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程序代写案例-ACCT 3011
时间：2021-12-16
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ACCT 3011 Financial Accounting B MOCK Final
Exam (THIS MOCK EXAM IS NOT MARKED)
Started: Jun 14 at 23:41
Quiz Instructions
ACCT 3011 - Financial Accounting B
Final Examination
Semester 2, 2020
Exam writing time: 120 minutes + 10 minutes of reading time (a total of 130 minutes).
DIRECTIONS TO CANDIDATES
1. This is a closed book examination.
2. There are five sections, containing fourteen (14) questions. Please attempt all fourteen (14)
questions.
3. Please note that the questions are not of equal value. The total mark for this examination is
100. It is important that you allocate your time according to the weighting of each question.
4. Materials permitted; handheld calculators, and approved language dictionary (if applicable).
No other electronic devices permitted (phones, tablets, etc).
5. NOTE - FOR THIS EXAM, copy, paste and undo are enabled. To copy, press 'control c'. To
paste, press 'control v'. To undo, press 'control z'. In this exam, you will need to copy some
tables from the background information into the textbox provided for your response. You can
also use the undo function if, for example, you accidentally delete some of your work.
6. The questions and company names are all fictitious.
7. Questions 1 to 4 are sub-parts of a single question on non-controlling interest (NCI) and
equity accounting. The background information is repeated at the beginning of question 3
for your convenience. Obviously, you would want to do all 4 of these questions as a block.
8. Questions 6 to 7 are sub-parts of a single question on foreign currency translation.
Obviously, you would want to do all 2 of these questions as a block.
9. Questions 8 to 9 are sub-parts of a single question on segment reporting. Obviously, you
would want to do all 2 of these questions as a block.
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10. Questions 10 to 14 are sub-parts of a single question on hedge accounting. Obviously, you
would want to do all 5 of these questions as a block.
11. If your questions present in a narrow window, try clicking on the three bars at the top left
corner (right next to the University of Sydney logo) to close the panel on the left.
Integrity Contract
The 2020 Student Charter (https://www.sydney.edu.au/policies/showdoc.aspx?
recnum=PDOC2011/215&RendNum=0) lays out the core principles of the partnership
between the University and its students. Under the Charter, students must act honestly
and ethically in all academic matters and commit to a culture of academic
integrity. Among the University's core values is 'respect and integrity', which is to say
that our dealings must be honest, and that we must treat each other as equal
participants in the University community. In this situation, acting with respect and
integrity involves a commitment to our performance on this test being honest, ethical,
and a true reflection of our learning.
By clicking Take the Quiz to begin this test, you confirm this statement:
I will act in line with my responsibilities as outlined in the Student Charter. I will act
honestly and ethically in completing this assessment.
Questions 1 to 4: Non-Controlling Interest (NCI) and
Equity Accounting
Background information relevant to Questions 1 to 4.
Black Ltd paid $20,000 to acquire 40% of the issued shares of White Ltd at 1
July 2018 when the subsidiary’s equity consisted of issued capital of
$10,000 and retained earnings of $5,000. At the acquisition date, all assets
and liabilities of White Ltd were recorded at their fair values, except for the
following:
A piece of land with a carrying amount of $5,000 and a fair value of
$6,000.
An item of plant with a book value of $1,200 and a fair value of $2,000.
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Its cost to White was 1,600. The plant has a remaining useful life of 4
years.
A contingent liability (it satisfied AASB 3 to be recognized on
consolidation) with an estimated fair value of $500. This contingent
liability had not been recognized by White Ltd at the date of acquisition.
Additional information:
The land was sold on 15 June 2020.
The contingent liability was settled on 1 September 2020 for $300.
Intragroup Transaction #1: At 1 August 2018, Black sold inventory to
White at a 25% mark-up. The inventory had originally cost Black $3,000.
The inventory was all sold by 30 June 2019.
Intragroup Transaction #2: At 1 September 2018, White sold
inventory to Black at a 25% mark-up. The inventory had originally cost
White $2,000. By 30 June 2019, Black held 30% of the inventory
purchased from white. By 30 June 2020, Black still held 10% of the
inventory purchased from White. The inventory was all sold by 30 June
2021.
Intragroup Transaction #3: On 1 July 2018, Black Ltd sold an item of
equipment to White Ltd for $4,500. This asset had cost Black Ltd
$5,000 on 1 July 2015 and was being depreciated straight line over 10
years. Accumulated depreciation at 30 June 2018 was $1,500. The asset
is depreciated by White Ltd using a 50% reducing balance method on
cost.
