.

IV. Deferred tax liability. V. Long-term accrual accounts. B) CURRENT ASSETS C) CURRENT LIABILITIES

I. Non-current assets held for sale. I. Liabilities linked to non-current assets held for sale

II. Inventories. II. Short-term provisions. 1. Commercial (goods for sale). III. Short-term debt.

2. Raw materials and other supplies. 1. Debentures and other negotiable securities.

3. Work-in process. 2. Short-term debt payable to credit institutions. 55.608

4. Finished goods. 3. Short-term debt from leasing contracts. 5. Auxiliary products, consumables and replacements. 4. Derivative financial instruments.

39

6. Advances to suppliers. 5. Other financial liabilities. 10.206

III. Trade accounts receivables and other receivables. IV. Short-term debt payable to subsidiaries and associated companies.

1. Trade accounts receivables for sale and services. 116.613 V. Trade accounts payables and other payables.

2. Accounts receivables from subsidiaries and associated companies. 1. Trade accounts payables for purchases

and services. 5.061

3. Sundry accounts receivables. 2. Accounts payables to subsidiaries and associated companies.

4. Employee receivables. 20.412 3. Sundry accounts payable. 5. Assets for current tax. 4. Salary payable. 7.077 6. Other receivables from public authorities. 25.179 5. Liability for current tax. 4.431 7. Called subscribed capital receivable. 6. Other payables to public authorities. IV. Short-term investments in subsidiaries and associated companies. 7. Customer advances. 29.631

1. Holdings in equity. VI. Short term accrual accounts. 2. Loans to companies. TOTAL LIABILITIES 3. Debt instruments. 4. Derivative financial instruments. 5. Other financial assets. V. Short-term financial investments. 1. Holdings in equity. 2. Loans to companies. 420 3. Debt instruments. 4. Derivative financial instruments. 5. Other financial assets. VI. Accrual accounts. 504 VII. Cash and cash equivalents. 1. Cash. 2. Cash equivalents. TOTAL ASSETS

40

LESSON 4 INCOME STATEMENT

EXERCISE 1 (LESSON 4) The following list of accounts for Company Jan Ltd. is available at the end of 200X. ACCOUNT AMOUNT Advertisement expenses 15,500 Change in inventory of goods for sale (increase) 1,200 Discount for volume of sale 150,000 Grants, donations and legacies transferred to income for the year 12,000 Income tax 3,500 Insurance expense 14,500 Intangible assets depreciation expense 10,800 Interest from long term loans to other companies 25,000 Interest of debt from financial institutions 120,000 Losses for uncollective accounts 1,200 Losses from disposal of tangible fixed assets 2,640 Losses from impairment of inventory of goods for sale 800 Losses from impairment of trade accounts receivable 3,600 Purchase of goods for sale 1,854,000 Purchase returns of goods for sale 30,000 Rent revenue 4,800 Repairs and conservation 9,600 Revenue form holdings in equity instruments, other companies 1,200 Reversion of impairment of trade accounts receivable 2,000 Sale of goods for sale 3,109,440 Social security in charge of the company 168,000 Tangible assets depreciation expense 30,000 Wages and salaries 840,000 Work performed for own assets 45,000

REQUIRED: 1) Calculate the net turnover. 2) Calculate the consumption of goods for sale 3) Prepare the Income Statement for year 200X according to the model established in the new P.G.C.

EXERCISE 2 (LESSON 4)

41

The following list of accounts for Company Feb Ltd. is available at the end of 200X. ACCOUNT AMOUNT Change in inventory of finished goods (increase) 314 Change in inventory of raw materials (decrease) 4.242 Discount for volume of sale of finished goods 36.000 Exceptional expenses 30.600 Expense for the provision for trade operations 240 Income tax 105 Insurance expense 63.410 Intangible assets depreciation expense 62.900 Interest of debt from financial institutions 15.160 Interest of debt from subsidiaries 19.300 Losses from disposal of tangible fixed assets 1.440 Losses from impairment of inventory of raw materials 2.178 Losses from impairment of tangible fixed assets 1.297 Losses from impairment of trade accounts receivable 15.554 Negative exchange differences 96 Operating grants, donations and legacies 14.818 Profits from equity and debt instruments 1.200 Purchase of raw materials 180.500 Purchase returns of raw materials 5.085 Redundancy pays 8.800 Rent expense 107.797 Revenue form holdings in equity instruments, other companies 91 Revenue form holdings in equity instruments, subsidiaries 800 Reversion of impairment of inventory of raw materials 3.178 Reversion of impairment of trade accounts receivable 15.884 Sale of finished goods 745.300 Sale returns of finished goods 2.120 Services rendered 33.720 Social security in charge of the company 33.620 Supplies 82.433 Tangible assets depreciation expense 44.800 Taxes other than income tax 1.640 Wages and salaries 117.400 Work performed by other companies 187

