1 AYB340T1.171 cont/… QUESTION 1 Part A On 1 July 2015, Adelaide Ltd, an Australian company, acquired shares in Mong Kok Ltd, a company based in Hong Kong. At this date, the equity of Mong Kok Ltd was: HK$ Share capital 200 000 General reserve 100 000 Retained earnings 300 000 At 30 June 2016 and 2017 respectively, the retained earnings balances of Mong Kok Ltd were HK$400 000 and HK$450 000 respectively. All transactions occurred evenly throughout these years. The internal financial statements of the two companies at 30 June 2018 were as follows: Statements of Profit or Loss and Other Comprehensive Income Adelaide Ltd A$ Mong Kok Ltd HK$ Sales 700 000 595 000 Cost of sales 300 000 400 000 400 000 195 000 Expenses 210 200 100 000 189 800 95 000 Dividend revenue 12 000 — Profit before income tax 201 800 95 000 Tax expense 51 800 20 000 Profit 150 000 75 000 Retained earnings as at 1/7/17 750 000 450 000 900 000 525 000 Dividend paid 100 000 25 000 Retained earnings as at 30/6/18 800 000 500 000 Question 1 continued overleaf Practice exam AYB340 cont/… 2 Question 1 continued Statements of Financial Position Adelaide Ltd A$ Mong Kok Ltd HK$ Current assets 311 520 250 000 Shares in Cantonese Ltd 288 480 — Property, plant and equipment (net) 700 000 500 000 Patents and trademarks 100 000 150 000 Total assets 1 400 000 900 000 Liabilities 100 000 100 000 Net assets 1 300 000 800 000 Equity: Share capital 500 000 200 000 General reserve — 100 000 Retained earnings 800 000 500 000 Total equity 1 300 000 800 000 Additional information 1. The dividend paid by Mong Kok Ltd was paid on 1 May 2018. 2. Some relevant exchange rates are: 1 July 2015 HK$1 = $A0.80 Average 2015–16 0.82 1 July 2016 0.85 Average 2016–17 0.88 1 July 2017 0.90 Average 2017–18 0.85 1 May 2018 0.80 30 June 2018 0.78 Required Translate the financial statements of Mong Kok Ltd as at 30 June 2018 into the presentation currency of Australian dollars, assuming that the functional currency is the Hong Kong dollar. (10 marks) (Total: 10 marks) End of Part A Question 1 continued overleaf Practice exam AYB340 cont/… 3 Question 1 continued Part B What is an operating segment? Briefly explain how we determine an entity’s operating segments. (5 marks) What is a reporting segment? Briefly explain how we determine an entity’s reporting segments. (5 marks) (Total: 10 marks) End of Part B (Total marks for Question 1: 20 marks) Practice exam AYB340 cont/… 4 QUESTION 2 On 1 July 2013, Cymbal Ltd purchased 40% of the shares of Gong Ltd for $63,200 and signed a joint venture agreement with the two other shareholders in Gong Ltd. At that date, equity of Gong Ltd consisted of: Share capital $125,000 Retained earnings $ 11,000 At 1 July 2013, the identifiable assets and liabilities of Gong Ltd were recorded at amounts equal to their fair values. Information about income and changes in equity for both companies for the year ended 30 June 2016 was as shown below. Cymbal Ltd Gong Ltd Profit before tax $26,000 $23,500 Income tax expense (10,600) (5,400) Profit 15,400 18,100 Retained earnings (1/7/15) 18,000 16,000 33,400 34,100 Dividend paid (5,000) (4,000) Dividend declared (10,000) (5,000) (15,000) (9,000) Retained earnings (30/6/16) $18,400 $25,100 Additional information 1. Cymbal Ltd recognised the final dividend revenue from Gong Ltd before receipt of cash. Gong Ltd declared a $6,000 dividend in June 2015, this being paid in August 2015. 2. On 31 December 2015, Gong Ltd sold Cymbal Ltd a motor vehicle for $12,000. The vehicle had originally cost Gong Ltd $18,000 and was written down to $9,000 for both tax and accounting purposes at time of sale to Cymbal Ltd. Both companies depreciated motor vehicles at the rate of 20% p.a. on cost. 3. The beginning inventory of Gong Ltd included goods at $4,000 bought from Cymbal Ltd; their cost to Cymbal Ltd was $3,200. 4. The ending inventory of Cymbal Ltd included goods purchased from Gong Ltd at a profit before tax of $1,600. 