Assume 30% tax rate and periodic inventory system
Below is the shareholder’s equity of White Ltd at 1 July 2018, 30 June 2019,
30 June 2020, and 30 June 2021.
15 ptsQuestion 1
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Assume tha Black decided that the 40% ownership allowed them to
obtain control of White Ltd. The Black Ltd group applied the
proportionate (partial) goodwill method.
Required:
Using the NCI memorandum account, calculate the total NCI in equity for the
Black Ltd group at 30 June 2019, 30 June 2020, and 30 June 2021.
Please copy and paste the NCI Memorandum template into the answer box
below. Feel free to add additional rows or delete rows you don't need.
Note - to do this, left-click your mouse in front of "N" for 'NCI Memorandum'
below, drag to and including the bottom right-hand cell. Then once it is all
highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
NCI Memorandum
White Ltd
$
NCI
$
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NCI Memorandum
White Ltd
$
NCI
$
2 ptsQuestion 2
Describe how intragroup transaction #2 impacts on the determination of
non-controlling interest.
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To save your time from scrolling all the way up, this is
a repeat of the background information relevant to
questions 1 to 4.
Black Ltd paid $20,000 to acquire 40% of the issued shares of White Ltd at 1
July 2018 when the subsidiary’s equity consisted of issued capital of
$10,000 and retained earnings of $5,000. At the acquisition date, all assets
and liabilities of White Ltd were recorded at their fair values, except for the
following:
A piece of land with a carrying amount of $5,000 and a fair value of
$6,000.
An item of plant with a book value of $1,200 and a fair value of $2,000.
Its cost to White was 1,600. The plant has a remaining useful life of 4
years.
A contingent liability (it satisfied AASB 3 to be recognized on
consolidation) with an estimated fair value of $500. This contingent
liability had not been recognized by White Ltd at the date of acquisition.
Additional information:
The land was sold on 15 June 2020.
The contingent liability was settled on 1 September 2020 for $300.
Intragroup Transaction #1: At 1 August 2018, Black sold inventory to
White at a 25% mark-up. The inventory had originally cost Black $3,000.
The inventory was all sold by 30 June 2019.
Intragroup Transaction #2: At 1 September 2018, White sold
inventory to Black at a 25% mark-up. The inventory had originally cost
White $2,000. By 30 June 2019, Black held 30% of the inventory
purchased from white. By 30 June 2020, Black still held 10% of the
inventory purchased from White. The inventory was all sold by 30 June
2021.
Intragroup Transaction #3: On 1 July 2018, Black Ltd sold an item of
$
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equipment to White Ltd for $4,500. This asset had cost Black Ltd
$5,000 on 1 July 2015 and was being depreciated straight line over 10
years. Accumulated depreciation at 30 June 2018 was $1,500. The asset
is depreciated by White Ltd using a 50% reducing balance method on
cost.
Assume 30% tax rate and periodic inventory system
Below is the shareholder’s equity of White Ltd at 1 July 2018, 30 June 2019,
30 June 2020, and 30 June 2021.
8 ptsQuestion 3
Assume Black Ltd subsequently reassesses this professional judgment
about their investment in White Ltd. In this reassessment, Black Ltd
decides that they do not have control of White Ltd at 30 June 2021.
Instead, Black Ltd determines that they only had significant influence over
White Ltd at 30 June 2021. Black Ltd decides that they must therefore
rework their financial reports, and must instead apply equity accounting to
their investment in White Ltd.
Required:
Calculate the carrying value of the ‘Investment in White Ltd’ account at 30
June 2021 using the equity method. Show all of your calculations. [Hint: we
are not asking for journal entries here. We simply want a calculation that is
appropriately narrated. For example, one line in your calculation would be
‘share of net profit of associate’, which would be supported with an
appropriate calculation]
For your convenience, we suggest that you copy and paste the table below
into the answer box to calculate the carrying value of the 'Investment in
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Russel Ltd' account at 30 June 2021.
Note - to do this, left-click your mouse in front of "I" for 'Item' below, drag to
and including the bottom right-hand cell. Then once it is all highlighted, type
'Control c' (to copy) and then type "Control v' in the answer box below (to
paste).
Item $
5 ptsQuestion 4
Edit View Insert Format Tools Table
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Again, assume Black Ltd subsequently reassesses this professional
judgment about their investment in White Ltd. In this reassessment, Black
Ltd decides that they do not have control of White Ltd at 30 June
2021. Instead, Black Ltd determines that they only had significant
influence over White Ltd at 30 June 2021. Black Ltd decides that they must
therefore rework their financial reports, and must instead apply equity
accounting to their investment in White Ltd.
