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Assessment Task – Tutorial Questions Unit Code: HI5020 Unit Name: Corporate Accounting Assignment: Tutorial Questions 2 Due: 11:30pm 26th June 2020 Weighting: 25% Total Assignment Marks: 50 marks...

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Assessment Task – Tutorial Questions

Unit Code: HI5020

Unit Name: Corporate Accounting

Assignment: Tutorial Questions 2

Due: 11:30pm 26th June 2020

Weighting: 25%

Total Assignment Marks: 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. Examine conceptual issues and the sources of authority for the accounting requirements which
apply to reporting by Australian companies and corporate groups, including Company Law,
International and Australian Accounting Standards, and Stock Exchange requirements;
2. Critically analyse and interpret the financial statements and other disclosures produced by
Australian companies and corporate groups;
3. Apply Australian Accounting Standards and Corporate Legislation to the financial reporting
processes of a range of corporate forms including companies and joint ventures;
4. Evaluate financial accounting problems and select appropriate accounting strategies for the
accounting entity;
5. Prepare accounting reports for companies and other corporate forms that meet the compliance
equirements of the professional and legal bodies in Australia;
6. Make judgments about appropriate use of accounting standards and accurately apply appropriate
treatments and communicate these outcomes to a diverse range of stakeholders.

Description: Each week students were provided with three tutorial questions of varying degrees of
difficulty. These 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 for
weeks 6 to 10 inclusive and submit these answers in a single document.



The questions to be answered are:

Question 1
At 30 June 2019, Beta Ltd had the following defe
ed tax balances:

Defe
ed tax liability $18,000
Defe
ed tax asset 15,000

Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the
following items:

Depreciation expense – plant $7,000
Doubtful debts expense 3,000
Long-service leave expense 4,000

For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:

Tax depreciation – plant $8,000
Bad debts written off 2,000

Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate
of 30% applies.

Required:
a) Determine the taxable income and income tax payable for the year to 30 June XXXXXXXXXXMarks)
) Determine by what amount the balances of the defe
ed liability and defe
ed tax asset will
increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and
long-service leave. (3 marks)
c) Prepare the necessary journal entries to account for income tax assuming recognition criteria are
satisfied. (2.5 marks)
d) What are the balances of the defe
ed tax liability and defe
ed tax asset at 30 June 2020? (2
marks)




Question 2
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd
issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado
Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.

At this date the statement of financial position of Eldorado Ltd was as follows:

Ca
ying amount Fair value
Machinery $40,000 $67,000
Fixtures & fittings 60, XXXXXXXXXX,000
Vehicles 35, XXXXXXXXXX,000
Cu
ent assets 10, XXXXXXXXXX,000
Cu
ent liabilities (16, XXXXXXXXXX,000)
Total net assets $129,000
Share capital (80,000 shares at $1.00 per share) $80,000
General reserve 20,000
Retained earnings 29,000
Total equity $129,000

Required:
Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition. (10
marks)


Question 3
a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions
occu
ed between the two entities:

 On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously
costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other
entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.
 During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost
plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The
tax rate is 30%.

Required:
(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the
intragroup transfers of inventory. (4 marks)
(ii) Compute the amount of cost of goods sold to be reported in the consolidated income
statement for 2017 relating to the relevant intra-group sales. (2 marks)

) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its ca
ying value
in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). 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:
Prepare the necessary journal entries in 30 June 2017 to eliminate the intra-group transfer of
equipment. (4 marks)

Question 4
Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018 for a cost of $1,600,000. As
at the date of acquisition, all assets and liabilities of Expert Ltd were fairly valued except a land that
has a ca
ying value $150,000 less than the fair value. The recorded balance of equity of Expert Ltd as
at 1 July 2018 were as:

Share capital $800,000
Retained earnings $200,000
General Reserve $400,000
Total $1,400,000

Additional information:

 The management of Giant Ltd values non-controlling interest at the proportionate share of Expert
Ltd identifiable net assets.
 Expert Ltd has a profit after tax of $200,000 for the year ended 30 June 2019.
 During the financial year to 30 June 2019, Expert Ltd sold inventory to Giant Ltd for a price of
$120,000. The inventory costs Expert Ltd $60,000 to produce. 25 percent of the inventory are still
on the hand of Giant Ltd as at 30 June 2019.
 During the year Expert Ltd paid $60,000 in consultancy fees to Giant Ltd.
 On 1 July 2018, Expert Ltd sold an item of plant to Giant Ltd $80000. The equipment had a ca
ying
value of $60,000 (Cost $100,000, accumulated depreciation $40,000). At the date of sale, it was
expected that the equipment had a remaining life of 4 years and no residual value.
 The tax rate is 30 percent.

