SAMPLE QUESTIONS OF CASE ANALYSIS

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…

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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