Required:
In accordance with AASB 112, prepare a further journal entry to record the
temporary tax difference between the carrying value and tax base of the
‘Investment in White Ltd’ account, at 30 June 2021. Provide a short narration
that shows your calculations. [Hint: You will need to also determine the
carrying value of the investment in White Ltd at 30 June 2021 to calculate
the split between ‘income tax expense’ and ‘opening retained earnings’. To
simplify the question for you, we advise that the equity carrying value of the
Investment in White Ltd at 30 June 2021 was $24,154.5.]
For your convenience, you can copy and paste the table below into the
answer box to enter your tax effect journal entry.
Note - to do this, left-click your mouse in the first cell at the top left corner of
the table below, drag to and including the bottom right-hand cell. Then once
it is all highlighted, type 'Control c' (to copy) and then type "Control v' in the
answer box below (to paste).
ACCOUNT NAME DEBIT CREDIT
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20 ptsQuestion 5
Issues in Consolidation
A student in your tutorial argued:
‘Certainly I agree that the aggregation required in the consolidation process
results in the concealment of some information that would be of value to
some user groups. However, where reporting entities fully comply with the
requirements of AASB8, ‘Operating Segments’, these deficiencies are
effectively addressed’.
Required:
Comment critically on this argument, coming to your own balanced
perspective on the issues discussed. In your response you are expected to
make some reference to the arguments of Clarke, Dean and Egan (2014).
You are not however, required to specifically consider the alternatives to
group accounting that Clarke, Dean and Egan (2014) propose.
(Note that this question is from your week 12 tutorial)
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Questions 6 to 7: Foreign Currency Translation
Background information relevant to Questions 6 to 7.
On 1 July 2020, Black Ltd, an Australian company, acquired all of the issued
shares of White Ltd, a company incorporated in the US. The financial
statements of profit or loss and other comprehensive income and statement
of financial position of White Ltd at 30 June 2021 were as follows:
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Exchange rates based on equivalence to 1 US$ were as follows:
Additional information:
On 1 October 2020, White Ltd paid US$50 000 for a sonic scanner which
is to be depreciated evenly over a 10-year period. In addition, the land on
hand at the beginning of the year was sold for US$112 000 on the same
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date. The carrying amount of the land at the date of sale was US$100
000.
On 1 January 2021, White Ltd acquired a new plant for US$100 000.
This plant has a useful life of 5 years. White Ltd expects to consume the
benefits of this plant evenly over its life. On 1 March 2021, White Ltd
acquired $US150 000 worth of land.
White Ltd declared dividends of US$40 000 for the year ended 30 June
2021. A quarter of these were the interim dividends declared and paid on
1 January 2021 while the remaining were declared on 1 June 2021.
Sales, purchases, and expenses occurred evenly throughout the period.
The closing inventories on 30 June 2021 were acquired during the last 2
months of the financial year ended 30 June 2021.
12 ptsQuestion 6
Translate the following Statement of Comprehensive Income and Statement
of Financial Position into AUD using the current rate method.
Please copy and paste the translation template below into the answer box
and fill in the last two columns.
Note - to do this, left-click your mouse in front of the first cell at the top left
corner below, drag to and including the bottom right-hand cell. Then once it
is all highlighted, type 'Control c' (to copy) and then type "Control v' in the
answer box below (to paste).
30 June
2021
Exchange
Rate
AUD$
Sales revenue 362,400
Cost of goods sold
Opening inventory 20,000
Purchases 160,000
Closing inventory 37,000
143,000
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Gross profit 219,400
Gains 12,000
Depreciation expense (40,000)
Other expenses (66,950)
Profit before income
tax
124,450
Income tax expense (4,620)
Profit for the year 119,830
Retained earnings
1.7.2020
175,000
Dividend paid (10,000)
Dividend declared (30,000)
Retained earnings
30.6.2021
254,830
Share capital 300,000
General reserve 10,000
Foreign currency
translation reserve
Total Equity 564,830
Trade payables 138,970
Other current liabilities 88,000
Deferred tax liabilities 32,200
Provisions 76,000
Total Liabilities 335,170
Total Equity and
Liabilities
900,000
Cash at bank 357,830
Trade receivables 75,220
Inventories 37,000
Land 150,000
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Plant and machinery 350,000
Accumulated
depreciation - plant and
machinery
75,000
Deferred tax assets 4,950
Total Assets 900,000
8 ptsQuestion 7
To complete the above translation, you will also need to reconcile the
Foreign Currency Translation Reserve. We have started the reconciliation for
you. Complete the following reconciliation. Insert also the missing words and
numerical rates in the left-hand column.
