Reference no: EM132574371
BFA301 Advanced Financial Accounting - University of Tasmania
Choose ONE company from the list provided on MyLO. Self-selection will be OPEN for 1 week. Only ONE student per company. After this time students will be allocated a company - no choice. If you submit on another company (not the one allocated on MyLO) you forfeit all marks assigned to this component.
ASX chosen company for comparison is "Insurance Australia Group Ltd" (IAG)
Google your company's website to download their latest Annual Report and financial statements. Scroll to find your company then click on the code to access all your company's information including the latest Annual Report (see on right hand side under ‘Resources').
Individual Case Study - Eno Advanced Manufacturing Ltd is a publicly listed company located in Melbourne. The company, founded in 2001, has undertaken a growth and expansion phase in recent years, particularly as a result of the advances in the energy sector. It is now recognised as a major Australian manufacturer and innovator in advanced manufacturing for the energy sector in Australia and New Zealand.
Eno Advanced Manufacturing Ltd has three entities that it controls:
• Island Engineering Ltd (Hobart, Tasmania) (70% of the share capital owned).
• Allan Design Pty Ltd (Paradise, Tasmania) (100% of the share capital owned).
• Cloud Press (NZ) Ltd (Christchurch, NZ) (100% of the share capital owned).
You have been appointed as group accountant for Eno Advanced Manufacturing Ltd. As such you are required to prepare consolidated financial statements for the Parent and its Subsidiaries for the year ended 30 June 2019.
In addition, the board have requested that you provide a brief report on the consolidation policies of an ASX 200 company to assist in their deliberations for Eno Advanced Manufacturing's 2020 vision & strategic planning for the future. Further details are provided at the end of this document.
General Information about Eno Advanced Manufacturing Ltd
o The presentation currency for the group is AUD.
o Eno Advanced Manufacturing Ltd treats Cloud Press (NZ) Ltd as a foreign entity according to AASB 121 and uses the current rate method to translate financial information.
o The functional currency for Cloud Press Ltd is NZD. You will first need to translate the New Zealand operations into the presentation currency of the group before applying consolidation principles.
o The management of Eno Advanced Manufacturing Ltd values any non-controlling interest at the proportionate share of identifiable net assets, using the partial goodwill method (AASB3).
o Eno Advanced Manufacturing Ltd recognises a receivable for dividends when they are declared by a subsidiary.
o All entities within the group use the perpetual inventory method.
o The group uses the direct method to present cash flows from operating activities.
o Round to the nearest dollar for ALL journal entries and calculations (NOT ‘000s or $m).
o Expenses need to be classified by function in the consolidated financial statements.
o For all financial statements, you may use either $ OR
000 (NOT $m) but all must be the same.
o The Australian income tax rate is 30%. New Zealand's company tax rate is 28%.
The working income statements and balance sheets of Eno Advanced Manufacturing Ltd, Island Engineering Ltd, Allan Design Pty Ltd and Cloud Press (NZ) Ltd for the year ended 30 June 2019 are provided to you, as group accountant, by the financial accountants of the respective entities. They are shown in the accompanying excel spreadsheet document (in the worksheet tab).
Additional Information relating to Island Engineering Ltd:
1. On 1 July 2017, Eno Advanced Manufacturing Ltd acquired 70 per cent of the share capital of Island Engineering Ltd for $1,200,000 cash. An extract of the Island Engineering Ltd Balance Sheet immediately before the acquisition is shown below:
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Island Engineering
Ltd
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Shareholders' equity
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Share capital
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1,100,000
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General reserve
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600,000
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Retained profits
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150,000
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2. On 1 July 2017, Island Engineering Ltd had recorded all its identifiable net assets at fair value, except for plant which cost $630 000 and had a carrying amount of $450 000. The fair value of the plant was assessed at $480 000. It was expected to have a further useful life of 5 years and the benefits are expected to be consumed evenly over this period. The plant had not been revalued in the books of Island Engineering Ltd prior to consolidation.
3. On 30 June 2018, 20% of Island Engineering Ltd's inventory was sold to Eno Advanced Manufacturing Ltd at a profit of $35 000. All of this inventory had been sold to external entities by 30 June 2019.