REQUIRED: 1) Calculate the net turnover. 2) Calculate the consumption of goods for sale 3) Prepare the Income Statement for year 200X according to the model established in the new P.G.C.

42

EXERCISE 3 (LESSON 4) The following list of accounts for Company Mar Ltd. is available at the end of 200X. ACCOUNT AMOUNT Change in inventory of raw materials (*) ¿? Discount for volume of purchase of goods for sale 1,000 Excess of provision for trade operations 60 Excess of provisions for other responsibilities 420 Expense for the provision for trade operations 180 Financial expenses from capitalization of provisions 15 Gains from disposal of investment property 300 Income tax 2,233 Interest of debt from financial institutions 55 Interest of discounting of bill of exchange in financial institutions 35 Investment property depreciation expense 25 Losses from impairment of inventory of goods for sale 50 Operating grants, donations and legacies 100 Profits from held for trading portfolio 40 Purchase discount for early payments 800 Purchase of goods for sale 15,000 Rent expense 120 Rent revenue 220 Revenue form holdings in equity instruments, subsidiaries 18 Revenue from debt instrument, other companies 21 Reversion of impairment of inventory of goods for sale 100 Sale of finished goods 22,000 Sale returns of finished goods 800 Services from independent professionals 75 Social security in charge of the company 60 Tangible assets depreciation expense 100 Wages and salaries 220 Work performed for own assets 300

(*) The value of the initial inventory was 3,200 €. The value of the final inventory is 2,000 €. REQUIRED: 1) Calculate the net turnover. 2) Calculate the consumption of goods for sale. 3) Prepare the Income Statement for year 200X according to the model established in the new

P.G.C.

43

EXERCISE 4 (LESSON 4) - From exam of course 0708 Company X, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 2008. ACCOUNT AMOUNT Capital grants, donations and legacies transferred to income for the year 2,250 Change in inventory of goods for sale (*) ¿? Discount for volume of purchase of goods for sale 1,500 Discount for volume of sale of goods for sale 4,300 Excess of provision for trade operations 615 Expense for the provision for trade operations 1,095 Income tax 9,544 Insurance expense 600 Intangible assets depreciation expense 1,000 Interest of debt from financial institutions 1,100 Investment property depreciation expense 2,250 Losses from available for sale financial instruments 800 Losses from impairment of inventory of goods for sale 500 Losses from impairment of long term loans 200 Losses from impairment of tangible fixed assets 1,300 Losses from impairment of trade accounts receivable 1,530 Purchase discount for early payments 600 Purchase of goods for sale 42,350 Purchase returns of goods for sale 1,300 Rent revenue 1,200 Repairs and conservation 1,500 Revenue form holdings in equity instruments, other companies 2,480 Revenue from long term loans to other companies 1,790 Reversion of impairment of inventory of goods for sale 1,000 Sale of goods for sale 57,300 Sale returns 2,113 Services from independent professionals 345 Services rendered 48,721 Social security in charge of the company 3,480 Supplies 3,800 Tangible assets depreciation expense 3,000 Wages and salaries 17,400

(*) The value of the initial inventory of goods for sale was 1,086. The value of the final inventory is 2,807. REQUIRED: a) Calculate the net turnover. c) Calculate the consumption of goods for sale. b) Prepare the Income Statement according to the format established by the P.G.C. 2007.

