Advanced Financial Accounting essay on Revaluation of Money.

Describe about the Advanced Financial Accounting for Revaluation of Money.

1a.

Date	Particulars	Amount	Amount
	Revaluation of Machinery
07-01-15	Impairment Loss A/c Dr.	100,000
	Accumulated Depreciation A/c. Dr.	100,000
	To, Machinery A/c		200,000
30/06/2016	Depreciation A/c Dr.	50,000
	To, Accumulated Depreciation A/c		50,000

	Income Statement A/c Dr.	150,000
	To, Depreciation A/c		50,000
	To, Impairment Loss A/c		100,000
	Impairment Loss A/c Dr.	100,000
	To, Accumulated surplus A/c		100,000

In accordance with the paragraph 15 of AASB 116, the actual asset value could be evaluated with the help of machinery evaluation. In addition, paragraph 29 of AASB 116 states that the organisation needs to present the cost model used to value the asset. Furthermore, the paragraphs 73-79 of AASB 116 deal with the change in depreciation, which needs to be presented in the annual report (Aasb.gov.au, 2016).

1b.

	Adjustment for Unrecorded Expenses:
Date	Particulars	Amount	Amount
07-05-16	Outstanding Repairs A/c Dr.	17500
	Deferred Tax Asset A/c Dr.	7500
	To, Bank A/c		25000
30/06/2016	Retained Earnings A/c Dr.	17500
	To, Outstanding Repairs A/c		17500
30/06/2016	Income Tax Payable A/c Dr.	7500
	To, Deferred Tax Assets A/c		7500

The above journal entries are passed to comply with the paragraph 7 of AASB 116 to provide accurate figures in the annual report of the organisation. Additionally, the paragraphs 67-72 of AASB 116 represent the treatment related to outstanding repairs to be included while preparing the financial statements (Aasb.gov.au, 2016).

1c.

In this scenario, Rainyday could not pass journal entries for share devaluation, since the investment on Bobsmith iss yet to be sold. Henceforth, the organisation has not suffered from any loss, which could be recorded in the form of journal entries or adjustments (AASB, 2016). As per the AASB standard, share sale is primarily taken into account under capital gain or loss, in which adjustments could be made after conduction of the share sale.

1d.

	Bad Debt
Date	Particulars	Amount	Amount
	Provision for Doubtful Debts A/c Dr.	900000
	To, Bad Debt A/c.		900000
	Bad Debt A/c Dr.	900000
	To, Income Statement A/c.		900000

The above journal entries and adjustments are developed to comply with the paragraph 3 of AASB 137 (Aasb.gov.au, 2016). Thus, with the help of these entries and adjustments, the financial statements could be prepared accordingly.

In the Books of Sunny Ltd.
Journal Entries
Date	Particulars	Amount	Amount
31/01/2016	Bank A/c Dr.	18930000
	To, Share Application A/c		18900000
	To, Share Option A/c		30000
	(Applications for shares)
	Share Application A/c Dr	18900000
	Share Option A/c Dr.	30000
	To, Share Capital A/c		18012000
	To, Share Allotment A/c		900000
	To, Profit on Option A/c		18000
	(Allotment from shares and profit from option)
02-12-16	Share Allotment A/c Dr.	6000000
	To, Share Capital A/c		6000000
	(Allotment of 6,000,000 shares)
03-12-16	Bank A/c Dr.	5080000
	Calls-in-Arrear A/c Dr.	20000
	To, Share Allotment A/c		5100000
	(Amount received at allotment)
20/03/2016	Share Capital A/c Dr.	80000
	To, Calls-in-Arrear A/c		20000
	To, Share Forfeiture A/c		60000
	(Forfeiting of shares)
04-05-16	Bank A/c Dr.	74000
	Share Forfeiture A/c Dr.	60000
	To, Share Capital A/c		80000
	To, Profit on Forfeiture A/c		54000
	(Share reissue)
	Cost of Re-Issue A/c Dr.	3600
	To, Bank A/c		3600
	(Expenses of reissue paid)

3a.

Calculation for Current Tax Liabilities
	Particulars	Amount	Amount
	Accounting Profit Before Tax		190750
Add:	Depreciation on Equipment:
	Taxable Amount	60000
	Accounting Amount	-40000	20000
	Depreciation on Motor Cycle:
	Taxable Amount	12000
	Accounting Amount	-15000	-3000
	Government Grant		-30000
	Entertainment Expenses		4500
	Prepaid Insurance		-3000
	Rent Payable		6000
	Taxable Profit Before Tax		185250
	Difference between Book Value & Taxable Value		5500
	Deferred Tax Liability		1650
	Current Tax		57225

Deferred Tax Worksheet
Particulars	Book Value	Taxable Value	Difference	Deferred Tax (Assets/Liability)
Equipment	400000	400000
Less : Depreciation	40000	60000
Net Value	360000	340000	20000	6000
Motor Cycle	60000	60000
Less : Depreciation	15000	12000
Net Value	45000	48000	-3000	-900

3b.

