Test bank How much do you know about consolidated financial statements?

So what do you know?

Professor Philip E Dunn tests your knowledge of Consolidated Financial Statements

Q1. Which International Financial Reporting Standard deals with a Business Combination? Q2. Which International Financial Reporting Standard deals with Consolidated Financial Statements? Q3. Positive Goodwill is capitalised but is then subject to what on an annual basis?

Mini case study Dunn Ltd acquired 7.5m shares in Davenport Ltd at a cost of £30m on 1 January 2020 and the summary Statements of Financial Position of the companies immediately after the acquisition were: Dunn Ltd £m Non-Current Assets 60.00 Investment in Davenport 30.00 Current Assets 20.00

Total Assets

------£110.00 Equity Share Capital Retained Earnings Total Equity Current Liabilities

Total Equity and Liabilities

Davenport Ltd Non Current Assets Current Assets

Total Assets Equity Share Capital 10m Ordinary Shares £1.00 each Retained Earnings Total Equity Current Liabilities

Total Equity and Liabilities

30.00 70.00 100.00 10.00 ------£110.00 ------£m 25.00 15.00 ------£40.00

10.00 23.00 33.00 7.00 ------£40.00 Q4. Calculate the amount of Goodwill arising on the acquisition. Q5. Calculate the Non-Controlling Interest.

When drafting the Consolidated Statement of Financial Position immediately after the acquisition what would be the values for the following? Q6. Non-Current Assets. Q7. Goodwill. Q8. Current assets. Q9. Total assets. Q10. Share capital. Q11. Retained earnings. Q12. Non-Controlling Interest. Q13. Total equity. Q14. Current liabilities. Q15. Total equity and liabilities. Q16. In future years the Goodwill will be subject to Impairment under which International Financial Reporting Standard?

IAS 36 Impairment of Assets.Q16.

£125.25, Q15. £17m, Q14. £108.25m, Q13. £8.25m, Q12. £70m, Q11. £30m, Q10. £125.25m, Q9. £35m, Q8. £5.25m, Q7. £85m, Q6.

£8.25m, Q5. £5.25m, Q4. Impairment, Q3. IFRS 10 Consolidated Financial Statements, Q2. IFRS 3 Business Combinations, Q1. Answers

Ask PQ’s agony aunt Karen Young when you need expert advice. Email your dilemma to graham@pqmagazine.com, and he will pass on the best ones to Karen

THE QUESTION The Christmas break led me to realise that I want to invest more into my professional development. Do you have any suggestions for how I can progress my career outside of my day job?

KAREN’S RESPONSE Online learning of every description is exploding right now, and as a result there is no excuse for you not to continue to learn, grow and hone your skills to help you prepare for your next job or promotion. That said, you should not ignore the immense benefits that both old-school organic networking and online networking can have on your career.

Have a look at some professional finance organisations or groups that you can join. You can then stay up-to-date with the conversations that the members are having and what journals are being published. Joining LinkedIn groups can also allow you to join in with these conversations, giving you the ability to message members directly and remotely. You may take this networking one step forward and look to take on a leadership role on a committee or for a local organisation, to showcase the skills you use both inside and outside of your day job. You could also use this role as a tool to target your professional association to raise your visibility among those you are in contact with on LinkedIn – network whenever you have the opportunity. • Karen Young is a director at Hays. She is passionate about helping people to find the right job, and companies to find the right person

CFOs going for growth

CFOs seem to be looking past Omicron and plan to focus their businesses on growth in 2022

CFOs rate persistent labour shortages, the pandemic, climate change and higher inflation respectively as the top risks facing their firms, according to Deloitte’s UK CFO Survey Q4 2021.

Compared with this time last year, CFOs have reduced their risk rating for Covid-19. In contrast, labour and supply shortages have emerged as significant short-term risks over the past year, resulting in a higher risk rating for inflation.

Almost half of the CFOs surveyed (46%) reported that their businesses have faced significant or severe recruitment difficulties over the past three months. Things are expected to improve in 2022, with 24% of CFOs expecting significant or severe recruitment difficulties in a year’s time.

