Reference no: EM132801052
HI5020 Corporate Accounting - Holmes Institute
Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. The tutorial questions are available in the Tutorial Folder, for each week, on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for weeks 1 to 11 inclusive and submit these answers in a single document.
The questions to be answered are;
Question 1
In accounting for the acquisition of assets, the assets acquired are to be recorded at the ‘cost of acquisition'. How would you determine the ‘costs of acquisition' of an asset?
Question 2
How are changes in accounting policies accounted for and disclosed?
Question 3
Following information relate to Hawke Ltd for the financial year ended 2020
Hawke Ltd Statement of Financial position
As at 30 June 2020
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2020
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2019
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Assets
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|
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Cash at bank
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84200
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100000
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|
Accounts receivable
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208000
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172000
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Inventory
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200000
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208000
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|
Prepaid insurance
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12000
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20000
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Interest receivable
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400
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600
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Investments
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80000
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40000
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|
Plant and equipment
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800000
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720000
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Less: Accumulated depreciation
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-200000
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-180000
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Total assets
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1184600
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1080600
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Liabilities
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|
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Accounts payable
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152000
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128000
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Provision for employee benefits
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24000
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16000
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Other expenses payable
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8000
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12000
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Equity
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|
|
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Share capital
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800000
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800000
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Retained earnings
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200600
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124600
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Total liabilities and equity
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1184600
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1080600
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Hawke Ltd
Statement of Financial performance For the period ended 30 June 2020
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2020
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Income
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|
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Sales revenue
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$1,920,000
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|
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Interest revenue on investments
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$4,000
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$1,924,000
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Less: Expenses
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|
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Cost of sales
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$1,344,000
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|
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Employee expenses
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$260,000
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Insurance expense
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$32,000
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Loss on sale of equipment
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$8,000
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Depreciation expense - plant and equipment
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$80,000
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Other expenses
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$44,000
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$1,768,000
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Profit for the year
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$156,000
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Additional information
The loss on sale of equipment relates to an item that originally cost $80 000 and had a carrying amount of $20000 when sold.
Required: Calculate the following:
(a) Cash collected from customers
(b) Cash paid to suppliers
(c) Cash paid to employees for wages and salary
(d) Cash spent on plant and equipment
(e) Proceeds from sale of equipment
(f) Cash paid for insurance
Question 4
On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star for the two years to 2019 are as follows:
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2019
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2018
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Profit before tax
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$4 500 000
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$3 600 000
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Warranty expense
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-
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1500 000
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Depreciation expense - machinery
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60 000
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60 000
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Gain on sale of machinery for accounting
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-
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-
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Warranty paid
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750 000
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-
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|
Tax depreciation - machinery
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90 000
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90 000
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|
Gain on sale of machinery for tax
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-
|
-
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Provision for warranty - carrying amount
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750 000
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1500 000
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Provision for warranty - tax base
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-
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-
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Machinery - carrying amount
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180 000
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240 000
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Machinery - tax base
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120 000
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210 000
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The company tax rate is 30%.
Required
(a) Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019
(b) Prepare the required tax journal entries for each year.
Question 5
On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows:
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Debit (SFr)
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Credit (SFr)
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Cash
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7000
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|
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Accounts Receivable
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20000
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|
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Receivable from Popular Creek
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5000
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Inventory
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25000
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|
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Plant and Equipment
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100000
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|
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Accumulated Depreciation
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|
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10000
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Accounts Payable
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12000
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Bonds Payable
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50000
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Common Stock
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60000
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Sales
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|
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150000
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Cost of goods sold
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70000
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|
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Depreciation Expense
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10000
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Operating Expense
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30000
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|
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Dividend paid
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15000
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Total
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SFr282,000
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SFr 282,000
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Additional Information
1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to RoadTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:
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January 1
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1SFr=$.73
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March 1
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1SFr=$.74
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November 1
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1SFr=$.77
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December 31
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1SFr=$.80
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20X1 Average
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1SFr=$.75
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6. The Swiss franc is the functional currency.
Required
(a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars.
(b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?
Question 6
(a) Zealandia ltd is the parent company holding 90 percent interest in the Oceania ltd. For each of the following independent cases, provide adjusting entries necessary to eliminate the effect of intragroup transaction at 30 June 2020:
(i) During the period Oceania Ltd sold inventory to Zealandia Ltd at a price of $240000. The cost of the inventory to Oceania ltd was $168000. Ninety percent (90%) of the inventory has been sold by Zealandia Ltd to outside third parties by the end of the period. (2 marks)
(ii) During the period, Oceania borrowed $1500000 from Zealandia Ltd which is still unpaid by the end of the period. During the period Oceania Ltd has paid $30000 interest to Zealandia Ltd for the borrowing.
(iii) At the end of the year, Oceania Ltd declared and paid a dividend amounting to $180000. Zealandia Ltd has declared and paid a dividend of $150000.
(iv) One year ago, at 1 July 2019, Oceania Ltd sold equipment to Zealandia Ltd for a price of $810000. At the time of the sale, the carrying value of the equipment in the Oceania Ltd.'s account was $450000 and the accumulated depreciation was $450000. Zealandia is depreciating the equipment over a further 5 years period. The expected salvage value is zero. Assume a corporate tax rate of 30 percent.
(v) During the period Zealandia has paid a consultancy fee to Oceania Ltd of $75000. Zealandia has provided a management service to Oceania Ltd for $80000 which ahs not been paid as yet by Oceania Ltd.
(b) When are profits realised in relation to inventory transfers within the group?
Attachment:- Corporate Accounting.rar