In the Books of Blaze Ltd.
Journal Entries
Date	Particulars	Amount	Amount
30/06/2016	Profit & Loss A/c Dr.	58875
	To, Provision for Income Tax A/c		57225
	To, Deferred Tax Liability A/c		1650
	(Charged tax liability)
	Deferred Tax Assets Dr.	6000
	To, Revenue Reserve A/c		6000
	(Increased reserves by adding Tax assets)
	Revenue Reserve A/c Dr.	900
	To, Deferred Tax Liability A/c		900
	(Decreasing the reserves by deducting tax liability)

In the Books of Sunshine Ltd.
Journal Entries
Date	Particulars	Amount	Amount
07-01-13	Equipment A/c Dr.	800000
	To, Bank A/c		800000
	(Equipment bought)
30/06/2014	Depreciation A/c Dr.	152000
	To, Equipment A/c		152000
	(Depreciation charged on equipment)
	Income Statement A/c Dr.	152000
	To, Depreciation A/c.		152000
	(Depreciation charge adjusted with the income statement)
07-01-14	Equipment A/c Dr.	82000
	To, Revaluation Surplus A/c		82000
	(Inclusion of valuation hike in revaluation surplus)
30/06/2015	Depreciation A/c Dr.	136000
	To, Equipment A/c		136000
	(De[recitation charged on equipment)
	Income Statement A/c Dr.	136000
	To, Depreciation A/c		136000
	(Depreciation charge adjusted with the income statement)
	Revaluation Surplus A/c Dr.	82000
	To, Income Statement A/c		82000
	(Inclusion of valuation hike in revaluation surplus)
30/06/2016	Depreciation A/c Dr.	136000
	To, Equipment A/c		136000
	(Depreciation charged on Equipment)
	Income Statement A/c Dr.	136000
	To, Depreciation A/c.		136000
	(Depreciation charge adjusted with the income statement)
06-01-16	Loss on Revaluation A/c Dr.	48000
	To, Equipment A/c		48000
	(Subtraction of valuation fall in revaluation surplus)
30/06/2016	Depreciation A/c Dr.	18000
	To, Equipment A/c		18000
	(Depreciation charged on Equipment)
	Bank A/c. Dr.	390000
	To, Equipment A/c		382000
	To, Profit on Sales A/c		8000
	(Inclusion of profit from bank revaluation)

5a.

Calculating the Impairment Loss
	Cinema	DVD Sales
Assets:	$ Amount	$ Amount
Inventory	4,000	85,000
Furniture and fittings	250,000	35,000
Less: accumulated depreciation	-45,000	-10,000
Electrical equipment	165,000	25,000
Less: accumulated depreciation	-55,000	-15,000
Land and buildings	650,000	185,000
Less: Accumulated depreciation (buildings)	-25,000	-6,000
Licence	25,000	-
Goodwill	45000	15000
Carrying amount of cash generating unit	1,014,000	314,000
Fair Value, less, Cost of Sales	780000	318000
Value in Use	900000	290000
Recoverable Amount (Higher of Fair Value & Value in Use)	900000	318000
Impairment Loss	114,000	0
Impairment Loss Exchange Goodwill	69,000	0

Apportionment of Impairment Loss, Exchange Goodwill
Particulars	Amount	Percentage	Amount
Inventory	4,000	0.41%	284.8
Furniture and fittings	205,000	21.16%	14597.5
Electrical equipment	110,000	11.35%	7832.8
Land and buildings	625,000	64.50%	44504.6
Licence	25,000	2.58%	1780.2
Total	969,000	1	69,000

5b.

In the Books of Movies Ltd.
Journal Entries
Date	Particulars	Amount	Amount
30/06/2016	Impairment Loss A/c Dr.	69,000
	To, Goodwill A/c		45000
	To, Inventory A/c		285
	To, Furniture & Fitting A/c		14598
	To, Electrical Equipment A/c		7833
	To, Land & Building A/c		44505
	To, License A/c		1780
	(Charged impaired loss from assets)
	Impairment Loss A/c Dr.	4000
	Accumulated Depreciation A/c Dr.	6000
	To, Land & Building A/c		10000
	(Deducting the impairment loss and accumulated depreciation)

The entries pertaining to impairment loss have been framed in accordance with the paragraph 5 of AASB 136 (Amiraslani, Iatridis & Pope, 2013). Thus, the exact amount of impairment loss has been represented to gain an overview of the financial disclosures of the organisation.

References:

AASB, C. A. S. (2016). Consolidated Financial Statements.

Aasb.gov.au. (2016). Retrieved 27 August 2016, from https://www.aasb.gov.au/News.aspx.

Amiraslani, H., Iatridis, G.E. & Pope, P.F. (2013). Accounting for asset impairment: a test for IFRS compliance across Europe. Centre for Financial Analysis and Reporting Research (CeFARR).

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