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What is the Impact of Financial Accounting and  the Impact on Decision Maker Texas.

  1. Calculate the acquisition analysis?
  2. Prepare the consolidation worksheet entries for the preparation by Zack Ltd of its consolidated financial?

Prepare a statement of profit or loss and other comprehensive income for Black Hole Ltd for the year ended according to the requirements of AASB 101 .

Prepare a statement of financial position for Black Hole Ltd as to comply with AASB 101.

Prepare a statement of changes in equity for Black Hole Ltd for the year ended according to the requirements of AASB 101.

Acquisition Analysis as at 1 July, 2015

Net fair value of identifiable assets and liabilities of Zack Ltd.

Share Capital

      1,50,000

General Reserve

          34,000

Retained Earnings

          20,000

Land ((155000-150000)*(1-30%))

            3,500

Plant ((190000-175000)*(1-30%))

          10,500

Inventory ((40000-32000)*(1-30%))

            5,600

Provision for damages (8000*(1-30%))

          (5,600)

Recorded Goodwill

          (2,000)

Net Fair Value

      2,16,000

Consideration given

      2,27,500

Goodwill

          11,500

Goodwill already recorded

            2,000

Net goodwill to be recorded

            9,500

Consolidation Worksheet entries as on 30 June, 2016

1. Business Combination Valuation Entries

Land

Dr.

            5,000

To Deferred Tax Liability

Cr.

            1,500

To Business Combination Valuation Reserve

Cr.

            3,500

(Being Land fair valued)

Inventory

Dr.

            8,000

To Deferred Tax Liability

Cr.

            2,400

To Business Combination Valuation Reserve

Cr.

            5,600

(Being Inventory fair valued)

Accumulated Depreciation - Plant

Dr.

          25,000

To Plant

Cr.

          10,000

To Deferred Tax Liability

Cr.

            4,500

To Business Combination Valuation Reserve

Cr.

          10,500

(Being Plant fair valued)

Depreciation

Dr.

            5,000

To Accumulated depreciation

Cr.

            5,000

(Being depreciation recorded)

Deferred tax liability

Dr.

            1,500

To Income tax expense

Cr.

            1,500

(Being income tax expense on depreciation recorded)

Cost of sales

Dr.

            7,200

To Income tax expense

Cr.

            2,160

To Transfer from business combination valuation reserve

Cr.

            5,040

(Being 90% sale of inventory recorded)

Accumulated impairment loss

Dr.

          12,000

To Goodwill

Cr.

            2,500

To Business combination valuation reserve

Cr.

            9,500

(Being impairment of goodwill recorded)

Business combination valuation reserve

Dr.

            1,400

Deferred tax asset

Dr.

               600

To Provision for damages

Cr.

            2,000

(Being provision for damages recorded)

Transfer from Business combination valuation reserve

Dr.

            4,200

Income tax expense

Dr.

            1,800

To Gain on reversal of provision of damages

Cr.

            6,000

(Being reversal of excess provision of damags recorded earlier reversed)

2. Pre-Acquisition Entries

Share Capital

Dr.

      1,50,000

General Reserve

Dr.

          34,000

Retained Earnings (01.07.2015)

Dr.

          20,000

Business Combination Valuation Reserve

Dr.

          23,500

To Shares in Cathy Ltd.

Cr.

      2,27,500

(Being purchase of shares of William Ltd. Recorded)

Worksheet entries as on 30 June, 2016

1. Business Combination Valuation Entries

The entries on 30 June, 2016 are effected by:

  -  sale of inventory

  -  remeasurment of provision of damages

  -  transfer from general reserve to retained earnings

  -  call of 10c per shares on issued shares

Transfer from business combination valuation reserve

Dr.

            5,040

To Business Combination Valuation Reserve

Cr.

            5,040

(Being sale of inventory recorded)

Transfer from business combination valuation reserve

Dr.

            4,200

To Business Combination Valuation Reserve

Cr.

            4,200

(Being remeasurement of provision for damages recorded)

General Reserve

Dr.

          17,000

To Retained earnings

Cr.

          17,000

(Being amount transferred)

Share capital

Dr.

          10,000

To Shares in William Ltd.

Cr.

          10,000

(Being share money called by William Ltd.)

  1. Statement of Profit or Loss

Black Hole Ltd.

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended on June 30, 2018

 (Amount in $)

Particulars

 Notes

 For the year ended on  
June 30, 2018

Income from operations

Sale of product

                     8,25,000

Cost of sales

                   (4,50,000)

Gross Profit

                     3,75,000

Other income

               14

                          6,000

Administration expenses

                   (2,36,300)

Other expenses

                       (10,000)

Interest expense

                       (28,700)

Profit before tax

                     1,06,000

Less: Tax expense

                       (50,400)

Profit for the year

                        55,600

Other comprehensive income

Items that will not be classified to profit or loss:

Gain on Revaluation of assets

               15

                        55,000

Income tax expense on OCI

                       (16,500)

Other comprehensive income for the year (net of tax)

                        38,500

Total comprehensive income for the year

                        94,100

Black Hole Ltd.

