Reference no: EM131478791

Provide journal entries for additional information.

Additional Information -

(Unless otherwise indicated the following events/transactions are NOT reflected the unadjusted trial balance as at 30 June 2015. You will need to make appropriate adjustments where required and provide the necessary journal entries in general form.)

a. During the current financial year the company continued expanding their operations with the acquisition of another food processing business (Devon Delights Pty Ltd) from a competitor who was moving out of Tasmania. To help fund this acquisition, the company issued new shares. The public offer, which was completed on 31 January, 2017, was fully subscribed., raising $25rn from the 25 cent shares. The cost of the share issue was $100,000.

b. On 16 June 2017 the Company announced that it had completed the 100% acquisition of Devon Delights Pty Ltd. in exchange for all the assets and liabilities of Devon Delights, OrangeApples Ltd paid a cash consideration of $1 million and issued 1,200,000 ordinary shares to the vendors. At the date of issue the fair value of the shares were 0.25 cents. The cost of issuing these shares was $11,000. Legal costs associated with the acquisition amounted to $90,000.

The assets and liabilities of Devon Delights Pty Ltd at the date of acquisition were as follows:

	Carrying amount	Fair value
Assets	$	$
Accounts receivable	12,000	12,000
Inventory (Finishing goods)	64,000	68,000
Land	150,000	180,000
Building	565,000	600,000
Plant	320,000	232,000
Accumulated depreciation	(96,000)
Patents	180,000	200,000
Liabilities
Accounts payable	(16,000)	(16,000)
Debentures	(64,000)	(64,000)

The plant had an expected remaining useful life of 5 years. The 7% debentures are redeemable on 1 July 2019. The Devon Delights brand name had a fair value of $80,000, but under AA5B138 was not considered an asset in the books of Devon Delights Pty Ltd. Although the building was not being depreciated, since both the land and buildings were accounted for using the revaluation model, its remaining useful life was estimated to be 25 years.

c. As part of their strategic plan to increase future cash flows, OrangeApples Ltd decided to focus attention in the 2017 year to upgrading their property, plant, and equipment. The processing plant (PP3001), which was acquired on 1 July 2015, was expected to be operational for 7 years, during which time it was expected to run for 10 000 hours. During its first year of operation (2015-16), the plant was used for 3 000 hours, It was decided that in order to maintain this level of production for the full period, a major upgrade was required. On 1 July, 2016, the overhaul, which cost $234 600 was completed and paid for in cash. Management believes that this upgrade will add a further 2 000 hours of operating time to the plant's life. During the year ended 30 June 2017, the plant was in operation for 4 000 hours.

d. On 27 July, 2016, Truck 1 was traded-in for a new truck (a 2016 Fuso) which cost $E4 100 (excluding GST). A trade-in allowance of $12 500 was received and the balance was paid in cash. On-road costs of $1 500, which included registration and signage costs, were also paid in cash. OrangeApples Ltd estimated the new Fuso truck would have a useful life of 15 years and residual value of $10 000.

e. On 1 January 2017, OrangeApples Ltd sold their laboratory freeze dryer (asset number RD1002) for $29 MO cash. On the same day, the R&D department purchased a new industrial freeze dryer for $80 000 cash. At that time the new equipment was expected to have a useful life of 4 years with no residual value.

f. On 17 February, 2017, OrangeApples Ltd made a bonus issue of 40 000 shares at $0.25 per share, using $8 0-00 from the general reserve and $2 000 from the asset revaluation surplus created as a result of revaluing R&D's food safety & disease analysis system at fair value on 30 June 2016.

g. During March, a decision was made to exchange Truck 2 (fair value at exchange date: $12 640) for a car that could be used by the sales team. The used car, which was a 2011 Holden Cruze had a fair value of $11 995 at exchange date, 28 March 2017, The Holden Cruze originally cost $26 500 and had been depreciated in the previous owner's accounts by $15 850 to date of exchange. OrangeApples estimated the car's useful life and residual value at 4 years and $3200, respectively.

h. On 25 June 2016 the company was advised that one of its customers had gone bankrupt and that it should not expect to recover any of the outstanding debt„ which amounted to $5 500. No adjustment has been made for the bankruptcy event, as the company does not have any provision for doubtful debts.

i. At 30 June 2017, the R&D equipment was assessed as follows:

		Fair value
RD1001	R&D equipment 1 - Food safety & disease analysis system	$61 000
RD1003	R&D equipment 3 - Industrial freeze dryer	68 500

J. In addition, on 30 June 2017, the estimate of the useful life of the factory building was revised to 15 years. When it was originally acquired on 1 July 2011, it was estimated the useful life would be 20 years.

k. No balance date adjustment has yet been made for the prepaid insurance. Insurance is paid in advance on 30 November each year. The premium of $30,000 p.a. has remained unchanged for the past two years.

l. OrangeApples Ltd conducted an impairment test at 30 June 2017. Indicators suggested that an impairment loss was probable for the Devonport CGU, due to poor summer rainfall levels and as a consequence lower quantities and quality of the available produce. In addition the Bureau of Meteorology is forecasting an El Nino weather pattern will form during the remainder of 2017. OrangeApples calculated the recoverable amount of the Devonport CGU5 as $1.3rnillion. The carrying amounts of the assets and liabilities of the Devonport CGU are provided above at point (b). The land held by the Devonport CGU is considered to have a fair value less cost of disposal of $172 500.

m. The company tax rate is 30%. Except for revaluation, ignore tax effect accounting under AASB 112 Income Taxes, as this will be dealt with by your manager. You should however include any income tax expense relating to the SPLOCI. Due to expansion strategies the Company decided not to pay a dividend for the 2017 financial year.

Attachment:- Appendix.rar