5. The tax rate is 30%. Question 2 continued overleaf Practice exam AYB340 cont/… 5 Question 2 continued Required i) Prepare the journal entries in the records of Cymbal Ltd to account for the investment in Gong Ltd in accordance with AASB 128 for the year ended 30 June 2016 assuming Cymbal Ltd does not prepare consolidated financial statements. (10 marks) ii) Prepare the consolidated worksheet entries in relation to the investment in Gong Ltd, assuming Cymbal Ltd does prepare consolidated financial statements at 30 June 2016. (10 marks) (Total marks for Question 1: 20 marks) Practice exam AYB340 cont/… 6 QUESTION 3 The trial balance of Locust Ltd on 1 September 2018, the date on which the court ordered that the company be wound up, is presented below. LOCUST LTD Trial Balance as at 1 September 2018 Debit Credit Bank (secured over land and buildings) $114 000 Accounts payable 91 000 Accrued expenses 2 000 Unsecured notes 150 000 Debentures (secured by a circulating security interest over the company’s assets) 200 000 Share capital: 7% preference issued at $1 50 000 ‘A’ ordinary issued at $1 200 000 ‘B’ ordinary issued at $1 40 000 ‘C’ ordinary issued at $1 20 000 Allowance for doubtful debts 1 000 Accumulated depreciation: Vehicles 17 000 Plant and equipment 40 000 Cash $ 100 Accounts receivable 97 000 Inventory 146 400 Shares in Bee Pty Ltd 17 500 Vehicles 29 000 Plant and equipment 181 000 Land and buildings (net) 250 000 Goodwill 24 000 Retained earnings 180 000 _____ _ $925 000 $925 000 Additional information a) Share capital consisted of: - 50 000 7% preference shares fully paid - 200 000 ‘A’ ordinary shares fully paid - 100 000 ‘B’ ordinary shares paid to 40c - 100 000 ‘C’ ordinary shares paid to 20c The constitution provided that preference shareholders were preferential as to return of capital in a winding up, and ‘C’ ordinary shareholders were deferred as to return of capital until all other classes of shares had been paid in full. Question 3 continued overleaf Practice exam AYB340 cont/… 7 Question 3 continued b) Proceeds from sale of assets (the bank agreed to allow the liquidator to sell the land and buildings): Accounts receivable $ 71 000 Inventory 100 000 Shares in Bee Pty Ltd 10 000 Vehicles 10 000 Plant and equipment 116 000 Land and buildings 240 000 c) Calls on shares: The liquidator called up the uncalled balance on ‘B’ ordinary shares and ‘C’ ordinary shares. Holders of 10 000 ‘C’ ordinary shares and 10 000 ‘B’ ordinary shares failed to pay the call and these shares were subsequently forfeited. d) Payments made by liquidator after negotiation with creditors: Liquidation expenses $ 2 100 Liquidator’s remuneration 4 000 Bank overdraft and interest 116 000 Accounts payable 89 000 Accrued expenses 2 200 Unsecured notes and interest 154 500 Debentures and interest 206 000 Required i) Prepare journal entries to wind up the affairs of Locust Ltd. (12 marks) ii) Prepare the Liquidation account, the Cash account and the Shareholders’ Distribution account, clearly showing the share of cash for each class of shares. (8 marks) (Total marks for Question 3: 20 marks) Practice exam AYB340 cont/… 8 QUESTION 4 Question 4 continued overleaf partial goodwill method 2 400 Practice exam AYB340 cont/… 9 Question 4 continued Required: On the attachment to this examination paper: i. Prepare the consolidation worksheet general journal entries necessary for the preparation of the consolidated financial statements for the year ended 30 June 2012. (Note: The worksheet and consolidated financial statements do not have to be prepared). (36 marks) ii. What differences would arise if the full goodwill method was used? (4 marks) (Total marks for Question 4: 40 marks) END OF PAPER i Practice exam AYB340 AYB340 COMPANY ACCOUNTING Name:___________________________ PRACTICE EXAM Student number: _________________ FINAL EXAM: ATTACHMENT QUESTION 4 [Consolidation] ANSWER TO QUESTION 4 (a) - consolidation worksheet general journal entries Acquisition analysis _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Business combination valuation entries _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Question 4 attachment continued overleaf Practice exam AYB340 ii Question 4 attachment continued Pre-acquisition entry _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ NCI entries _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Question 4 attachment continued overleaf Practice exam AYB340 iii Question 4 attachment continued _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Question 4 attachment continued overleaf Practice exam AYB340 iv Question 4 attachment continued Intragroup Transactions _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ANSWER TO QUESTION 4 (b) – _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Question 4 attachment continued overleaf Practice exam AYB340 v Question 4 attachment continued ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ (Total marks for Question 4: 40 marks) END OF 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学霸联盟