Reference no: EM132576190

HA2032 Corporate and Financial Accounting - Holmes Institute

Learning Outcome 1: Demonstrate an understanding of the role of the Corporations Act, sources of authority, and accounting standards in the governance of companies and requirements for financial reporting;

Learning Outcome 2: Explain the various methods available to companies in their resource expansion and the impact of each on the accounting records and financial statements;

Learning Outcome 3: Critically analyse and interpret the financial statements and other disclosures produced by Australian companies and corporate groups;

Learning Outcome 4: Achieve a high level of competence in applying prescribed accounting techniques to the preparation of the consolidated financial statements of Australian companies and corporate groups;

Learning Outcome 5: Appreciate the role of each of the types of external administration and how each method is applied.

Question 1:

Redcliff Ltd acquired the entire share capital of ABC Ltd for $18,000 cash on 31 December 20X4. The balance sheets of the two companies as at that date were as follows:

Redcliff Ltd				ABC Ltd
	$	$		$
Current assets		240,000		28,800
Non-current assets:
Investment in ABC at cost	18,000
Other asset	96,000	114,000		9,600
Total assets		354,000		38,400
Current liabilities		198,000		20,400
Net assets		156,000		18,000
Paid-up capital		120,000		12,000
Retained profits		36,000		6,000
Owners' equity		156,000		18,000

Required:
Prepare the consolidated balance sheet of Redcliff Ltd and its subsidiary as at 31 December 20X4.

Question 2

Based on the information provided below, prepare appropriate consolidation journal entries for possible account adjustment or elimination.

Reference appropriate accounting standards to explain the approach which needs to be taken for the adjusting journals.

Parent paid $110 000 on 30 June for all the shares of Subsidiary, whose equity at that date is share capital $72 000 and retained profits $28 000. However, the assets of Subsidiary are not all recorded at their fair value. Assume that all companies adopt the revaluation model under

AASB 116. The discrepancies are:

	Carrying Amount	Fair Value
	$	$
Investments	26 000	54 000
Accounts receivable	14 000	8 000
PPE	26 000	12 000
Inventory	70 000	76 000
Franchise	Nil	10 000

Question 3

A substitution elimination recognises consolidation goodwill of $60 000 at control date 1 January 20X2. Goodwill impairment recognised in the following year is below:

Goodwill Impairment:
20X2	20X3	20X4
5,000	22,000	2,000

Required:

a) Record the eliminations for goodwill and its impairment at 31 December 20X2, 20X3 and 20X4 into general journal.
b) Record the eliminations of the goodwill and its impairment, if any, that are necessary 10 years after the control date, assuming no further impairment has been recognized.

Question 4

Non-controlling interest (NCI) is the ownership interest of those shareholders who hold shares in a subsidiary that are not owned by the immediate parent or the other group members.

Discuss the implication of reporting NCI as a separate item of owner's equity.

Question 5

Compare and contrast the two (2) different consolidation processes of serial and single consolidation techniques when indirect ownership interests exist.

Attachment:- Corporate and Financial Accounting.rar