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EXERCISE 5 (LESSON 4) - From exam of course 0708 Company X, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 200X. Change in inventory of finished goods (Final inventory > Initial inventory) 500 Change in inventory of raw materials (Final inventory < Initial inventory) 120 Discount for volume of purchase of raw materials 100 Exceptional revenue 1,200 Excess of provision for restructuring 420 Income tax expense 6,824 Interest of debt from financial institutions 90 Investment property depreciation expense 25 Losses for uncollective accounts 60 Losses from impairment of investment property 75 Losses from impairment of trade accounts receivable 180 Losses of held for trading portfolio 40 Operating grants, donations and legacies 100 Profits from disposal of tangible fixed assets 300 Purchase discount for early payments 80 Purchase of raw materials 5,000 Rent expense 120 Rent revenue 220 Revenue of long term loans to subsidiaries 36 Reversion of impairment of inventory of raw materials 50 Reversion of impairment of long term holdings in equity, subsidiaries 189 Reversion of impairment of trade accounts receivable 100 Sale of finished goods 20,000 Sales returns 800 Services from independent professionals 60 Social security in charge of the company 60 Tangible fixed assets depreciation expense 100 Wages and salaries 220 Work performed by other companies 200 Work performed for own assets 300

REQUIRED: Prepare the Income Statement according to the format established by the P.G.C. 2007.

INCOME STATEMENT (Debit) Credit 200X A) CONTINUING OPERATIONS 1. Net turnover. 19.200 a) Sales. 19.200 b) Services rendered. 2. Change in inventory of finished goods and work-in process. 500 3. Work performed for own assets. 300 4. Procurements. - 4.690 a) Consumption of goods for sale. b) Consumption of raw materials and other consumables. - 4.940 c) Work performed by other companies. 200 d) Impairment of goods for sale, raw materials and other consumables. 50 5. Other operating revenues. 320

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a) Accesory and other ordinary income. 220 b) Operating subventions included in income for the year. 100 6. Personnel expenses. - 280 a) Wages, salaries and similar expenses. - 220 b) Employee welfare expenses. - 60 c) Provisions. 7. Other operating expenses. - 320 a) Outside services. - 180 b) Taxes other than income tax. c) Losses, impairment and change in provisions for trade operations. - 140 d) Other operating expenses. 8. Fixed assets depreciation expense. - 125 9. Transfer of grants of non-financial non-current assets and others. 10. Excess of provisions. 420 11. Impairment and income from disposal of non-current assets. 225 a) Impairment and losses. - 75 b) Income from disposals and others. 300 12. Other income 1.200 A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11+12) 16.750 13. Financial revenues. 36 a) From holdings in equity instruments. - a1) Of subsidiaries and associated companies. a2) Of third parties. b) From marketable securities and other financial instruments. 36 b 1) Of subsidiaries and associated companies. 36 b 2) Of third parties. 14. Financial expenses. - 90 a) Of subsidiaries and associated companies. b) Of third parties. - 90 c) From capitalization of provisions. 15. Change in fair value of financial instruments. - 40 a) Held for trading and others. - 40 b) Transfer to income for the year for available for sale financial instruments. 16. Exchange differences. 17. Impairment and income from disposal of financial instruments. 189 a) Impairment and losses. 189 b) Income from disposals and others. A.2) FINANCIAL INCOME (13+14+15+16+17) 95 A.3) INCOME BEFORE TAXES (A.1+A.2) 16.845 18. Income tax. - 6.824 A.4) INCOME FROM CONTINUING OPERATIONS (A.3+18) 10.021 B) DISCONTINUED OPERATIONS 19. Post-tax income of discontinued operations. A.5) INCOME FOR THE YEAR (A.4+19) 10.021

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EXERCISE 6 (LESSON 4) - From exam of course 0708 Company X, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 200X. Capital grants, donations and legacies transferred to income for the year 2,250 Change in inventory of finished goods (Final inventory < Initial inventory) 350 Change in inventory of raw materials (Final inventory > Initial inventory) 235 Discount for volume of purchase of raw materials 100 Exceptional revenue 1,200 Excess of provision for restructuring 420 Income tax expense 6,824 Insurance expense 600 Intangible assets depreciation expense 1,000 Interest of debt from financial institutions 90 Investment property depreciation expense 2,250 Losses for uncollective accounts 60 Losses from available for sale financial instruments 800 Losses from impairment of investment property 75 Losses from impairment of trade accounts receivable 180 Losses of held for trading portfolio 40 Operating grants, donations and legacies 100 Profits from disposal of tangible fixed assets 300 Purchase discount for early payments 80 Purchase of raw materials 5,000 Rent revenue 1,200 Repairs and conservation 1,500 Revenue form holdings in equity instruments, other companies 2,480 Revenue of long term loans to subsidiaries 36 Reversion of impairment of inventory of raw materials 50 Reversion of impairment of trade accounts receivable 100 Sale of finished goods 20,000 Sales returns 800 Services rendered 48,721 Social security in charge of the company 3,480 Tangible assets depreciation expense 3,000 Wages and salaries 17,400 Work performed by other companies 200 Work performed for own assets 300 REQUIRED: Prepare the Income Statement according to the format established by the P.G.C. 2007.