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Please copy and paste the reconciliation template below into the answer
box.
Note - to do this, left-click your mouse in front of "N" for 'NCI Memorandum'
below, drag to and including the bottom right-hand cell. Then once it is all
highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
Note 1: Reconciliation of Foreign Currency Translation Reserve
USD$ AUD$ AUD$
Opening net assets 485,000
Net assets at __________________
rate of __________
Less Net assets at
__________________ rate of
__________
Changes to net assets
Profit for the year 119,830
Profit for the year at
__________________ rate of
__________
Less Profit for the year as determined
in the Statement of Comprehensive
Income
Less Dividend paid (10,000)
Dividend paid at __________________
rate of __________
Less Dividend paid at
__________________ rate of
__________
Less Dividend declared (30,000)
Dividend declared at
__________________ rate of
__________
Less Dividend declared at
__________________ rate of
__________
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Closing net assets 564,830
Foreign currency translation reserve
Questions 8 to 9: Segment Reporting
Background information relevant to Questions 8 to 9.
The Tri-State Holding Ltd group owns and operates a number of business
units in Australia. The internal accounting system reports the following
information to the CODM.
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Additional information:
There have been no additions to fixed assets during the current period.
Included in the assets of the sporting goods segment is $8 million of
office equipment purchased from the office equipment segment in the
last week of the financial year. The cost of this equipment to the office
segment was $3 million.
The corporate income tax rate is 30%.
The consolidated income tax expense for the period is $15.5 million.
6 ptsQuestion 8
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In accordance with AASB 8, determine the reportable segments of Tri-State
Ltd using just the:
- 10% revenue test and
- 10% results test and
You are not required to undertake the ‘10% asset test’ and the ‘75% test’.
Show all workings and provided an overall conclusion from these two tests
about which operating segments are reportable.
Please copy and paste the template below for the 10% revenue test. You
don't necessarily need to use all the rows.
Note - to do this, left-click your mouse in front of "O" for 'Operating division'
below, drag to and including the bottom right-hand cell. Then once it is all
highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
Operating division External
revenue
Internal
revenue
Total
revenue
>10% total
segment
revenue?
Please copy and paste the template below for the 10% results test. You don't
necessarily need to use all the rows.
Note - to do this, left-click your mouse in front of "O" for 'Operating division'
below, drag to and including the bottom right-hand cell. Then once it is all
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highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
Operating
division
Profit/loss SUM
PROFIT
SUM
LOSS
>10% of total
segment
results
denominator?
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4 ptsQuestion 9
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Discuss what the CODM approach means under AASB 8.
Questions 10 to 14: Hedge Accounting (taken from the
practice questions)
Background information relevant to Questions 10 to
14.
- 30 June 2007, Co A enters into preliminary negotiations with Help Desk
Singapore Limited (a Singaporean company) to provide 6 months of help
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desk services to Co A for the period 1 January 2008 to 30 June 2008.
- A contract is signed on 31 December 2007 (i.e. this is the date of
purchase) for SGD125,000. (SGD – Singapore Dollars). Payable is due
on 31 January 2008.
- The purchase will necessitate the recognition of a prepayment which
should be expensed on 1 January 2008.
- On 30 June 2007, Co A also enters FEC at a forward rate of 0.80$A for
SGD1 to receive SGD125,000 on 31 January 2008 to be delivered in
AUD (Australian dollars) $100,000 on 31 January 2008. Designated to
hedge the payable that will follow from the purchase of help desk
services.
- Assume the conditions are met to qualify for hedge accounting
- 30 September is Co A’s reporting date
Additional information
Brackets imply a liability, no brackets imply an asset
Date
Spot rate
A$ rate for SGD1
Fair value of forward
contract
30/6/07 0.769 0
30/9/07 0.760 (350)
31/12/07 0.787 (500)
31/1/08 0.794 (750)
Note: the fair value numbers are estimated. The negative values of the
forward contract indicate losses.
2 ptsQuestion 10
Prepare all journal entries at 30/6/07.
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6 ptsQuestion 11
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Prepare all journal entries at 30/9/07.
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2 ptsQuestion 12
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Prepare all journal entries at 31/12/07.
7 ptsQuestion 13
Prepare all journal entries at 30/9/07.
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3 ptsQuestion 14
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Explain how the journal entries would differ if the forward contract does not
qualify for hedge accounting.
