Reference no: EM132801041

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

	2020	2019
Assets
Cash at bank	84200	100000
Accounts receivable	208000	172000

Inventory	200000	208000
Prepaid insurance	12000	20000
Interest receivable	400	600
Investments	80000	40000
Plant and equipment	800000	720000
Less: Accumulated depreciation	-200000	-180000
Total assets	1184600	1080600
Liabilities
Accounts payable	152000	128000
Provision for employee benefits	24000	16000
Other expenses payable	8000	12000
Equity
Share capital	800000	800000
Retained earnings	200600	124600
Total liabilities and equity	1184600	1080600

Hawke Ltd
Statement of Financial performance For the period ended 30 June 2020

	2020
Income
Sales revenue	$1,920,000
Interest revenue on investments	$4,000	$1,924,000
Less: Expenses
Cost of sales	$1,344,000
Employee expenses	$260,000
Insurance expense	$32,000
Loss on sale of equipment	$8,000
Depreciation expense - plant and equipment	$80,000
Other expenses	$44,000	$1,768,000
Profit for the year		$156,000

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:

	2019	2018
Profit before tax	$4 500 000	$3 600 000
Warranty expense	-	1500 000
Depreciation expense - machinery	60 000	60 000
Gain on sale of machinery for accounting	-	-
Warranty paid	750 000	-
Tax depreciation - machinery	90 000	90 000
Gain on sale of machinery for tax	-	-
Provision for warranty - carrying amount	750 000	1500 000
Provision for warranty - tax base	-	-
Machinery - carrying amount	180 000	240 000
Machinery - tax base	120 000	210 000

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:

	Debit (SFr)		Credit (SFr)
Cash	7000
Accounts Receivable	20000
Receivable from Popular Creek	5000
Inventory	25000
Plant and Equipment	100000
Accumulated Depreciation			10000
Accounts Payable			12000
Bonds Payable			50000
Common Stock			60000
Sales			150000
Cost of goods sold	70000
Depreciation Expense	10000
Operating Expense	30000
Dividend paid	15000
Total	SFr282,000		SFr 282,000

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:

January 1	1SFr=$.73
March 1	1SFr=$.74
November 1	1SFr=$.77
December 31	1SFr=$.80
20X1 Average	1SFr=$.75

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