47

2009 A) CONTINUING OPERATIONS 1. Net turnover. 67.921 a) Sales. 19.200 b) Services rendered. 48.721 2. Change in inventory of finished goods and work-in process. - 350 3. Work performed for own assets. 300 4. Procurements. - 4.620 a) Consumption of goods for sale. b) Consumption of raw materials and other consumables. - 4.470 c) Work performed by other companies. - 200 d) Impairment of goods for sale, raw materials and other consumables. 50 5. Other operating revenues. 1.300 a) Accesory and other ordinary income. 1.200 b) Operating subventions included in income for the year. 100 6. Personnel expenses. - 20.880 a) Wages, salaries and similar expenses. - 17.400 b) Employee welfare expenses. - 3.480 c) Provisions. 7. Other operating expenses. - 2.240 a) Outside services. - 2.100 b) Taxes other than income tax. c) Losses, impairment and change in provisions for trade operations. - 140 d) Other operating expenses. 8. Fixed assets depreciation expense. - 6.250 9. Transfer of grants of non-financial non-current assets and others. 2.250 10. Excess of provisions. 420 11. Impairment and income from disposal of non-current assets. 225 a) Impairment and losses - 75 b) Income from disposals and others. 300 12. OTHER INCOME 1.200 A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 38.076 12. Financial revenues. 2.516 a) From holdings in equity instruments. 2.480 a1) Of subsidiaries and associated companies. a2) Of third parties. 2.480 b) From marketable securities and other financial instruments. 36 b 1) Of subsidiaries and associated companies. 36 b 2) Of third parties. 13. Financial expenses. - 90 a) Of subsidiaries and associated companies. b) Of third parties. - 90 c) From capitalization of provisions. 14. Change in fair value of financial instruments. - 840

48

a) Held for trading and others. - 40 b) Transfer to income for the year for available for sale financial instruments. - 800 15. Exchange diferences. 16. Impairment and income from disposal of financial instruments. - a) Impairment and losses. b) Income from disposals and others. A.2) FINANCIAL INCOME (12+13+14+15+16) 1.586 A.3) INCOME BEFORE TAXES (A.1+A.2) 39.662 17. Income tax. - 6.824 A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 32.838 B) DISCONTINUED OPERATIONS 18. Post-tax income of discontinued operations. A.5) INCOME FOR THE YEAR (A.4+18) EXERCISE 7 (LESSON 4) Company HNY, Ltd. shows the following list of accounts at the end of year 2008: Revenue of long term loans to subsidiaries 540 Losses of held for trading portfolio 600 Reversion of impairment of inventory of raw materials 750 Losses for uncollective accounts 900 Losses from impairment of investment property 1,125 Purchase discount for early payments (raw materials) 1,200 Interest of debt from financial institutions 1,350 Discount for volume of purchase of raw materials 1,500 Operating grants, donations and legacies 1,500 Reversion of impairment of trade accounts receivable 1,500 Losses from impairment of trade accounts receivable 2,700 Work performed by other companies 3,000 Change in inventory of raw materials (Final inventory > Initial inventory) 3,525 Profits from disposal of tangible fixed assets 4,500 Work performed for own assets 4,500 Change in inventory of finished goods (Final inventory < Initial inventory) 5,250 Excess of provision for restructuring 6,300 Insurance expense 9,000 Losses from available for sale financial instruments 12,000 Sales returns 12,000 Intangible assets depreciation expense 15,000 Exceptional revenue 18,000 Rent revenue 18,000 Repairs and conservation 22,500 Capital grants, donations and legacies transferred to income for the year 33,750 Investment property depreciation expense 33,750

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Revenue form holdings in equity instruments, other companies 37,200 Tangible assets depreciation expense 45,000 Social security in charge of the company 52,200 Purchase of raw materials 75,000 Income tax expense 102,360 Wages and salaries 261,000 Sale of finished goods 300,000 Services rendered 730,815