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ACCT 3011 Financial Accounting B MOCK Final
Exam (THIS MOCK EXAM IS NOT MARKED)
Started: Jun 14 at 23:41
Quiz Instructions
ACCT 3011 - Financial Accounting B
Final Examination
Semester 2, 2020
Exam writing time: 120 minutes + 10 minutes of reading time (a total of 130 minutes).
DIRECTIONS TO CANDIDATES
1. This is a closed book examination.
2. There are five sections, containing fourteen (14) questions. Please attempt all fourteen (14)
questions.
3. Please note that the questions are not of equal value. The total mark for this examination is
100. It is important that you allocate your time according to the weighting of each question.
4. Materials permitted; handheld calculators, and approved language dictionary (if applicable).
No other electronic devices permitted (phones, tablets, etc).
5. NOTE - FOR THIS EXAM, copy, paste and undo are enabled. To copy, press 'control c'. To
paste, press 'control v'. To undo, press 'control z'. In this exam, you will need to copy some
tables from the background information into the textbox provided for your response. You can
also use the undo function if, for example, you accidentally delete some of your work.
6. The questions and company names are all fictitious.
7. Questions 1 to 4 are sub-parts of a single question on non-controlling interest (NCI) and
equity accounting. The background information is repeated at the beginning of question 3
for your convenience. Obviously, you would want to do all 4 of these questions as a block.
8. Questions 6 to 7 are sub-parts of a single question on foreign currency translation.
Obviously, you would want to do all 2 of these questions as a block.
9. Questions 8 to 9 are sub-parts of a single question on segment reporting. Obviously, you
would want to do all 2 of these questions as a block.
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10. Questions 10 to 14 are sub-parts of a single question on hedge accounting. Obviously, you
would want to do all 5 of these questions as a block.
11. If your questions present in a narrow window, try clicking on the three bars at the top left
corner (right next to the University of Sydney logo) to close the panel on the left.
Integrity Contract
The 2020 Student Charter (https://www.sydney.edu.au/policies/showdoc.aspx?
recnum=PDOC2011/215&RendNum=0) lays out the core principles of the partnership
between the University and its students. Under the Charter, students must act honestly
and ethically in all academic matters and commit to a culture of academic
integrity. Among the University's core values is 'respect and integrity', which is to say
that our dealings must be honest, and that we must treat each other as equal
participants in the University community. In this situation, acting with respect and
integrity involves a commitment to our performance on this test being honest, ethical,
and a true reflection of our learning.
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I will act in line with my responsibilities as outlined in the Student Charter. I will act
honestly and ethically in completing this assessment.
Questions 1 to 4: Non-Controlling Interest (NCI) and
Equity Accounting
Background information relevant to Questions 1 to 4.
Black Ltd paid $20,000 to acquire 40% of the issued shares of White Ltd at 1
July 2018 when the subsidiary’s equity consisted of issued capital of
$10,000 and retained earnings of $5,000. At the acquisition date, all assets
and liabilities of White Ltd were recorded at their fair values, except for the
following:
A piece of land with a carrying amount of $5,000 and a fair value of
$6,000.
An item of plant with a book value of $1,200 and a fair value of $2,000.
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Its cost to White was 1,600. The plant has a remaining useful life of 4
years.
A contingent liability (it satisfied AASB 3 to be recognized on
consolidation) with an estimated fair value of $500. This contingent
liability had not been recognized by White Ltd at the date of acquisition.
Additional information:
The land was sold on 15 June 2020.
The contingent liability was settled on 1 September 2020 for $300.
Intragroup Transaction #1: At 1 August 2018, Black sold inventory to
White at a 25% mark-up. The inventory had originally cost Black $3,000.
The inventory was all sold by 30 June 2019.
Intragroup Transaction #2: At 1 September 2018, White sold
inventory to Black at a 25% mark-up. The inventory had originally cost
White $2,000. By 30 June 2019, Black held 30% of the inventory
purchased from white. By 30 June 2020, Black still held 10% of the
inventory purchased from White. The inventory was all sold by 30 June
2021.
Intragroup Transaction #3: On 1 July 2018, Black Ltd sold an item of
equipment to White Ltd for $4,500. This asset had cost Black Ltd
$5,000 on 1 July 2015 and was being depreciated straight line over 10
years. Accumulated depreciation at 30 June 2018 was $1,500. The asset
is depreciated by White Ltd using a 50% reducing balance method on
cost.
