Arab Open University B326: TMA –2nd Semester 2015-2016 About TMA: The TMA covers the advanced accounting concepts and practices in the businesses. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess s

Arab Open University
B326: TMA –2nd Semester 2015-2016

About TMA:
The TMA covers the advanced accounting concepts and practices in the businesses. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of some of the learning points within chapter 1, 3,4 and 5 beside the supplementary material. This TMA requires you to apply the course concepts. The TMA is intended to:
 Assess students’ understanding of key learning points within chapter 1, 3,4 and 5.
 Increase the students’ knowledge about the reality of the advanced Accounting.
 Develop students’ communication skills, such as memo writing, essay writing, analysis and presentation of material.
 Develop the ability to understand and interact with the nature of the advanced accounting tools in reality.
 Develop basic ICT skills such as using the internet.

The TMA:
This TMA is based around two cases of “business combination” and “intercompany transaction and relevant information”. Marks will be awarded for blending the context of each case and with relevant theory by means of your own interpretation. In addition to this, some research is required.
The TMA requires you to:
1- Review various study sessions beside the supplementary materials.
2- Conduct a simple information search using the internet.
3- Present your findings in not more than 2,000 words ± 10%
4- You should use a Microsoft Office Word and Times New Roman Font of 12 points.
5- You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment.

Criteria for Grade Distribution:
Criteria Content Referencing& e-library Structure and Presentation of ideas Total marks
Part A Part B
Marks 65 35 (5) (5) 100



The TMA Questions
PART A: case study (Adidas)
The internet is a good place to get information that is useful to you in your study of accounting. For example, you can find information about current events, professional accounting organizations, and specific companies that may support your study.

The Coca-Cola Company is the world's largest beverage company. We own or license and market more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. We own and market four of the world's top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries.

We make our branded beverage products available to consumers throughout the world through our network of Company-owned or -controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers — the world's largest beverage distribution system.

Beverages bearing trademarks owned by or licensed to us account for more than 1.9 billion of the approximately 58 billion servings of all beverages consumed worldwide every day.

We believe our success depends on our ability to connect with consumers by providing them with a wide variety of options to meet their desires, needs and lifestyles. Our success further depends on the ability of our people to execute effectively, every day.

Our goal is to use our Company's assets — our brands, financial strength, unrivaled distribution system, global reach, and the talent and strong commitment of our management and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareowners.

Access the Coca cola home web page at: http://www.coca-colacompany.com From Coca cola home page and then “our Company”, click on “FINANCIAL INFORMATION”, followed by “Reports and results”, then select the year 2015 to display and download the “Annual report- 10k ” 2015 on Form PDF.
Note: the financial statements of Coca Cola are available at:
http://www.coca-colacompany.com/investors/investors-info-reports-and-financial-information/
Instructions Use the annual report and accounts of 2015 to answer the following questions:

1. Coca Cola has stated in their financials the vision , and objective of the company, please elaborate on it.
[Marks 8]

2. Financial accounting has allowed the accountant to use estimates when preparing the financial statements.
a. Please provide examples from Coca Cola financials on items which were estimated by management.
b. Explain window dressing in accounting and is it ethical to use it ( give examples on famous companies who has used window dressing).

[Marks 8]
3. Coca Cola Company may face risk factors that may affect the business performance and conditions. Please explain four risk factors that may face Coca Cola.
[Marks 8]

4. Write a memo explaining: (Hint: Explain and support your memo by suitable figures from the Coca Cola annual report.)
a- Coca Cola Company has classified the intangible asset into three category. Explain them ( give examples for each category with there carrying value)?

b- How do Coca Cola account intangible assets (explain the three types?

[Marks 6]

5. Define business combination and mention reasons why do companies merge?

[Marks 10]
6. What are the steps that the company has to do in time of merger transaction? And What are the obstacle that may lead to merger failure?
[Marks 10]

7. What are the Exceptions to not to consolidate the financial statement and what are the benefits of consolidating the financial statements?



[Marks 10]
PART B: case study

Using the equity method solve the following:

A. Below are the income statement information for 2014 of Purple and its 80% owned subsidiary “Bice”.
Purple Bice
Sales 12,000,000 7,200,000
Cost of goods sold 6,000,000 4,800,000
Gross profit 6,000,000 2,400,000
Operating expense 3,000,000 960,000
Net income 3,000,000 1,440,000

During 2014, Bice sold to Purple inventory for $ 2,400,000 with a gross profit $480,000. The remaining inventory on the hand of subsidiary is 25%.
Required
• Compute the unrealized profit – ending (5 marks)
• Compute profit for 2014 for the
o Non-controlling interest
o Parent profit
(5 marks 2.5 each)
• Prepare the consolidated income statement for 2014, show the elimination entries. (30 marks : each entry 5 marks and income statement 10 marks)

Use the following headings (below) to make up the different sections of your work:

The PT3 form
Title and contents page
References (Recorded according to the Harvard style - Available on LMS)