REQUIRED: Prepare the Income Statement according to the format established by the P.G.C. 2007. A) CONTINUING OPERATIONS 200X 1. Net turnover. 1.018.815 a) Sales. 288.000 b) Services rendered. 730.815 2. Change in inventory of finished goods and work-in process. - 5.250 3. Work performed for own assets. 4.500 4. Procurements. - 71.025 a) Consumption of goods for sale. b) Consumption of raw materials and other consumables. - 68.775 c) Work performed by other companies. - 3.000 d) Impairment of goods for sale, raw materials and other consumables. 750 5. Other operating revenues. 19.500 a) Accesory and other ordinary income. 18.000 b) Operating subventions included in income for the year. 1.500 6. Personnel expenses. - 313.200 a) Wages, salaries and similar expenses. - 261.000 b) Employee welfare expenses. - 52.200 c) Provisions. 7. Other operating expenses. - 33.600 a) Outside services. - 31.500 b) Taxes other than income tax. c) Losses, impairment and change in provisions for trade operations. - 2.100 d) Other operating expenses. 8. Fixed assets depreciation expense. - 93.750 9. Transfer of grants of non-financial non-current assets and others. 33.750 10. Excess of provisions. 6.300 11. Impairment and income from disposal of non-current assets. 3.375 a) Impairment and losses - 1.125 b) Income from disposals and others. 4.500 12. Other income 18.000 A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11+12) 587.415 12. Financial revenues. 37.740 a) From holdings in equity instruments. a1) Of subsidiaries and associated companies.

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a2) Of third parties. 37.200 b) From marketable securities and other financial instruments. b 1) Of subsidiaries and associated companies. 540 b 2) Of third parties. 13. Financial expenses. - 1.350 a) Of subsidiaries and associated companies. b) Of third parties. - 1.350 c) From capitalization of provisions. 14. Change in fair value of financial instruments. - 12.600 a) Held for trading and others. - 600 b) Transfer to income for the year for available for sale financial instruments. - 12.000 15. Exchange diferences. 16. Impairment and income from disposal of financial instruments. - a) Impairment and losses. b) Income from disposals and others. A.2) FINANCIAL INCOME (12+13+14+15+16) 23.790 A.3) INCOME BEFORE TAXES (A.1+A.2) 611.205 17. Income tax. - 102.360 A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 508.845 B) DISCONTINUED OPERATIONS - 18. Post-tax income of discontinued operations. A.5) INCOME FOR THE YEAR (A.4+18) 508.845 EXERCISE 8 (LESSON 4) - From exam of course 0809 The following list of accounts for Company TST Ltd. is available at the end of 2008:

Account Amount Capital grants, donations and legacies transferred to income for the year 3,375 Change in inventory of finished goods(*) ? Change in inventory of raw materials(*) ¿ Discount for volume of purchase of raw materials 2,250 Discount for volume of sale of finished products 6,450 Excess of provision for trade operations 923 Expense for the provision for trade operations 1,643 Income tax 22,400 Insurance expense 900 Intangible assets depreciation expense 1,500 Interest of debt from financial institutions 1,650 Investment property depreciation expense 3,375 Losses from available for sale financial instruments 1,200 Losses from impairment of inventory of raw materials 750 Losses from impairment of long term loans 300 Losses from impairment of tangible fixed assets 1,950 Losses from impairment of trade accounts receivable 2,295 Operating grants, donations and legacies 3,600 Profit from disposal of intangible fixed assets 2,500 Profit from held for trading portfolio 560 Purchase discount for early payments (raw materials) 900 Purchase of raw materials 63,525

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Purchase returns of raw materials 1,950 Rent revenue 1,800 Repairs and conservation 2,250 Revenue form holdings in equity instruments, other companies 3,720 Revenue from long term loans to other companies 2,685 Reversion of impairment of inventory of raw materials 1,500 Sale of finished products 85,950 Sale returns 3,170 Services from independent profesionals 518 Services rendered 73,082 Social security in charge of the company 5,220 Supplies 5,700 Tangible assets depreciation expense 4,500 Wages and salaries 26,100 (*) The change in the inventory has been the following:

Initial inventory Final inventory Raw materials 18,472 15,890 Finished products 3,427 28,877

REQUIRED:

1) Calculate the net turnover. 2) Calculate the consumption of raw materials. 3) Prepare the Income Statement for year 2008 according to the model established in the new P.G.C.