Assume 30% tax rate and periodic inventory system
Below is the shareholder’s equity of White Ltd at 1 July 2018, 30 June 2019,
30 June 2020, and 30 June 2021.
15 ptsQuestion 1
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Assume tha Black decided that the 40% ownership allowed them to
obtain control of White Ltd. The Black Ltd group applied the
proportionate (partial) goodwill method.
Required:
Using the NCI memorandum account, calculate the total NCI in equity for the
Black Ltd group at 30 June 2019, 30 June 2020, and 30 June 2021.
Please copy and paste the NCI Memorandum template into the answer box
below. Feel free to add additional rows or delete rows you don't need.
Note - to do this, left-click your mouse in front of "N" for 'NCI Memorandum'
below, drag to and including the bottom right-hand cell. Then once it is all
highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
NCI Memorandum
White Ltd
$
NCI
$
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NCI Memorandum
White Ltd
$
NCI
$
2 ptsQuestion 2
Describe how intragroup transaction #2 impacts on the determination of
non-controlling interest.
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To save your time from scrolling all the way up, this is
a repeat of the background information relevant to
questions 1 to 4.
Black Ltd paid $20,000 to acquire 40% of the issued shares of White Ltd at 1
July 2018 when the subsidiary’s equity consisted of issued capital of
$10,000 and retained earnings of $5,000. At the acquisition date, all assets
and liabilities of White Ltd were recorded at their fair values, except for the
following:
A piece of land with a carrying amount of $5,000 and a fair value of
$6,000.
An item of plant with a book value of $1,200 and a fair value of $2,000.
Its cost to White was 1,600. The plant has a remaining useful life of 4
years.
A contingent liability (it satisfied AASB 3 to be recognized on
consolidation) with an estimated fair value of $500. This contingent
liability had not been recognized by White Ltd at the date of acquisition.
Additional information:
The land was sold on 15 June 2020.
The contingent liability was settled on 1 September 2020 for $300.
Intragroup Transaction #1: At 1 August 2018, Black sold inventory to
White at a 25% mark-up. The inventory had originally cost Black $3,000.
The inventory was all sold by 30 June 2019.
Intragroup Transaction #2: At 1 September 2018, White sold
inventory to Black at a 25% mark-up. The inventory had originally cost
White $2,000. By 30 June 2019, Black held 30% of the inventory
purchased from white. By 30 June 2020, Black still held 10% of the
inventory purchased from White. The inventory was all sold by 30 June
2021.
Intragroup Transaction #3: On 1 July 2018, Black Ltd sold an item of
$
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equipment to White Ltd for $4,500. This asset had cost Black Ltd
$5,000 on 1 July 2015 and was being depreciated straight line over 10
years. Accumulated depreciation at 30 June 2018 was $1,500. The asset
is depreciated by White Ltd using a 50% reducing balance method on
cost.
Assume 30% tax rate and periodic inventory system
Below is the shareholder’s equity of White Ltd at 1 July 2018, 30 June 2019,
30 June 2020, and 30 June 2021.
8 ptsQuestion 3
Assume Black Ltd subsequently reassesses this professional judgment
about their investment in White Ltd. In this reassessment, Black Ltd
decides that they do not have control of White Ltd at 30 June 2021.
Instead, Black Ltd determines that they only had significant influence over
White Ltd at 30 June 2021. Black Ltd decides that they must therefore
rework their financial reports, and must instead apply equity accounting to
their investment in White Ltd.
Required:
Calculate the carrying value of the ‘Investment in White Ltd’ account at 30
June 2021 using the equity method. Show all of your calculations. [Hint: we
are not asking for journal entries here. We simply want a calculation that is
appropriately narrated. For example, one line in your calculation would be
‘share of net profit of associate’, which would be supported with an
appropriate calculation]
For your convenience, we suggest that you copy and paste the table below
into the answer box to calculate the carrying value of the 'Investment in
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Russel Ltd' account at 30 June 2021.
Note - to do this, left-click your mouse in front of "I" for 'Item' below, drag to
and including the bottom right-hand cell. Then once it is all highlighted, type
'Control c' (to copy) and then type "Control v' in the answer box below (to
paste).
Item $
5 ptsQuestion 4
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Again, assume Black Ltd subsequently reassesses this professional
judgment about their investment in White Ltd. In this reassessment, Black
Ltd decides that they do not have control of White Ltd at 30 June
2021. Instead, Black Ltd determines that they only had significant
influence over White Ltd at 30 June 2021. Black Ltd decides that they must
therefore rework their financial reports, and must instead apply equity
accounting to their investment in White Ltd.
