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30 Nov
2019

SAMPLE QUESTIONS OF CASE ANALYSIS | Good Grade Guarantee!

SAMPLE QUESTIONS OF CASE ANALYSIS
The following three questions were used previously in Case Analysis:
Sample question 1 (25 marks)
The Consolidated Statement of Financial Position at 31 March 20×7 shows an amount of US$662,094,000 for “Intangibles” which includes goodwill and other intangible assets.
Required:
What are the different categories of these other intangible assets (excluding goodwill) included in “Intangibles”? (6 marks)
Further to part (a), which categories (or category) of these other intangible assets are externally acquired and which categories (or category) are internally generated? (8 marks)
The amount of “Intangibles” was reduced from US$775,162,000 at 31 March 20×6 to US$662,094,000 at 31 March 20×7. Briefly explain the major factors that contribute to the decrease in “Intangibles.” (11 marks)
Sample Question 2 (25 marks)
“Investment Property,” an item of non-current assets in the Consolidated Statement of Financial Position, has a carrying amount of $9,560,000 in the 20×6 comparable column, but a ‘nil’ balance in the 20×7 column as the investment property was transferred to “asset classified as held for sale” at year-end 20×7.
Required:
What was the fair value of the investment property as at 31 December 20×7 that was transferred to “asset classified as held for sale”?
Explain how the fair value in part (a) was determined.
What was the gain or loss arising from changes in the fair value of investment property at 31 December 20×7? Be sure to specify the amount and whether it was a gain or a loss.
Sample Question 3 (20 marks)
Was there any impairment of assets in the year 20xx? What assets had been impaired in 20xx? Evaluate the impact of impairment on the firm’s profit for the year 20xx.
Suggested Answers to Case-Analysis Sample Questions
Sample Question 1 (25 marks)
Based on the information in Note 8 on page 96, there are five categories of intangibles other than goodwill, namely, patents, technology, brands, client relationship and development costs. (6 marks)
Based on Note 2.9 (b) on page 80, we know that patents, technology, brands and client relationship were acquired by the Group and development costs were internally generated. (8 marks)
From the information contained in Note 8, the primary reason for the decrease in the amount of “Intangibles” is exchange differences (the exchange rate movements during the year had been unfavorable to the value of the intangibles), causing a decrease in intangible value by US$89.9 million, in particular reduction of goodwill by US$54.1 million. The second largest reduction is due to the amortization, particularly of technology (US$9.7 million) and client relationship (US$5.7 million). The third major factor is the provision of impairment, in particular goodwill. (11 marks)
Sample Question 2 (25 marks)
(footnote 16, page 68).
The fair value of the investment property at 31 December 20×7 that was transferred to “asset classified as held for sale” was $11,800,000.
The fair value of the investment property had been determined by the directors of the company. No valuation was performed by independent qualified professional valuers. The valuation performed by the directors of the company was based on the sales proceeds the company received on the disposal of the investment property.
There was a gain of $2,240,000 arising from changes in the fair value of investment property at 31 December 20×7 recognized in the income statement (page 35).
Sample Question 3 (20 marks)
Footnote 10 (profit before taxation) shows the existence of impairment loss in year 20xx. Specifically, there was impairment on intangible assets, resulting in an impairment loss of 1.513 million and impairment on trade and other receivables, resulting in an impairment loss of 7.748 million. The total impairment losses were 8.555 million, representing an increase of 4.22 million. The losses reduce profit before tax from 81.023 million to 76.803 million. In other words, impairment loss in 20xx causes about 5% reduction in profit before tax.

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