HA2032 Unit Name: Corporate and Financial Accounting Assignment: Tutorial Questions Assignment (Individual)
This assignment is designed to assess your level of knowledge of the key topics covered in this unit.
Unit Learning Outcomes Assessed:
Demonstrate an understanding of the role of the Corporations Act, sources of authority, and accounting standards in the governance of companies and requirements for financial reporting;
• Explain the various methods available to companies in their resource expansion and the impact of each on the accounting records and financial statements;
• Critically analyse and interpret the financial statements and other disclosures produced by
Australian companies and corporate groups;
• Achieve a high level of competence in applying prescribed accounting techniques to the preparation of the consolidated financial statements of Australian companies and corporate groups;
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 from weeks 1 to 12 inclusive and submit these answers in a single document.
The questions to be answered are:
Question 1 (7 marks)
(Note this question is from the Week 2 Tutorial)
ABC Ltd was registered on 30 June 2019. The next day the directors issued a prospectus inviting applicants for 400,000 ordinary shares with an issue price of $2. The shares were payable in full on application. By 31 July 2019, the company had received 500,000 applications, together with the application monies. The directors allotted 400,000 shares on 1 August 2019 and returned the money for additional applications.
(a) Prepare general journal entries to record the above data. (3.5 marks) (b) Record the above data using ledgers. (3.5 marks)
Question 2 (7 marks)
(Note this question is from the Week 4 Tutorial)
(a) What are the most common reasons for a corporation to reduce its share capital? (2 marks)
(b) What are the allowable methods of reducing share capital? (2 marks)
(c) Discuss the differences between a share buyback and a capital reduction. (2 marks)
(d) What are the different types of debt instruments discussed in this unit? (1 mark)
Question 3 (7 marks)
(Note this question is from the Week 6 Tutorial)
(a) Explain the ways in which a company may expand by obtaining new assets. (1 mark)
(b) Jamuna River Ltd purchased a parcel of assets and liabilities comprising a business directly from Lyneham Pty Ltd. The parcel of assets, measured at net fair value, consisted of:
Balance of Accounts: ($)___
Accounts receivable 30,000
Accounts payable (48,000)
Question 3 (Cont’d) (7 marks)
Prepare journal entries to record the acquisition by Jamuna River Ltd, assuming that:
(i) The cost of acquisition was $600,000 cash. (3 marks)
(ii) The cost of acquisition was $432,000 cash. (3 marks)
Question 4 (7 marks)
(Note this question is from the Week 9 Tutorial)
On 1 July 2018, Sunflower Ltd acquired 90% of the share capital to gain control of Palm Ltd. The following intra-group transactions occurred during the year ending 30 June 2019.
(i) During the 2018/2019 period, Sunflower Ltd sold inventory to Palm Ltd for $1,600,000. Sunflower Ltd purchased this inventory at $1,000,000. By 30 June 2019, Palm Ltd had sold 70% of that inventory to a third party.
(ii) Palm Ltd declared a final dividend of $1,300, 000 from current year’s profits.
(iii) Palm Ltd paid Sunflower Ltd a fee for administrative services they provided of $40,000.
(iv) Palm Ltd has an intra-group loan with Sunflower Ltd. Sunflower Ltd provided a loan of $10,000,000. The loan charges 4% interest annually. One half of the interest for the current year remains unpaid as at 30 June 2019.
(v) Palm Ltd sold land to Sunflower Ltd for $560,000. The land was purchased by Palm Ltd at $300,000.
(a) Prepare the journal entries required to eliminate the intra-group transactions above. (5 marks)
(b) When are profits realised in relation to inventory transfers within the group? (1 mark)
(c) What are the rules for the elimination entry for intra-group transactions relating to dividends declared by the parent company and dividends declared by the subsidiary company? (1 mark)
Question 5 (11 marks)
(Note this question is from the Week 10 Tutorial)
On 1st July, 2018 Nile Ltd acquired 70% of the share capital of Amazon Ltd for $80,000,000. The equity of Amazon Ltd as at the acquisition date was:
Share Capital $ 52,000,000
General Reserve $ 20,000,000
Retained Earnings $ 10,000,000
All assets of Amazon Ltd were recorded at fair value on acquisition, except for one property which had a fair value which was $2,000,000 lower than its’ carrying amount. The cost of the property was $20,000,000 with accumulated depreciation of $12,000,000. Ignore Taxes.
(a) Complete the worksheet below using the NET method. (4.5 marks)
(b) Prepare the consolidation adjustments and eliminations entries and recognise the NCI in the pre-acquisition equity of Amazon Ltd, assuming that the NCI was measured at the proportionate share of the acquiree’s identifiable net assets. (6.5 marks)
Elimination of Investment in Amazon Ltd Amazon Ltd (S) $,000 Nile Ltd
(70% of Amazon) (P) $,000 30% NCI $,000
Fair Value of consideration transferred
Less: FV of identifiable assets acquired & liabilities assumed
Share capital on acquisition date 52,000
General reserve-acquisition date 20,000
Retained earnings-acquisition date 10,000
Fair value adjustment
Goodwill on acquisition
Question 6 (11 marks)
(Note this question is from the Week 12 Tutorial)
The following information relates to Moon Light Ltd.
(a) At the beginning of the accounting period the company has a salary payable liability of $200 and at the reporting date a salary payable of $360. During the year the salary expense shown in the income statement was $400.
(b) At the beginning of the accounting period the company has property, plant and equipment (PPE) with a carrying amount of $400. At the end of the accounting period, the carrying amount of the PPE is $1,200. During the year depreciation charged was $80, a revaluation surplus of $240 was recorded and PPE with a carrying amount of $60 was sold for $80.
(c) At the beginning of the accounting period the company has retained earnings of $2,000 and at the end of the accounting period the balance of the retained earnings is $2,800. The reported profit for the year was $1,800.
(d) Moon Light Ltd also provides you with the following information on its sales and collection of accounts receivable:
Sales for the year $16,000
Discounts provided to customers for early payment $400
Doubtful debts expense for the year $200
Opening balance of accounts receivable $3,600
Closing balance of accounts receivable $3,200
Opening balance of the allowance for doubtful debts $360
Closing balance of the allowance for doubtful debts $320
(a) Calculate the cash paid for salary. (2 marks)
(b) Calculate the cash paid to purchase new PPE. (3 marks)
(c) Calculate the dividend paid. (3 marks)
(d) Calculate the cash collected from customers. (3 marks)
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.
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 Safe – Assign to assess their originality.
For further information and additional learning resources please refer to your Discussion Board for the unit.