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Assessment Task 1

Question no. 1

Assessment Task:

Bilby Co's income statement for the year ended 31 December 2015 and statements of financial position at 31 December 2014 and 31 December 2015 were as follows:

Bilby co's extract of income statement for the year ended 31 December 2015

 

$'000

$'000

Sales

 

720

Raw materials consumed

70

 

Staff costs

94

 

Depreciation

118

 

Loss on disposal of non-current asset

18

 

 

 

(300)

Gross Profit

 

420

Interest payable

 

(28)

Profit before tax

 

392

Taxation

 

(124)

Profit for the period

 

268

Bilby Co's extract of statements of financial position as at 31 December

 

20X2

$'000

$'000

    20X1

    $'000

$'000

Assets

 

 

 

 

Property, plant and equipment

 

 

 

 

Cost

1,596

 

1,560

 

Depreciation

318

 

224

 

 

 

1,278

 

1,336

Current assets

 

 

 

 

Inventory

24

 

20

 

Trade receivables

76

 

58

 

Bank

?

 

56

 

 

 

 

 

134

Total assets

 

?

 

1,470

Equity and liabilities

 

 

 

 

Capital and reserves

 

 

 

 

Share capital

360

 

340

 

Share premium

36

 

24

 

Retained earnings

686

 

490

 

 

 

1,082

 

854

Non-current liabilities

 

 

 

 

Non-current loans

 

200

 

500

Current liabilities

 

 

 

 

Trade payables

12

 

6

 

Taxation

102

 

86

 

Proposed dividend

30

 

24

 

 

 

144

 

116

 

 

?

 

1,470

During the year, the company paid $90,000 for a new piece of machinery.

Dividends paid and proposed for the year (before the reporting date) totaled $72,000.

Required:
Prepare a statement of cash flows for BILBY Co for the year ended 31 December 2015 in accordance with the requirements of AASB 107, using the indirect method.

Question no. 2

Marks Ltd was formed on 1 August. On 1 September the company issued a prospectus inviting applications for the issue of 1,500,000 $1 ordinary shares.

The terms of the issue were:

• 50 cents payable on application.

• 50 cents payable on allotment.

The prospectus allowed for any excess moneys on application to be applied towards any allotment moneys due. The issue was oversubscribed when applications closed on 30 September. On 15 October, the allotment of shares was made as follows:

Shares Applied for

Amount Received ($)

Shares Allotted

500,000

500,000

500,000

1,200,000

600,000

1,000,000

100,000

50,000

NIL

1,800,000

1,150,000

1,500,000

The balance of the allotment money due was received by 31 October.

Required:

(a) Complete a worksheet for the over-subscriptions.

Shares Applied for

Amount Received

 

Shares Allotted

 

Application

 

Allotment

 

Refunds

 

 

 

 

$

 

$

$

$

500,000

 

1,200,000

 

100,000

500,000

600,000

 

50,000

500,000

1,000,000

NIL

 

 

 

 

 

 

 

 

 

1,800,000

1,150,000

1,500,000

 

 

 

(b) Prepare general journal entries to record the share issue

Question no. 3

Prepare entries in general journal form to record the following unrelated transactions:

(a) Lindsay Ltd issued a prospectus inviting applications for 280,000 $100 8%debentures, payable in full on application. The issue was subscribed for in full by the closing date of 30 September.

(b) Interest payments on the following debentures. 150,000 $100 5% debentureswith interest paid semi-annually on 1 March and 1 September.

(c) Burnley Ltd redeemed $7,500,000 worth of 8% debentures on their maturitydate of 30 June.

(d) Sharks Ltd issued 225,000 $100 9% Debentures on 1 January. Maturity date is31 December. On 15 May the company purchased on the ASX 45,000 of thedebentures at a price of $106.

(e) Drucker Ltd issued 150,000 $100 7.5% Debentures on 1 April 2014 withinterest payable semi-annually. On 1 December 2014, the company purchasedon the ASX 55,000 of the debentures, at a price of $97. Record all transactionsincluding the interest payments on 30 September 2014 and 31 March 2015.

Question no. 4

Foreshore Ltd was incorporated on 1 July 2014, to acquire the business of Sharpe Trading as a going concern, the purchase consideration being settled by the issue of 102,000 $1.00 ordinary shares in Foreshore Ltd fully paid. The ordinary shares of Foreshore Ltd have a fair value of $1.00. The Statement of Financial Position of Sharpe Trading at the date of acquisition was as follows:

Sharpe Trading - Statement of Financial Position as at 1st July 2014:

 

 $

  $

 

    $

Accounts receivable

Less : Allow for Doubtful Debts

 

Inventory

Freehold Property

 

Plant & Machinery

Less: Depreciation

 

Patents

   8,000

      500

 

 

 

 

50,000

10,000

 

 

  7,500

 

10,500

50,000

 

40,000

15,000

123,000

Bank Overdraft

Accounts Payable

 

Mortgage on Freehold

Owner's Equity

 8,000

 5,000

 

20,000

90,000

 

 

 

 

123,000

Foreshore Ltd assesses the fair value of assets acquired to be:

Freehold Premises

$90,000

Plant and Machinery

$30,000

Patents

$  7,400

Inventory

$  8,600

Accounts Receivable

$  7,000

All liabilities of Sharpe Trading were accepted at book value by Foreshore Ltd.