Required:
In accordance with AASB 112, prepare a further journal entry to record the
temporary tax difference between the carrying value and tax base of the
‘Investment in White Ltd’ account, at 30 June 2021. Provide a short narration
that shows your calculations. [Hint: You will need to also determine the
carrying value of the investment in White Ltd at 30 June 2021 to calculate
the split between ‘income tax expense’ and ‘opening retained earnings’. To
simplify the question for you, we advise that the equity carrying value of the
Investment in White Ltd at 30 June 2021 was $24,154.5.]
For your convenience, you can copy and paste the table below into the
answer box to enter your tax effect journal entry.
Note - to do this, left-click your mouse in the first cell at the top left corner of
the table below, drag to and including the bottom right-hand cell. Then once
it is all highlighted, type 'Control c' (to copy) and then type "Control v' in the
answer box below (to paste).
ACCOUNT NAME DEBIT CREDIT
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20 ptsQuestion 5
Issues in Consolidation
A student in your tutorial argued:
‘Certainly I agree that the aggregation required in the consolidation process
results in the concealment of some information that would be of value to
some user groups. However, where reporting entities fully comply with the
requirements of AASB8, ‘Operating Segments’, these deficiencies are
effectively addressed’.
Required:
Comment critically on this argument, coming to your own balanced
perspective on the issues discussed. In your response you are expected to
make some reference to the arguments of Clarke, Dean and Egan (2014).
You are not however, required to specifically consider the alternatives to
group accounting that Clarke, Dean and Egan (2014) propose.
(Note that this question is from your week 12 tutorial)
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Questions 6 to 7: Foreign Currency Translation
Background information relevant to Questions 6 to 7.
On 1 July 2020, Black Ltd, an Australian company, acquired all of the issued
shares of White Ltd, a company incorporated in the US. The financial
statements of profit or loss and other comprehensive income and statement
of financial position of White Ltd at 30 June 2021 were as follows:
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Exchange rates based on equivalence to 1 US$ were as follows:
Additional information:
On 1 October 2020, White Ltd paid US$50 000 for a sonic scanner which
is to be depreciated evenly over a 10-year period. In addition, the land on
hand at the beginning of the year was sold for US$112 000 on the same
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date. The carrying amount of the land at the date of sale was US$100
000.
On 1 January 2021, White Ltd acquired a new plant for US$100 000.
This plant has a useful life of 5 years. White Ltd expects to consume the
benefits of this plant evenly over its life. On 1 March 2021, White Ltd
acquired $US150 000 worth of land.
White Ltd declared dividends of US$40 000 for the year ended 30 June
2021. A quarter of these were the interim dividends declared and paid on
1 January 2021 while the remaining were declared on 1 June 2021.
Sales, purchases, and expenses occurred evenly throughout the period.
The closing inventories on 30 June 2021 were acquired during the last 2
months of the financial year ended 30 June 2021.
12 ptsQuestion 6
Translate the following Statement of Comprehensive Income and Statement
of Financial Position into AUD using the current rate method.
Please copy and paste the translation template below into the answer box
and fill in the last two columns.
Note - to do this, left-click your mouse in front of the first cell at the top left
corner below, drag to and including the bottom right-hand cell. Then once it
is all highlighted, type 'Control c' (to copy) and then type "Control v' in the
answer box below (to paste).
30 June
2021
Exchange
Rate
AUD$
Sales revenue 362,400
Cost of goods sold
Opening inventory 20,000
Purchases 160,000
Closing inventory 37,000
143,000
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Gross profit 219,400
Gains 12,000
Depreciation expense (40,000)
Other expenses (66,950)
Profit before income
tax
124,450
Income tax expense (4,620)
Profit for the year 119,830
Retained earnings
1.7.2020
175,000
Dividend paid (10,000)
Dividend declared (30,000)
Retained earnings
30.6.2021
254,830
Share capital 300,000
General reserve 10,000
Foreign currency
translation reserve
Total Equity 564,830
Trade payables 138,970
Other current liabilities 88,000
Deferred tax liabilities 32,200
Provisions 76,000
Total Liabilities 335,170
Total Equity and
Liabilities
900,000
Cash at bank 357,830
Trade receivables 75,220
Inventories 37,000
Land 150,000
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Plant and machinery 350,000
Accumulated
depreciation - plant and
machinery
75,000
Deferred tax assets 4,950
Total Assets 900,000
8 ptsQuestion 7
To complete the above translation, you will also need to reconcile the
Foreign Currency Translation Reserve. We have started the reconciliation for
you. Complete the following reconciliation. Insert also the missing words and
numerical rates in the left-hand column.