Required:
a) Based on the above information, calculate the non-controlling interest as at 30 June XXXXXXXXXX
marks)
) Prepare the necessary journal entries to recognise the non-controlling interest as at 30 June 2019.
(3.5 marks)



















Question 5

The Daddy Group has the following group structure:
Daddy Ltd
80% 80%
XXXXXXXXXX27%
XXXXXXXXXXSon 1 Ltd XXXXXXXXXXSon 2 Ltd XXXXXXXXXXSon 3 Ltd
70% XXXXXXXXXX55%
XXXXXXXXXX30 %
Son 4 Ltd XXXXXXXXXXSon 5 Ltd
10% 5% 45% 95%
XXXXXXXXXXSon 6 Ltd XXXXXXXXXXSon 7 Ltd
(a) Reproduce and complete the following controlling and non-controlling interest table. Show
your calculations. ( 7 marks)

(b) What percentage of the voting in Son 7 Ltd will be controlled by the Daddy Ltd?
(1.5 marks)

(c) What percentage of the dividend declared by Son 7 Ltd will be received by the Daddy Ltd?
Answered Same Day Jun 12, 2021 HI5020

Solution

Pallavi answered on Jun 17 2021
127 Votes
Question 1
    Particulars
    Amount in $
    Net profit before tax
    80000
    Add: Inadmissible Expense
     
    Depreciation expense – plant
    7000
    Doubtful debts expense
    3000
    Long-service leave expense
    4000
     
     
    Net Profit after addition
    94000
    Less: Admissible expense
     
    Tax depreciation – plant
    8000
    Bad debts written off
    2000
    Net Profit after adjustments
    84000
     
     
    Less: Tax @30%
    25200
     
     
    Net Profit after tax
    58800
     
    Amount in $
    Particulars
    As per books
    As per tax
    DTL
    DTA
    Depreciation expense – plant
    7000
    8000
     
    300
    Doubtful debts expense
    3000
    2000
    300
     
    Long-service leave expense
    4000
    0
    1200
     
    Total
    14000
    10000
    1500
    300
    As tax depreciation is more hence defe
ed tax asset would arise.
    Doubtful debts and long service leave expense has been charged more, hence defe
ed tax liability would arise.
    a) taxable Income is $84000 and income tax payable $25200
    b) The balances of the defe
ed tax liability would increase by $1500 and the balances of the defe
ed tax asset would increase by $ 300 for the year to 30 June 2020 because of depreciation, doubtful debts and long-service leave.
    c)
    
    
    
    Journal Entries in the books of Beta Ltd
    Date
    Particulars
    Amount $
    Amount $
    30.06.2020
    Profit & Loss A/c D
    1500
     
     
     To Defe
ed tax Liability
     
    1500
     
     
     
     
    30.06.2020
    Defe
ed tax Asset A/c D
    300
     
     
     To Profit & Loss A/c
     
    300
    d) The balances of the defe
ed tax liability and defe
ed tax asset at 30 June 2020 are
    Particulars
    Opening Balance
    Addition
    Closing Balance
    Defe
ed tax liability
    18000
    1500
    19500
    Defe
ed tax asset
    15000
    300
    15300
Question 2
    Journal Entries in the books of Quick Buck Ltd
    Date
    Particulars
    Amount $
    Amount $
    01.07.2019
    Business Purchase D
    192000
     
     
     To Eldorado Ltd
     
    192000
    (business of Eldorado taken over)
    01.07.2019
    Machinery D
    67000
     
     
    Fixtures & fittings D
    68000
     
     
    Vehicles D
    35000
     
     
    Cu
ent assets D
    12000
     
     
    Goodwill D
    28000
     
     
     To Cu
ent Liabilities
     
    18000
     
     To Business...
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