The survey found that finance leaders are focused on growth, with a record 37% rating an increase in capital investment as a strong priority in the next 12 months. Expansionary strategies, including introducing new products and services, expanding into new markets and raising investment are a greater focus now than at any time since the question was first asked in 2009.

When it comes to investment an overwhelming majority of CFOs expect to invest more in digital technology (94%) and workforce skills (77%) over the next three years. Most CFOs (84%) expect productivity to grow faster, too.

In brief

Pap Fancy a four-day week? Some 30 UK companies have joined a six-month pilot offering employees a four-day working week. The trial, which starts in June, is being run on the 100:80:100 model – 100% of the pay for 80% of the time, in exchange for a commitment for 100% productivity. Staff will be expected to work between 32 to 35 hours a week. The pilot programme will be run in conjunction with academics, the UK 4 Day Week Campaign and the think tank Autonomy.

Pap Boosting diversity UK companies must step up their efforts to appoint more directors from ethnic minorities, says the Institute of Directors. It said that many companies have failed to meet government targets, and they were accused of being ‘too slow’ to increase ethnic minority representation. While recruitment of more diverse directors has accelerated, some 20% of FTSE 100 companies still lack any board members. Under the Parker review, FTSE 100 companies were told to have at least one director of colour on the board by the start of 2022. The review also recommended that FTSE 250 companies should meet the target by 2024.

Pap London top for finance London leads the global financial and professional services rankings for the second year running, according to new figures published by the City of London Corporation. London received an overall competitiveness score of 61, followed by New York (58) and Singapore (53). The rankings were rounded out with Frankfurt (45), Hong Kong (39) and Tokyo (36). For the first time, the research includes Paris as a second European comparator centre, with a competitiveness score of 41. The study said that the UK’s international financial reach continues to be unmatched. Against the backdrop of a challenging year, UK financial services exports increased and the UK’s trade surplus remains higher than in all other global financial centres.

The PQ Book Club: books you should read

Sort Your Brain Out: Boost your performance, manage stress and achieve more, by Dr Jack Lewis and Adrian Webster (Capstone, £10.99) How is your brain feeling at the moment? Do you need to unlock its hidden potential? Well, this is where the authors come in. They start off with a nice picture of your ‘amazing brain’ – that wrinkled pink lump of pulsating wetware! It may be 89% water and 11% fat, but Lewis and Webster remind us it is the ultimate supercomputer, and currently light years ahead of anything that humans have so far managed to create. It is also working relentlessly, just for you.

They stress there are a few things you can do to ensure you improve your brain’s performance. The first is water! You must hydrate your brain every day – remember it’s 80% water. Every time you breathe you lose water in the form of water vapour so start every day with a big glass of water.

Next up is exercise. We are talking 20-30 minutes of moderate exercise every day (or 40-60 minutes every other day). This is particularly important in the revision phase.

How you deal with stress is also important. The authors think it has a bad reputation – cortisol, the primary stress hormone, is actually vital for helping us get things done. The key point here is that a little bit of stress is the short-term is a good thing. Chronic stress, however, is most definitely bad. PQ rating: 5/5 There are lots of books out there helping you ‘sort your brain out’, but this one is really nicely put together – like a healthy brain!

The last chairman of the FRC

Once appointed, Jan du Plessis will be the last chairman of the FRC and the first of the ARGA. But who is Jan? Well, he started his working life as an articled clerk (trainee) at Greenwood Ironside, a small accountancy firm in South Africa, and still has a beach cottage there. As FRC chairman he will earn £125,000, The ex-chair of BT liked to get up at 5.30am – so staff may need to get into work a little earlier if they want to beat the boss in! He drives a 15-year-old silver Mercedes estate and at his Buckinghamshire home he has alpacas, chickens, guinea fowl, pigs and sheep.