Net turnover. 1. Net turnover. 149.412 a) Sales. 76.331 Sale of finished products 85.950 Discount for volume of sale of finished products - 6.450 Sale returns - 3.170 b) Services rendered. 73.082 Services rendered 73.082 Consumption of raw materials. b) Consumption of raw materials and other consumables. - 61.007 Purchase of raw materials - 63.525 Discount for volume of purchase of raw materials 2.250 Purchase returns of raw materials 1.950 Purchase discount for early payments (raw materials) 900 Change in inventory of raw materials(*) - 2.582

Income Statement for year 2008 according to the model established in the new P.G.C. A) CONTINUING OPERATIONS 1. Net turnover. 149.412 a) Sales. 76.331

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b) Services rendered. 73.082 2. Change in inventory of finished goods and work-in process. 25.450 3. Work performed for own assets. 4. Procurements. - 60.257 a) Consumption of goods for sale. b) Consumption of raw materials and other consumables. - 61.007 c) Work performed by other companies. d) Impairment of goods for sale, raw materials and other consumables. 750 5. Other operating revenues. 5.400 a) Accesory and other ordinary income. 1.800 b) Operating subventions included in income for the year. 3.600 6. Personnel expenses. - 31.320 a) Wages, salaries and similar expenses. - 26.100 b) Employee welfare expenses. - 5.220 c) Provisions. 7. Other operating expenses. - 12.383 a) Outside services. - 9.368 b) Taxes other than income tax. c) Losses, impairment and change in provisions for trade operations. - 3.015 d) Other operating expenses. 8. Fixed assets depreciation expense. - 9.375 9. Transfer of grants of non-financial non-current assets and others. 3.375 10. Excess of provisions. 11. Impairment and income from disposal of non-current assets. 550 a) Impairment and losses. - 1.950 b) Income from disposals and others. 2.500 A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11+12) 70.853 12. Financial revenues. 6.405 a) From holdings in equity instruments. 3.720 a1) Of subsidiaries and associated companies. a2) Of third parties. 3.720 b) From marketable securities and other financial instruments. 2.685 b 1) Of subsidiaries and associated companies. b 2) Of third parties. 2.685 13. Financial expenses. - 1.650 a) Of subsidiaries and associated companies. b) Of third parties. - 1.650 c) From capitalization of provisions. 14. Change in fair value of financial instruments. - 640 a) Held for trading and others. 560 b) Transfer to income for the year for available for sale financial instruments. - 1.200 15. Exchange differences. 16. Impairment and income from disposal of financial instruments. - 300 a) Impairment and losses. - 300

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b) Income from disposals and others. A.2) FINANCIAL INCOME (12+13+14+15+16) 3.815 A.3) INCOME BEFORE TAXES (A.1+A.2) 74.668 17. Income tax. - 22.400

A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 52.268 B) DISCONTINUED OPERATIONS 18. Post-tax income of discontinued operations.

A.5) INCOME FOR THE YEAR (A.4+18) 52.268 EXERCISE 9 (LESSON 4) - From exam of course 0809 Calculate the consumption of raw materials from the following information that is available for company TRY, Ltd. Accounts receivable 3,000 Change in inventory of finished goods (initial inventory= 1,200; final inventory=950) 250 Change in inventory of raw materials (initial inventory= 150; final inventory=300) 150 Discount for volume of purchase of raw materials 450 Discount for volume of sale of finished products 1,500 Purchase discount for early payments (raw materials) 170 Purchase of raw materials 8,500 Purchase returns of raw materials 630 Sale of finished products 12,000 Sale returns 850 EXERCISE 10 (LESSON 4) - From exam of course 0809 Calculate the amount of “procurements” that will be shown in the income statement, from the following information that is available:

Final inventory of finished goods 5,960 Final inventory of raw materials 17,600 Initial inventory of finished goods 8,730 Initial inventory of raw materials 12,300 Losses from impairment of finished goods 3,650 Losses from impairment of raw materials 2,540 Losses from impairment of trade accounts receivables 22,460 Purchase discount for early payments (raw materials) 3,420 Purchase of raw materials 85,650 Purchase returns 1,750 Reversion of impairment of raw materials 3,820 Sale of finished goods 156,000 Sale returns 23,500 Work performed by other companies 14,350

exercises first semesterpersonal.us.es/cabad/exercises first semester 0910 para... · 2009. 9....

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