Required:
Prepare General Journal entries in the books of Foreshore Ltd to record:

(I) The acquisition of the net assets of Sharpe Trading by Foreshore Ltd.
(II) The Payment of the purchase consideration to Sharpe Trading by

Please note: Journal entries must comply with the requirements of Accounting Standards.

Question no. 5

Prepare general journal entries to record the following unrelated transactions.

(i) The payment of a declared final ordinary share dividend of $20,000.
(ii) The transfer of $150,000 to dividend equalization reserve.
(iii) The revaluation of land upwards by $50,000 and a subsequent bonusissue of ordinary shares for $50,000..
(iv) The declaration of a final dividend of $0.05 per share on 1,000,000 $2.00ordinary shares paid to $1.50.

Question no. 6

Hamish Ltd 2015

Operating profit before tax

540,000

Included in the operating Profit:

Impairment loss goodwill

Depreciation Building

Profit on sale of Shares

Long Service Leave Expense

Depreciation Machinery

 

 

20,000

15,000

45,000

24,000

50,000

 

Additional Information:

- Impairment loss goodwill and depreciation of buildings are not tax deductible and represent permanent differences.
- Profit on sale of shares is not included as assessable income and is a permanent difference. The shares were purchased in 1980 (pre-CGT)
- Long service leave expense creates a temporary difference only allowable as a tax deduction in the year it is paid. An amount of $16,000 was paid in 2015 for LSL.
- Depreciation of machinery creates a temporary difference. Machinery cost $150,000 in July 2014 with 3 years useful life. Taxation depreciation is $75,000 in 2015.
- The company, tax rate is 30%.

Required:

(a) Reconcile accounting profit before tax to taxable income for 2015.
(b) Prepare general journal entries recording Current Tax Payable under the taxpayable method for 2015.

Assessment Task 2

Activity 1 -Explain in brief the following: 1) Statement of Comprehensive Income 2) Cash Flow statement.

Activity 2 - Explain in brief the following; 1) Statement of Changes in Equity 2) Statement of Financial Position.

Activity 3 -Describe each type of organisation and give an example: 1) Merchandising 2) Manufacturing 3) Serviced 4) Governmental 5) Nonprofit

Activity 4 - Listed below are typical accounts or titles that appear on financial statements. For each item, identify the financial statement(s) on which it appears.

Account

Financial statement(s) on which it appears

1) Wages expense

 

 

2) Cost of goods sold

 

 

3) Sales revenue

 

 

4) Merchandise inventory

 

 

5) Net income

 

 

6) Retained earnings

 

 

7) Contributed capital

 

 

8) Rent expense

 

 

   9) Cash

 

 

Account Financial statement(s) on which it appears
1) Wages expense

2) Cost of goods sold

3) Sales revenue

4) Merchandise inventory

5) Net income

6) Retained earnings

7) Contributed capital

8) Rent expense

9) Cash

Activity 5 - Other than business managers, who relies on financial reports to make decisions?

Activity 6 -Briefly describe (1) Goodwill (2) Intangible Assets.

Activity 7 - In relation to ‘Issue of Shares', briefly describe ‘Call' and ‘Unpaid Calls'.

Activity 8 -Prepare Journal entries to record:
a) The issue of $100,000 of 8% debentures at 10% premium. All cash is received.
b) The buying back of $100,000 of 8% debentures at 110 per 100.

Activity 9 - Describe (1) Taxable Temporary Differences (2) Deductible Temporary Differences

Activity 10 - Given the following information calculate the Carrying Amount, the Tax Base and the type of Temporary Difference as at financial year end.

i. Plant and Machinery
Balance as at 1 July was $300,000
Accounting depreciation to be charged = 10% per annum
Taxation depreciation to be charged = 15% per annum

ii.Accounts Receivable
The balance at 1 July was $250,000
Bad Debts written off during the year $10,000
Doubtful Debts expensed at the end of year $25,000

Activity 11 -Describe in brief:
i. Bonus issue
ii. Dividend
iii. Dividend Equalisation reserve:

Activity 12 - Describe in brief (a) Current Assets (b) Current Liabilities
Activity 13 - Describe briefly the Related Party Disclosures to be made as per AASB 124
Activity 14 - Describe Impairment of Assets, give examples of three assets that are excluded
from impairment testing as per AASB 136.

Activity 15 -The acquired goodwill value for Daffodil Ltd is $50,000. The Goodwill is tested for impairment and the appropriate carrying amounts were established at $45,000. Record the journal entry to account for any goodwill impairment.

Activity 16 -On 1 July 2010 Kawan Ltd acquired all the issued shares of Katumba Ltd for $200,000.
Extract of Katumba's statement of equity revealed the following:

Balances as at 1 July 2010                                Amount($)

            General reserve                                     10,000

            Share Capital                                                    80,000

            Retained Earnings                                             15,000

Record the journal entries to eliminate the investment in Katumba Ltd by Kawan Ltd.

Attachment:- Assessment Task.zip

Financial Accounting, Accounting

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