Notes to the Financial Statements

For the year ended on June 30, 2018

Note - 1: Cash and cash equivalents

Particulars

 Amount

Cash at bank

               500

Total

               500

Note - 2: Trade and other receivables

Particulars

 Amount

Accounts receivable

         58,000

Allowance for doubtful debts

        (12,800)

Total

         45,200

Note - 3: Inventories

Particulars

 Amount

Inventories

         87,700

Total

         87,700

Note - 4: Other current assets

Particulars

 Amount

Prepaid Insurance

            7,000

Total

            7,000

Note - 5: Property, plant & equipment - Tangible assets

Particulars

 Amount

Land

 - cost

      2,20,000

Buildings

 - cost

      3,80,000

Plant and equipment

 - cost

   2,22,500

 - accumulated dep

     (42,500)

      1,80,000

Total

      7,80,000

Note - 6: Property, plant & equipment - Intangible assets

Particulars

 Amount

Goodwill

 - cost

   1,05,000

 - accumulated impairment loss

     (10,000)

         95,000

Total

         95,000

Note - 7: Borrowings

Particulars

 Amount

Current portion of mortgage loans

         50,000

Current portion of debentures

         80,000

Bank overdraft (at call)

         69,200

Total

      1,99,200

Note - 8: Trade and other payables

Particulars

 Amount

Accounts payable

         69,500

Total

         69,500

Note - 9: Current tax liability

Particulars

 Amount

Current tax liability

         52,100

Total

         52,100

Note - 10: Current provisions

Particulars

 Amount

Provision for employee benefits

Annual leave

         18,000

Total

         18,000

Note - 11: Other liabilities

Particulars

 Amount

Dividend payable

         10,000

Interest payable

            2,800

Total

         12,800

Note - 12: Non-current Borrowings

Particulars

 Amount

Mortagage Loans

   2,50,000

Less: Current portion of mortgage loans

     (50,000)

      2,00,000

7% debentures

       80,000

Less: Current portion of debentures

     (80,000)

                  -   

Total

      2,00,000

Note - 13: Non-current Provisions

Particulars

 Amount

Provision for employee benefits

Long-service leave

         16,200

Total

         16,200

Note - 14: Other Income

Particulars

 Amount

Interest revenue

            2,500

Dividends revenue

            3,500

Total

            6,000

Note - 15: Gain on Revaluation of assets

Particulars

 Amount

Gain on Revaluation of Land

         25,000

Gain on Revaluation of Building

         30,000

Total

         55,000

Black Hole Ltd.

STATEMENT OF FINANCIAL POSITION

For the year ended on June 30, 2018

 (Amount in $)

Particulars

Notes

 As at
June 30, 2018

Current assets

Cash and cash equivalents

1

                        500

Trade and other receivables

2

                   45,200

Inventories

3

                   87,700

Other current assets

4

                     7,000

Total current assets

                1,40,400

Non-current assets

Property, plant and equipment

-   Tangible assets

5

                7,80,000

-   Intangible assets

6

                   95,000

Deferred tax assets

                     9,800

Total non-current assets

                8,84,800

 Total assets - (a)

             10,25,200

Current liabilities

Borrowings

7

                1,99,200

Trade and other payables

8

                   69,500

Current tax liabilities

9

                   52,100

Provisions

10

                   18,000

Other liabilities

11

                   12,800

Total current liabilities

                3,51,600

Non-current liabilities

Borrowings

12

                2,00,000

Provisions

13

                   16,200

Deferred tax liability

                   18,400

Total non-current liabilities

                2,34,600

Total liabilities - (b)

                5,86,200

Net assets (a-b)

                4,39,000

Equity

Contributed equity

                2,00,000

Retained earnings

                1,29,000

Revaluation reserves

                   85,000

General reserve

                   25,000

Total equity

                4,39,000

Black Hole Ltd.

Statement of Changes in Equity

For the year ended on June 30, 2018

Particulars

Share Capital

 Retained Earnings

 Revaluation Surplus

 General Reserve

 Total

Balance as at 1 July, 2017

      1,00,000

 1,28,400

  46,500

            -   

  2,74,900

Profit for the year

    55,600

     55,600

Other comprehensive income

  38,500

     38,500

Total comprehensive income for the year

Shares issued during the year

      1,00,000

  1,00,000

Transfer to general reserve

   (25,000)

   25,000

              -   

Transactions with owners in their capacity as owners:

 -  dividends paid

   (20,000)

   (20,000)

 -  dividends provided for

   (10,000)

   (10,000)

Balance as at June 30, 2017

      2,00,000

 1,29,000

  85,000

   25,000

  4,39,000

References

Porter, G & Norton, C 2014, Financial Accounting: The Impact on Decision Maker, Texas: Cengage Learning

Shah, P 2013, Financial Accounting, London: Oxford University Press

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[Accessed 28 February 2024].

My Assignment Help. 'Impact Of Financial Accounting And AASB 101 Compliance For Black Hole Ltd Essay.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/acc705-corporate-accounting/financial-accounting-london.html> accessed 28 February 2024.

My Assignment Help. Impact Of Financial Accounting And AASB 101 Compliance For Black Hole Ltd Essay. [Internet]. My Assignment Help. 2021 [cited 28 February 2024]. Available from: https://myassignmenthelp.com/free-samples/acc705-corporate-accounting/financial-accounting-london.html.

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