(a) Kayte operates in the shipping industry and owns vessels for transportation. In June 2014, Kayte acquired Ceemone whose assets were entirely investments in small companies. The small companies each owned and operated one or two shipping vessels. There were no employees in Ceemone or the small companies. At the acquisition date, there were only limited activities related to managing the small companies as most activities were outsourced. All the personnel in Ceemone were employed by a separate management company. The companies owning the vessels had an agreement with the management company concerning assistance with chartering, purchase and sale of vessels and any technical management. The management company used a shipbroker to assist with some of these tasks.
Kayte accounted for the investment in Ceemone as an asset acquisition. The consideration paid and related transaction costs were recognised as the acquisition price of the vessels. Kayte argued that the vessels were only passive investments and that Ceemone did not own a business consisting of processes, since all activities regarding commercial and technical management were outsourced to the management company. As a result, the acquisition was accounted for as if the vessels were acquired on a stand-alone basis.
Additionally, Kayte had borrowed heavily to purchase some vessels and was struggling to meet its debt obligations. Kayte had sold some of these vessels but in some cases, the bank did not wish Kayte to sell the vessel. In these cases, the vessel was transferred to a new entity, in which the bank retained a variable interest based upon the level of the indebtedness. Kayte’s directors felt that the entity was a subsidiary of the bank and are uncertain as to whether they have complied with the requirements of IFRS 3 Business Combinations and IFRS 10 Consolidated Financial Statements as regards the above transactions. (12 marks)
(b) Kayte’s vessels constitute a material part of its total assets. The economic life of the vessels is estimated to be 30 years, but the useful life of some of the vessels is only 10 years because Kayte’s policy is to sell these vessels when they are 10 years old. Kayte estimated the residual value of these vessels at sale to be half of acquisition cost and this value was assumed to be constant during their useful life. Kayte argued that the estimates of residual value used were conservative in view of an immature market with a high degree of uncertainty and presented documentation which indicated some vessels were being sold for a price considerably above carrying value. Broker valuations of the residual value were considerably higher than those used by Kayte. Kayte argued against broker valuations on the grounds that it would result in greater volatility in reporting.
Kayte keeps some of the vessels for the whole 30 years and these vessels are required to undergo an engine overhaul in dry dock every 10 years to restore their service potential, hence the reason why some of the vessels are sold. The residual value of the vessels kept for 30 years is based upon the steel value of the vessel at the end of its economic life. At the time of purchase, the service potential which will be required to be restored by the engine overhaul is measured based on the cost as if it had been performed at the time of the purchase of the vessel. In the current period, one of the vessels had to have its engine totally replaced after only eight years. Normally, engines last for the 30-year economic life if overhauled every 10 years. Additionally, one type of vessel was having its funnels replaced after 15 years but the funnels had not been depreciated separately. (11 marks)
Required:
Discuss the accounting treatment of the above transactions in the financial statements of Kayte.
Note: The mark allocation is shown against each of the elements above.
Professional marks will be awarded in question 3 for clarity and quality of presentation. (2 marks)
第1题:
A local-area network(LAN)is a communications network that(125)a variety of devices and provides a(126)for information exchange among those devices. The scope of the LAN is small typically a single building or a cluster(丛)of buildings. The LAN is usually owned by the same organization that owns the(127)devices. The internal data rate of LAN is at least several Mb/s.The basic of LAN communication is broadcasting. At each station, there is a transmitter/receiver that communicates over a(128)shared, By other stations. A transmission from any one station is(129)to and received by all other stations.
A.broadcast
B.cable
C.control
D.interconnects
E.internet
第2题:
What are not the resulting effects on cities when those people moved out?
A. There were more crimes.
B. Cities were in a bad condition.
C. Only one mass transit system was completed.
D. Some small companies move in while larger ones moved out.
32.答案为D。根据全文,选项A、B、C在文中均提到是迁移的后果,而选项D没有提到。
第3题:
Please mark (out) one of the most important register of shipping in the world. ______.
A.HK MARDEP
B.COSCO
C.Lloyd's Society
D.Liberia Shipping Registry
第4题:
______ of the following statements is(are)correct regarding motor lifeboats on cargo vessels.① The motor of each lifeboat shall be operated in the ahead and astern position for a period of not more than 5 minutes once in each week;② The fuel tank of all motor-propelled lifeboats shall be emptied and the fuel changed at least once in every year.
A.① only
B.② only
C.Both ① and ②
D.Neither ① nor ②
第5题:
请选择合适的选项,补充下列英文句子:International shipping requires more()shipping procedures,that make the post time between two countries is always longer than domestic post.
第6题:
A small IT department is deploying Power 720 servers exploiting virtualization technologies. Each Power 720 will have two partitions, one with 6 cores and one with 2 cores, and both partitions having 32GB of memory each. Live Partition Mobility is being considered at some point in the future. What is the minimum AIX Edition required to support the customer?()
第7题:
When defining shipping for a store using WebSphere Commerce Accelerator a seller must create:()
第8题:
Needle
Tapered roller
Roller
Ball
第9题:
assistants
ships
vehicles
guns
第10题:
shipping jurisdictions for each fulfillment center
shipping codes for each set of shipping charges to be applied to products
shipping methods for each carrier and service offered by the carrier
shipping zones for each geographical region where goods will be shipped
第11题:
has the ownership of a vessel
has the ship owned by a shipping company
owns no ship of a shipping company
owns the ship named by a register of shipping
第12题:
just in the joined-venture companies.
in any company.
in state-owned companies.
in private-owned companies.
第13题:
● When a large packet wants to travel through a network whose MTU is too small, one solution is to allow routers to break up the packet into (). ()A. messages B. frames C. fragments D. bits
第14题:
The Shipping Articles shall be signed by each seaman and the ______.
A.Master of the vessel
B.Shipping Commissioner
C.Coast Guard
D.Customs Service
第15题:
Shipowner is a person who ______.
A.has the ownership of a vessel
B.has the ship owned by a shipping company
C.owns no ship of a shipping company
D.owns the ship named by a register of shipping
第16题:
第17题:
Which three are current small business needs for technology investments? ()
第18题:
The not ice given by the shipper after the shipment of the goods is called().
第19题:
be more productive
plan for today
work from anywhere
reduce reliance on technology
serve customers better
minimize network investments
第20题:
HK MARDEP
COSCO
Lloyd's Society
Liberia Shipping Registry
第21题:
Ship Security Officer
Designated Person Ashore
Internal Auditor
Patrol Team
第22题:
Master of the vessel
Shipping Commissioner
Coast Guard
Customs Service
第23题:
makes a cargo reach the farthest destination
makes the ship go as far as she can
is the most significant change in shipping industry
is the most economical change in shipping industry