Advanced financial accounting assignment

Assignment Help Financial Accounting

Reference no: EM132496958

Scenario or Task:

Refer to the case study provided with this assignment. Answer any four questions from the case study provided.

Critically analyze the case study and support your answer with proper literature review and in-text referencing. Your findings (learning derived) and suggestions should be based on the case study and the literature review pursued by you.

Part 1: Differentiate between
(a) The equity method,
(b) The initial value method and
(c) The partial equity methods
with core assumptions and with supported illustrations (Make you own assumption to support your illustrations)

Part 2: Star & Anderson SAOG. acquired all of the common stock of Wilkinson SAOG. on January 1, 2018. As of that date, Wilkinson had the following trial balance:

Particulars	Debit	Credit
Sundry Creditors		30,000
Land & Buildings (10 year life)	70,000
Additional Paid-in -Capital		30,000
Sundry Debtors	25,000
Cash and bank balances	18,000
Short Term Investments	17,000
Equity share capital		150,000
Inventory	55,000
Plant and Equipment (4 year life)	120,000
Land	45,000
Long term borrowings ( Maturity 31/12/2020		90,000
Retained earnings (Opening Balance)		60,000
Supplies	10,000
Total	360,000	360,000

During 2018, Wilkinson SAOG reported net income of OMR 48,000 while paying dividends of OMR 6,000.
During 2019, Wilkinson SAOG reported net income of OMR 66,000 while paying dividends of OMR 18,000.
Assume that Star & Anderson SAOG. acquired the common stock of Wilkinson SAOG. for OMR 294,000 in cash. As of January 1, 2018, Wilkinson SAOG land had a fair value of OMR 51,000, its buildings were valued at OMR 94,000, and its equipment was appraised at OMR 108,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 5 years.
Star & Anderson SAOG decided to use the equity method for this investment.
Required: Prepare consolidation worksheet entries for December 31, 2018.

Part 3: With reference to IAS 21 the Effects of Changes in Foreign Exchange Rates compare and contrast between the two translation methods (a) temporal method exchange rate and (b) current rate method exchange rate with supported illustrations?

Part 4:
Ali Salem Co. began operating a subsidiary in a foreign country on January 1, 2015 by acquiring all of the common stock for OMR 50,000, the local currency. This subsidiary immediately borrowed OMR 180,000 on a five-year note with nine percent interest payable annually beginning on January 1, 2015.

A building was then purchased for OMR 200,000 on January 1, 2015. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a group of local doctors for OMR 8,000 per month.

Jan 1 2015 OMR 1=$2.40
Oct 1, 2015 OMR1=$2.22
Average for 2015 OMR=$2.28
Dec 31 2015 OMR1=$2.16
By year-end, payments totaling OMR 60,000 had been received. On October 1, OMR 6,000 were paid for a repair made on that date and it was the only transaction of this kind for the year.

A cash dividend of OMR 9,000 was transferred back to Ali Salem on December 31, 2015. The functional currency for the subsidiary was the (OMR), cash balance at 1 Jan 2015 was OMR 28,200. Currency exchange rates were as follows:

A. Prepare an income statement for this subsidiary in and then translate these amounts into U.S. dollars.
B. Prepare a statement of retained earnings for this subsidiary in and then translate the amounts into U.S. dollars.
C. Prepare a balance sheet for this subsidiary in and then translate the amounts into U.S. dollars.

Attachment:- Advanced Financial Accounting Assignment.rar

Reference no: EM132496958

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