Business Finance
HI 5020 Holmes Institute Corporate Accounting Questions

HI 5020

Holmes Institute

HI

Question Description

Help me study for my Accounting class. I’m stuck and don’t understand.

Corporate accounting assignment needs to be answered. please deliver them with in the given time

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Assessment Task – Tutorial Questions Assignment Unit Code: HI5020 Unit Name: Corporate Accounting Assignment: Tutorial Questions Due: week 13, Wednesday 11.59 pm Weighting: 50 percent, 50 Marks Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit Unit Learning Outcomes Assessed: 1-6 Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. The tutorial questions are available in the Tutorial Folder, for each week, on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions and submit these answers in a single document. The questions to be answered are; Question 1 Week 7 (7 marks) Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%. Required: (a) Calculate the company’s taxable profit and hence its tax payable for 2017. (2 marks) (b) Determine the deferred tax liability and/or deferred tax asset that will result. (2 marks) (c) Prepare the necessary journal entries on 30 June 2017. (3 marks) Question 2 Week 8 (7 marks) The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired Fair value of liabilities acquired Total shareholders’ equity of the subsidiary company Retained earnings of the subsidiary company $2,640,000 $720,000 $800,000 $1,120,000 Required: (a) (b) (c) (d) Pass the necessary journal entry to record the acquisition (2 marks) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (2 marks) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (2 marks) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 (1 marks) Question 3 Week 4 (7 marks) Aqua Ltd issues a prospectus inviting the public to subscribe for 30 million ordinary shares of $2.00 each. The terms of the issue are that $1.00 is to be paid on application and the remaining $1.00 within one month of allotment. Applications are received for 36 million shares during July 2019. The directors allot 30 million shares on 15 August 2019. The shares were allotted on a first-come, first-serve basis. The directors refunded the application money for 6 million shares on 15 August 2019. The amounts payable on the allotment are due by 20 September 2019. By 20 September 2019, the holders of 5 million shares have failed to pay the amounts due on allotment. The directors forfeit the shares on 30 September 2019. The shares are resold on 15 October 2019 as fully paid. An amount of $1.90 per share is received. The remaining balance of forfeited shares were refunded on 20 October 2019. Required Provide the journal entries necessary to account for the above transactions and events. Question 4 Week 10 (7 marks) (a) Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation? (2 marks) (b) What is a non-controlling interest, and how should it be disclosed? (2 marks) (c) How are non-controlling interests affected by intra-group transactions? (2 marks) (d) What are the three steps we use to calculate total non-controlling interest? (1 mark) Question 5 Week 9 (11 marks) (a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales Cost of Sales Inventory Dr15 000 Cr 13 000 Cr 2 000 Deferred Tax Asset Dr Income Tax ExpenseCr 300 300 Required (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry. (2.5 marks) (ii) Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis. (1.5 marks) (b) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs $900000, accumulated depreciation $300000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent. Required: Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment. (7 marks) Question 6 Week 12 (11 marks) On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital Retained earnings Total shareholders’ equity $450 000 $300 000 750 000 Additional information • On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014. • For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000. • For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000. • Assume a tax rate of 30% is assumed Required Apply equity method of accounting to: (a) Calculate the amount of goodwill at the date of acquisition (3 marks) (b) Prepare the journal entries for the year ending 30 June 2015 (3 marks) (c) Prepare the journal entries for the year ending 30 June 2016 (5 marks) Submission Directions: The assignment will be submitted via Blackboard. Each student will be permitted only ONE submission to Blackboard. You need to ensure that the document submitted is the correct one. Academic Integrity Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Skills link on Blackboard. Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment. Table 1: Six categories of Academic Integrity breaches Plagiarism Reproducing the work of someone else without attribution. When a student submits their own work on multiple occasions this is known as self-plagiarism. Collusion Working with one or more other individuals to complete an assignment, in a way that is not authorised. Copying Reproducing and submitting the work of another student, with or without their knowledge. If a student fails to take reasonable precautions to prevent their own original work from being copied, this may also be considered an offence. Impersonation Falsely presenting oneself, or engaging someone else to present as oneself, in an in-person examination. Contract cheating Contracting a third party to complete an assessment task, generally in exchange for money or other manner of payment. Data fabrication and falsification Manipulating or inventing data with the intent of supporting false conclusions, including manipulating images. Source: INQAAHE, 2020 If any words or ideas used the assignment submission do not represent your original words or ideas, you must cite all relevant sources and make clear the extent to which such sources were used. In addition, written assignments that are similar or identical to those of another student is also a violation of the Holmes Institute’s Academic Conduct and Integrity policy. The consequence for a violation of this policy can incur a range of penalties varying from a 50% penalty through suspension of enrolment. The penalty would be dependent on the extent of academic misconduct and your history of academic misconduct issues. All assessments will be automatically submitted to SelfAssign to assess their originality. Further Information: For further information and additional learning resources please refer to your Discussion Board ...
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Assessment Task – Tutorial Questions Assignment
Unit Code: HI5020
Unit Name: Corporate Accounting
Assignment: Tutorial Questions
Due: week 13, Wednesday 11.59 pm
Weighting: 50 percent, 50 Marks
Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in
this unit

