问题详情

SectionB–TWOquestionsONLYtobeattempted
(a)Chemcleantradesinthechemicalindustry.Theentityhasdevelopmentandproductionoperationsinvariouscountries.IthasenteredintoanagreementwithJomasterunderwhichChemcleanwilllicenceJomaster’sknowhowandtechnologytomanufactureachemicalcompound,Volut.Theknow-howandtechnologyhasafairvalueof$4million.Chemcleancannotusetheknow-howandtechnologyformanufacturinganyothercompoundthanVolut.ChemcleanhasnotconcludedthateconomicbenefitsarelikelytoflowfromthiscompoundbutwilluseJomaster’stechnologyforaperiodofthreeyears.ChemcleanwillhavetokeepupdatingthetechnologyinaccordancewithJomaster’srequirements.TheagreementstipulatesthatChemcleanwillmakeanon-refundablepaymentof$4milliontoJomasterforaccesstothetechnology.Additionally,Jomasterwillalsoreceivea10%royaltyfromsalesofthechemicalcompound.
Additionally,Chemcleanisinterestedinanothercompound,Yacton,whichisbeingdevelopedbyJomaster.Thecompoundisinthesecondphaseofdevelopment.TheintellectualpropertyofcompoundYactonhasbeenputintoanewlyformedshellcompany,Conew,whichhasnoemployees.ThecompoundistheonlyassetofConew.Chemcleanisintendingtoacquirea65%interestinConew,whichwillgiveitcontrolovertheentityandthecompound.Chemcleanwillprovidethenecessaryresourcestodevelopthecompound.(8marks)
(b)Intheyearto30June2015,Chemcleanacquiredamajorsubsidiary.TheinventoryacquiredinthisbusinesscombinationwasvaluedatitsfairvalueattheacquisitiondateinaccordancewithIFRS3BusinessCombinations.Theinventoryincreasedinvalueasaresultofthefairvalueexercise.Asignificantpartoftheacquiredinventorywassoldinthepostacquisitionperiodbutbefore30June2015,theyearend.
Intheconsolidatedstatementofprofitorlossandothercomprehensiveincome,thecostofinventoriesacquiredinthebusinesscombinationandsoldbytheacquirerafterthebusinesscombinationwasdisclosedontwodifferentlines.Theinventorywaspartlyshownascostofgoodssoldandpartlyasa‘non-recurringitem’withinoperatingincome.Thepartpresentedundercostofgoodssoldcorrespondedtotheinventory’scarryingamountinthesubsidiary’sfinancialstatements.Thepartpresentedasa‘non-recurringitem’correspondedtothefairvalueincreaserecognisedonthebusinesscombination.The‘non-recurringitem’amountedto25%ofChemclean’searningsbeforeinterestandtax(EBIT).Chemcleandisclosedtheaccountingpolicyandexplainedinthenotestothefinancialstatementsthatshowingtheinventoryatfairvaluewouldresultinafallinthegrossmarginduetothefairvalueincrease.Further,Chemcleanarguedthatisolatingthispartofthemargininthe‘non-recurringitems’,whosenatureistransparentlypresentedinthenotes,enabledtheusertoevaluatethestructuralevolutionofitsgrossmargin.(6marks)
(c)Intheconsolidatedfinancialstatementsfor2015,Chemcleanrecognisedanetdeferredtaxassetof$16million,whichrepresented18%ofitstotalequity.Thisassetwasmadeupof$3milliontaxabletemporarydifferencesand$19millionrelatingtothecarry-forwardofunusedtaxlosses.Thelocaltaxregulationallowsunusedtaxlossestobecarriedforwardindefinitely.Chemcleanexpectsthatwithinfiveyears,futuretaxableprofitsbeforetaxwouldbeavailableagainstwhichtheunusedtaxlossescouldbeoffset.Thisviewwasbasedonthebudgetsfortheyears2015-2020.Thebudgetswereprimarilybasedongeneralassumptionsaboutthedevelopmentofkeyproductsandeconomicimprovementindicators.Additionally,theentityexpectedasubstantialreductioninthefutureimpairmentoftradereceivablesandpropertywhichtheentityhadrecentlysufferedandthiswouldresultinasubstantialincreaseinfuturetaxableprofit.
Chemcleanhadrecognisedmateriallossesduringthepreviousfiveyears,withanaverageannuallossof$19million.AcomparisonofChemclean’sbudgetedresultsfortheprevioustwoyearstoitsactualresultsindicatedmaterialdifferencesrelatingprincipallytoimpairmentlosses.Intheinterimfinancialstatementsforthefirsthalfoftheyearto30June2015,Chemcleanrecognisedimpairmentlossesequaltobudgetedimpairmentlossesforthewholeyear.Initsfinancialstatementsfortheyearended30June2015,Chemcleandisclosedamaterialuncertaintyaboutitsabilitytocontinueasagoingconcern.Thecurrenttaxrateinthejurisdictionis30%.(9marks)
Required:
DiscusshowtheaboveitemsshouldbedealtwithinthefinancialstatementsofChemcleanunderInternationalFinancialReportingStandards.
Note:Themarkallocationisshownagainsteachofthethreeissuesabove.
Professionalmarkswillbeawardedinquestion2forclarityandqualityofpresentation.(2marks)
请帮忙给出正确答案和分析，谢谢！