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

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)
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...

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