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Please copy and paste the reconciliation template below into the answer
box.
Note - to do this, left-click your mouse in front of "N" for 'NCI Memorandum'
below, drag to and including the bottom right-hand cell. Then once it is all
highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
Note 1: Reconciliation of Foreign Currency Translation Reserve
USD$ AUD$ AUD$
Opening net assets 485,000
Net assets at __________________
rate of __________
Less Net assets at
__________________ rate of
__________
Changes to net assets
Profit for the year 119,830
Profit for the year at
__________________ rate of
__________
Less Profit for the year as determined
in the Statement of Comprehensive
Income
Less Dividend paid (10,000)
Dividend paid at __________________
rate of __________
Less Dividend paid at
__________________ rate of
__________
Less Dividend declared (30,000)
Dividend declared at
__________________ rate of
__________
Less Dividend declared at
__________________ rate of
__________
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Closing net assets 564,830
Foreign currency translation reserve
Questions 8 to 9: Segment Reporting
Background information relevant to Questions 8 to 9.
The Tri-State Holding Ltd group owns and operates a number of business
units in Australia. The internal accounting system reports the following
information to the CODM.
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Additional information:
There have been no additions to fixed assets during the current period.
Included in the assets of the sporting goods segment is $8 million of
office equipment purchased from the office equipment segment in the
last week of the financial year. The cost of this equipment to the office
segment was $3 million.
The corporate income tax rate is 30%.
The consolidated income tax expense for the period is $15.5 million.
6 ptsQuestion 8
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In accordance with AASB 8, determine the reportable segments of Tri-State
Ltd using just the:
- 10% revenue test and
- 10% results test and
You are not required to undertake the ‘10% asset test’ and the ‘75% test’.
Show all workings and provided an overall conclusion from these two tests
about which operating segments are reportable.
Please copy and paste the template below for the 10% revenue test. You
don't necessarily need to use all the rows.
Note - to do this, left-click your mouse in front of "O" for 'Operating division'
below, drag to and including the bottom right-hand cell. Then once it is all
highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
Operating division External
revenue
Internal
revenue
Total
revenue
>10% total
segment
revenue?
Please copy and paste the template below for the 10% results test. You don't
necessarily need to use all the rows.
Note - to do this, left-click your mouse in front of "O" for 'Operating division'
below, drag to and including the bottom right-hand cell. Then once it is all
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highlighted, type 'Control c' (to copy) and then type "Control v' in the answer
box below (to paste).
Operating
division
Profit/loss SUM
PROFIT
SUM
LOSS
>10% of total
segment
results
denominator?
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4 ptsQuestion 9
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Discuss what the CODM approach means under AASB 8.
Questions 10 to 14: Hedge Accounting (taken from the
practice questions)
Background information relevant to Questions 10 to
14.
- 30 June 2007, Co A enters into preliminary negotiations with Help Desk
Singapore Limited (a Singaporean company) to provide 6 months of help
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desk services to Co A for the period 1 January 2008 to 30 June 2008.
- A contract is signed on 31 December 2007 (i.e. this is the date of
purchase) for SGD125,000. (SGD – Singapore Dollars). Payable is due
on 31 January 2008.
- The purchase will necessitate the recognition of a prepayment which
should be expensed on 1 January 2008.
- On 30 June 2007, Co A also enters FEC at a forward rate of 0.80$A for
SGD1 to receive SGD125,000 on 31 January 2008 to be delivered in
AUD (Australian dollars) $100,000 on 31 January 2008. Designated to
hedge the payable that will follow from the purchase of help desk
services.
- Assume the conditions are met to qualify for hedge accounting
- 30 September is Co A’s reporting date
Additional information
Brackets imply a liability, no brackets imply an asset
Date
Spot rate
A$ rate for SGD1
Fair value of forward
contract
30/6/07 0.769 0
30/9/07 0.760 (350)
31/12/07 0.787 (500)
31/1/08 0.794 (750)
Note: the fair value numbers are estimated. The negative values of the
forward contract indicate losses.
2 ptsQuestion 10
Prepare all journal entries at 30/6/07.
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6 ptsQuestion 11
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Prepare all journal entries at 30/9/07.
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2 ptsQuestion 12
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Prepare all journal entries at 31/12/07.
7 ptsQuestion 13
Prepare all journal entries at 30/9/07.
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3 ptsQuestion 14
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Explain how the journal entries would differ if the forward contract does not
qualify for hedge accounting.
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