ACC705 Accounting Corporate And Reporting

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23-07-2021

Question:

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

Calculate the acquisition analysis?
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 .

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.)

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

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ACC705 Accounting Corporate And Reporting

Question:

Answer:

Answer – 1

Answer – 2

Statement of Profit or Loss

Answer – b Statement of financial position

Answer – c (Statement of changes in equity)

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