Hidden Assets

If you are running out of things to watch on the goggle box then PQ magazine has a recommendation for you – Hidden Assets (BBC 4). Set in Ireland and Belgium the story involves diamonds, a terrorist bombing campaign, and a dead body (more than one, actually). It’s up to Emer Berry and her Criminal Assets Team to make sense of it all… and in truth it makes so much more sense than the last two series of Line of Duty! Think Scandi Noir here, but what we really liked is the fact that it didn’t spoonfeed the audience despite the complex plot.

Time to get Wordle?

Have you signed up to the Wordle craze yet? It has taken social media by storm and even PQ magazine has got hooked. Wordle is a simple puzzle game which gives you six chances to guess a five-letter word. If the letter goes green you have the right letter in the right place, yellow means you have found the letter but it’s in the wrong position. The game was created by a software engineer Josh Wardle in New York for his partner. He has now sold it for a seven figure sum!

We don’t want to spoil it for you, but computer scientists and linguists have been trying to discover the ultimate five-letter word start. ‘IRATE’ is a popular suggestion, as is ‘LATER’. PQ magazine always starts with ‘TRAIN’, but we thought it should really be ‘DEBIT’!

HMRC fraud squad brings in £1billion

HMRC’s Fraud Squad is now five years old and since its creation it has recovered more than £1 billion. Since 2016, more than 1,200 seizures of cash and assets have been made, including gold bars worth £750,000 from a passenger at Manchester Airport and £48,000 found in a freezer drawer, hidden among chicken nuggets at a house in Blackpool!

The gold bars were auctioned off with the proceeds going back into the public purse, the cash was part of a £16 million tobacco fraud.

Simon York, Director, Fraud Investigation Service, said: “Whether it’s cash seizures, confiscation orders or account freezing orders, recovering these assets stops criminals bankrolling their lavish lifestyles and funding further crimes that harm our communities, such as drugs, guns and human trafficking.”

Know your symbols?

New research by AAT has found that millions of Brits can’t identify basic GCSE level maths symbols, with only 2% of the 2,000 adults surveyed able to identify all 10 of the GCSE level symbols!

Just 41% of those surveyed could identify the infinity symbol and 34% cannot name the less than sign. Perhaps more worryingly more than a quarter of teachers couldn’t identify the square root symbol.

The idea behind the AAT research is to highlight how most adults haven’t used these symbols since they left school, and maths knowledge is not indicative of success when it comes to a career in accounting or finance – there is a much broader skillset involved.

Rachel Staples, Head of Qualifications and Product Development at AAT, said: “Maths can be a polarising topic with many people believing they aren’t good at it. However, that shouldn’t be the case. While we’ve looked into the knowledge of the nation in regards to common GCSE mathematical symbols, the truth is they aren’t used as frequently in later life or indicative of overall professional success.”

’ W E V E G O T T H E L O T

Book of numbers

The i Book of Number Puzzles has brand new content throughout, with a collection of over 100 mixed puzzles that have been specially selected by the creators of the i puzzle page. This fantastic range of number puzzles will engage even the most avid solver. Instructions are featured alongside every puzzle and solutions are included at the back of the book. The book contains a large range of puzzle types familiar from the daily puzzle pages in the i, together with a selection of other puzzle types, including ‘calcudoku’, mental maths and maths puzzles. To be in with a chance of winning one of three number puzzle books this month simply email your name and address to giveways@ pqmagazine.com. Head up your email ‘Numbers’.

Mindfulness counts

We are giving away the fourth in a series of four books by bestselling author Gareth Moore, which currently includes The Mindfulness Puzzle Book, The Mindfulness Puzzle Book 2 and The Mindfulness Puzzle Book 3. There is also an ebook, Mindfulness Puzzles for Your Kindle, comprising content from books 2 and 3. Puzzle-solving is a favourite relaxation technique for many, and this book features a wide range of specially selected games to provide the perfect level of challenge and reward for your brain. Feel the tension release as you focus on each achievable and fun task, and experience the endorphin-reward buzz as you successfully complete each puzzle. We have three books to give away. To be entered into the free draw simply send you name and address to giveways@pqmagazine.com and we will do the rest. Head up your email ‘Refresh’.

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be received by Friday 11 March 2022. The main draw will take place on Monday 14 March 2022. TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM