ACF301 – Coursework 2025-26

Advance information

Please read this document carefully.

The coursework forms 25% of the marks for the assessment of this module and comprises of an individual test based on the case study set out in this document. This test takes place starting at 9am (UK time) Monday 8^th December 2025 (Week 10).

Coursework instructions

· The test will take place online through Moodle.

· You can access the test on Monday 8^th December 2025 from 9am onwards and the submission folder will remain open until 5pm (UK time).

· You are recommended to spend no more than 60-90 minutes completing this test. There is no time limit on the test.

· The coursework test is based on the accounting issues which arise from the scenario set out in the advance information in this document. You will be provided further impact information and the requirements on Monday 8^th December 2025.

· You may prepare for the test in study groups or on your own, however you must complete the test itself on your own.

· The test is open book.

· You should prepare your answer to this test using Microsoft Word and upload to Moodle. Answers to numerical questions may be handwritten however you may only upload one document to moodle.

Please note: you will not be required to produce a full set of consolidated financial statements.

Background

Glind plc

Glind plc (Glind) is a developer and manufacturer of security systems. Glind’s products help clients to protect their warehouses and office buildings. All transactions are in £ sterling.

Historically Glind had taken a cautious approach to growth but has recently started to acquire shares in suppliers.

Glind has a year end of 30 June.

Your role

You are a recent graduate of Lancaster University, employed as the Financial Accountant at Glind. You have received the following e-mail from the Finance Director:

To: Financial Accountant

From: Finance Director

On 1 April 2025, Glind bought 9 million ordinary shares of Elphi plc (Elphi), a supplier. Due to the strategic fit with our company, Glind paid a substantial premium to gain control over Elphi. A number of other investors continue to hold shares in Elphi.

The acquisition of Elphi means that Glind will prepare consolidated financial statements for the first time. I am not sure how to calculate some of the figures for inclusion in the consolidated statement of financial position. I am also concerned that we paid too much money for the acquisition of shares in Elphi and am unsure about the impact of this on the financial statements.

Glind is also considering a future investment opportunity in Dilla Ltd (Dilla). I am unsure about the accounting treatment for the investment in Dilla. I have provided some information about the investment in Elphi and the future investment opportunity in Dilla in Exhibit 1. A draft of the accounting policy note in relation to strategic investments is also included in Exhibit 1.

An extract from the draft financial statements for the Glind group for the year ended 30 June 2025 and forecast information for the year ending 30 June 2026, the next financial year, is included in Exhibit 2.

The directors receive a bonus based on the performance of Glind. Details of the bonus arrangements are provided in Exhibit 3.

Further information will be available on Monday 8^th December 2025 together with the tasks you must perform.

Exhibit 1: Existing and future investments

Investment in Elphi

On 1 April 2025, Glind bought 9 million ordinary shares in Elphi. The acquisition resulted in Glind having control over Elphi.

The acquisition of shares was paid for as follows:

Ø An immediate cash payment of £2.12 per share acquired.

Ø A 1 for 4 share exchange.

Ø A future cash payment, payable on 31 March 2028.

Ø A future cash payment, payable only Elphi achieves a profit target in the year ending 30 June 2026.

The financial statements of Elphi also show the following information relevant to the purchase:

Ø Elphi has a number of intangible assets.

Ø The notes to the financial statements of Elphi show a contingent liability.

Glind chose to account for the non-controlling interests in Elphi using the fair value method.

Potential investment opportunity in Dilla during the year ending 30 June 2026 (the next financial year)

Glind is currently in negotiations to buy 30% of the ordinary share capital of Dilla from an existing shareholder. Dilla is a major supplier of materials used by Glind in the manufacture of security systems.

The other 70% of the share capital of Dilla is currently owned by nine other institutional investors, the largest of which is Morrib plc (Morrib). Morrib would like Glind’s input into key decisions made, to improve the profits of the company. As part of the investment, Glind would therefore be able to appoint a number of directors.

Glind is also in negotiations to acquire some convertible debt securities which could be converted into new ordinary shares.

Accounting policy note (Extract)

Basis of consolidation

The consolidated financial statements incorporate the financial statements of Glind plc and subsidiaries controlled by Glind plc (the “Group”).

Glind plc has arrangements over which it has control and which qualify as subsidiary companies. Acquisitions of subsidiaries are accounted for using the acquisition method. When the Group completes a business combination, the identifiable assets acquired and liabilities assumed are measured at fair value. The consideration transferred is measured at fair value and includes the fair value of any contingent consideration.

Any non-controlling interest in an acquisition is initially measured either at fair value or at the non-controlling interest’s proportion of net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis.

Transactions and balances between subsidiaries are eliminated.

Joint ventures and associates

Where the Group has the ability to exercise joint control over entities, they are accounted for as joint ventures. Where the Group has the ability to exercise significant influence over entities, they are accounted for as associates.

For joint ventures and associates, the Group recognises its interest in the joint venture or associate as an investment in joint ventures or associates. The group uses the equity method of accounting.

Exhibit 2: Draft and forecast financial statements extract

The following shows draft financial information for the year ended 30 June 2025 and forecast financial information for the year ending 30 June 2026.

The information includes the results of Elphi and the shares issued to acquire shares in Elphi.

Consolidated statement of profit or loss for the year ended 30 June (extract)

Consolidated statement of financial position as at 30 June (extract)

(*) The forecast profit attributable to the equity holders of the parent includes an expected dividend from the investment in Elphi as follows:

Ø For the year ended 30 June 2025: a dividend of £0.10 per share.

Ø For the year ended 30 June 2026: a dividend of £0.14 per share.

Exhibit 3: Bonus arrangements

The directors receive a bonus based on consolidated profit attributable to the equity holders of the parent. The bonus target is determined using basic earnings per share.