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ACT503 Corporate Accounting

tag 0 Download 4 Pages / 917 Words tag 08-07-2021
  • Course Code: ACT503
  • University: Charles Darwin University

    MyAssignmentHelp.com is not sponsored or endorsed by this college or university

  • Country: Australia


Question 1:

MyOwnWork Ltd commences operations on 1 July 2018 and presents its first statement ofprofit and loss and other comprehensive income and first statement of financial position on30 June 2019. The statements are prepared before considering taxation. The following information is available:

Insurance was initially prepaid to the amount of $30 000. At year end, the unused component of the prepaid insurance amounted to $10 000.

  • Amounts received from sales, including those on credit terms, are taxed at the time of sale is made.
  • The plant is depreciated over five years for accounting purposes, but over four years for taxation purposes.
  • The tax rate is 30 per cent

Question 2:

MyNextProblem Ltd has acquired a new building called Next In Line Building for $2 000 000. It has incurred incidental costs of $30 000 in the acquisition process for legal fees, real estate agent’s fees and stamp duties. At the quarterly Board meeting, the management believes that these costs should be expensed because they have not increased the value of the building and, if the building was immediately resold, these amounts would not be recouped. In other words, the fair value of the building is considered to still be $2 000 000.

Required: Discuss how these costs should be accounted for in the books of MyNextProblem Ltd.

Question 3:

A recent annual report of the City of Darwin Council did not include library books on thestatement of financial position, notwithstanding the existence of a substantial library collection. The City of Darwin Council’s accounting policy for library books is to expense them at the time of acquisition. A note in the annual report reveals that in applying this policy the council considered the following factors:

  • As soon as the book is purchased its fair value is minimal compared with its cost.
  • The acquisition costs of individual books are below the council’s capitalisation policy.
  • The useful life of a book is variable and indeterminable, making depreciation difficult.

Critically evaluate the council’s accounting policy for its library collection. Suggest an alternative accounting policy or supplemental information that could be reported, if appropriate.

Question 4

ChallengeMe Pty Ltd is a manufacturer of tennis equipment and fashion wear. The statement of financial position as at 30 June 2020 and details of expenses and revenues for the year ending 30 June 2020 are as follows:

Provide the consolidated accounts of FinalHeadache Ltd and Solutions Ltd as at 30 June 2019 with the following:

  • Goodwill computation
  • Consolidation journal entries to:

o Revalue the assets of Solutions Ltd so that goodwill can subsequently be accounted for

o Eliminate the investment in Solutions Ltd and the pre-acquisition capital and reserves of Solutions Ltd

o Recognise impairment of goodwill

o Additional depreciation and decrease in Deferred tax liability

  • Consolidation worksheet for FinalHeadache Ltd and its controlled entity for the period ending 30 June 2019 showing columns of Eliminations and adjustments and Consolidated amounts
  • Consolidated statement of financial position of the FinalHeadache group
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