Question 1 Week 7

(7 marks)

Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is
expected to have a useful life of 5 years (straight-line basis) and no residual value. For
taxation purposes, the ATO allows the company to depreciate the asset over 4 years.
The profit before tax for the company for the year ending 30 June 2017 is $600,000. To
calculate this profit the company has deducted $60,000 entertainment expense, and $80,000
salary expense that has not yet been paid. Also the company has included $70,000 interest as
income that the company has not yet received. The tax rate is 30%.
Required:
(a) Calculate the company’s taxable profit and hence its tax payable for 2017. (2 marks)
Answer:
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑎𝑠 𝑝𝑒𝑟 𝑏𝑜𝑜𝑘𝑠 =

640,000
5

= 128,000
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑓𝑜𝑟 𝑡𝑎𝑥 𝑝𝑢𝑟𝑝𝑜𝑠𝑒 =

640,000
4

= 160,000
𝑬𝒙𝒄𝒆𝒔𝒔 𝒐𝒇 𝒕𝒂𝒙 𝒅𝒆𝒑𝒓𝒆𝒄𝒊𝒂𝒕𝒊𝒐𝒏 𝒐𝒗𝒆𝒓 𝒃𝒐𝒐𝒌 𝒅𝒆𝒑𝒓𝒆𝒄𝒊𝒂𝒕𝒊𝒐𝒏
= 160,000 − 128,000
= 32,000
𝑻𝒂𝒙𝒂𝒃𝒍𝒆 𝒑𝒓𝒐𝒇𝒊𝒕 = = 600,000 − 32,000
= $568,000
𝑻𝒂𝒙 𝑷𝒂𝒚𝒃𝒍𝒆 = 𝑻𝒂𝒙 𝒑𝒓𝒐𝒇𝒊𝒕 ∗ 𝑻𝒂𝒙 𝒓𝒂𝒕𝒆
= $568,000 ∗ 30%
= $170,400
(b) Determine the deferred tax liability and/or deferred tax asset that will result. (2 marks)

Particular
Profit
Tax rate
Tax

For tax purpose
600,000
30%
180,000

As per books
568,000
30%
170,400

Difference
600000-568000 = 32,000
30%
180000-170400 = 9,600

(c) Prepare the necessary journal entries on 30 June 2017. (3 marks)

Question 2 Week 8

(7 marks)

The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and
800,000 shares each valued at $1.50. The summary statement of the financial position of the
subsidiary company immediately following the acquisition is:
Fair value of assets acquired
Fair value of liabilities acquired

$2,640,000
$720,000 Total shareholders’ equity of the

Required:
(a) Pass the necessary journal entry to record the acquisition (2 marks)
Journal:
Accounts
Investment in Subsidiary
Equity Shares
Cash

Debit
2200000

Credit
1200000

1000000

(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (2
marks)
Goodwill = 2200000-1920000) =280,000

(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (2
marks)
Accounts
Assets Account
Goodwill

Debit
2640000
720000

Credit

Investment in Subsidiary

2200000

(d) Determine the amount of goodwill (or bargain purchase) arising out of the
acquisition if the purchase consideration paid was $1,000,000 cash and 400,000
shares each valued at $1.50 (1 marks)

Accounts
Cash
Shares
Purchase Consideration
Net Asset
Amount transfer to capital
reserve

Amount
1000000
600000 (400000 * 1.5)
1600000
1920000
320000

Question 3 Week 4

(7 marks)

Aqua Ltd issues a prospectus inviting the public to subscribe for 30 million ordinary shares of
$2.00 each. The terms of the issue are that $1.00 is to be paid on application and the
remaining $1.00 within one month of allotment.
Applications are received for 36 million shares during July 2019. The directors allot 30 million
shares on 15 August 2019. The shares were allotted on a first-come, first-serve basis. The
directors refunded the application money for 6 million shares on 15 August 2019. The
amounts payable on the allotment are due by 20 September 2019.
By 20 September 2019, the holders of 5 million shares have failed to pay the amounts due on
allotment. The directors forfeit the shares on 30 September 2019. The shares are resold on
15 October 2019 as fully paid. An amount of $1.90 per share is received. The remaining
balance of forfeited shares were refunded on 20 October 2019.

Required
Provide the journal entries necessary to account for the above transactions and events.
Date
Jul-19

Account titles
Debit
Bank A/c
$ 36,000,000 (1 * 36000000)
Share application A/c
(To record receipt of
ordinary share appli...

Awseen (2891)
UT Austin

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