Additional Information relating to Allan Design Pty Ltd:
4. On 1 July 2016, Eno Advanced Manufacturing Ltd purchased 100 per cent of the shares of Allan Design Pty Ltd for $800 000 cash. An extract of Allan Design Ltd's balance sheet immediately before the acquisition is shown below:
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Allan Design Pty Ltd
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Shareholders' equity
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Share capital
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450,000
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General reserve
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100,000
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Retained profits
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230,000
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5. At the time of investment, the liabilities of Allan Design Pty Ltd were all recorded at fair value, except for a contingent liability relating to a warranty claim for an amount of $25 000 and a contingent liability was disclosed in the notes of Allan Design Pty Ltd. Six months after acquisition Eno Advanced Manufacturing Ltd intervened and negotiated a $10,000 payment to settle the case and Allan Design Pty Ltd recorded an expense for the $10,000 for the period ending 30 June 2017.
6. A comparison of the carrying amounts and fair values of its identifiable assets indicated no differences except for the following:
• an internally generated patent has a fair value of $20,000. The patent has an indefinite life and is therefore tested for impairment annually. It has not been impaired.
• furniture (cost $108 500), carrying value $90 000 and fair value $104 000, which is depreciated on a straight-line basis and has an expected further useful life of 7 years (from acquisition). It has no residual value.
7. On 20 May 2019 Allan Design Pty Ltd purchased inventory from Eno Advanced Manufacturing Ltd for $130 000. This inventory had previously cost Eno Advanced Manufacturing $100 000. Allan Design Pty Ltd had not paid Eno Advanced Manufacturing Ltd for these goods as at 30 June 2019, but at that date Allan Pty Ltd had already sold 60% to external parties. Allan Design Pty Ltd sold the remainder of the goods to an external party on the 9 July 2019 for a total profit of $20 000.
8. On 1 February 2017, Allan Design Pty Ltd entered into a management agreement with Eno Advanced Manufacturing Ltd. The agreement was for 5 years and specified a payment of $16 000
p.a. to be paid to Eno annually in advance on 1 February.
9. Allan Design Pty Ltd borrows $50 000 interest-only from Eno Advanced Manufacturing Ltd on 1 July 2018 with an interest rate of 6% p.a. The interest is to be paid annually in advance, starting on 1 July 2018.
10. On 1 January 2018, Allan Design Pty Ltd sold equipment costing $125 000 to Eno Advanced Manufacturing Ltd for $160 000. Allan Design Pty Ltd had not charged depreciation on the equipment as it had only purchased it from an external entity on 28 December 2017 at an end of year sale. Both companies depreciate equipment at 10% straight-line on cost.
Additional Information relating to Cloud Press (NZ) Ltd:
11. On 30 June 2019, Eno Advanced Manufacturing Ltd acquired all the issued shares of Cloud Press (NZ) Ltd, a specialist manufacturing company based in Christchurch, New Zealand, for AUD$420 000 cash. Cloud Press (NZ) Ltd's Income Statement and Balance Sheet (given in NZ dollars) immediately before the acquisition is shown in the attached excel worksheet.
12. Sales and other expenses were incurred evenly throughout the period ended 30 June 2019.
13. Relevant exchange rates are as follows: (these are fictitious for the purposes of this assignment) 1 July 2016 1 NZD = AUD$0.90
1 July 2017 1 NZD = AUD$0.92
1 July 2018 1 NZD = AUD$0.94
30 June 2019 1 NZD = AUD$0.95
Average rate for the year 2019 1 NZD = AUD$0.93 Ending inventory acquired 1 NZD = AUD$0.96
Required
You are to prepare a full set of Consolidated Financial Statements for the group for the year ended 30 June 2019 in accordance with applicable accounting standards with relevant notes.
In addition, you have been asked to provide a brief report on the subsidiaries and consolidation policies of the ASX 200 company assigned to you. The purpose is to compare and contrast the policies, decisions and financial statements with those of Eno Advanced Manufacturing to assist the board with their 2020 vision & strategic planning for the future.
Attachment:- Case Study Assignment.rar