Faculty of Higher Education
Assignment Cover Sheet
Unit Code H15020
Unit Name CORPORATE ACCOUNTING
Assignment Number TUTORIAL QUESTIONS 2
Due Date 26 -05-2020
Declaration
Complete this and attach as a front cover sheet to your Blackboard submission
We certify that:
1. This assignment is our own work. We have acknowledged and disclosed any assistance received in its
preparation and cited all sources from which data, ideas, words (whether quoted directly or
paraphrased) were taken.
2. This assignment was prepared specifically for this unit only.
3. The reference list is truthful and accurate and in Harvard referencing style.
Student name/s & ID LECTURER NO OF QUES SUBMITTED
1,2,3,4,5
Table of Contents
Answer to Question 2 (Week 7).................................................................................................2
Part A.....................................................................................................................................2
Part B......................................................................................................................................2
Answer to Question1 (Week 8)..................................................................................................4
Part A.....................................................................................................................................4
Answer to Question3 (Week 9)..................................................................................................6
Part A.....................................................................................................................................6
Part B......................................................................................................................................7
Part C......................................................................................................................................7
Answer to Question2 (Week 10)................................................................................................8
Part A.....................................................................................................................................8
Part B......................................................................................................................................9
Answer to Question 3 (Week 11).............................................................................................10
Part (A).................................................................................................................................11
Part B....................................................................................................................................12
Reference..................................................................................................................................13
ANS TO QUES 1 :
CURRENT TAX WORKSHEET
FOR YEAR ENDED 30 JUNE 2020
PROFIT BEFORE $ 80,000
INCOME TAX
ADD
DOUBTFUL DEBT $ 3000
EXPENSE
DEPRECIATION $ 7000
EXPENSES PLANT
LONG SERVICE $ 4000 $ 14,000
LEAVE EXPENSE
$ 94,000
LESS
BAD DEBTS $ 2000
WRITTEN OFF
LONG SERVICE
LEAVE PAID
TAX DEPRICATION $ 8000 $ 10,000
TAXABLE INCOME $ 84,000
CURRENT TAX $ 25,200
LIABILITY@30%
PART B
DEFFERED TAX FOR YEAR
DEFFERED TAX LIABILITY INCREASE IN DEFFERED TAX LIABILITY = ( $ 8000 –
7000 ) * 30 % = 3000
Consequently DOUBTFUL DEBTS EXPENSE IS BEING GREATER THAN BAD
DEBTS
DEFFERED TAX ASSEST INCREASE = ( 3000 – 2000 ) * 30% = 300
LONG SERVICE LEAVE EXPENSE GREATER THAN LONG SERVICE PAID
DEFFERED TAX ASSET INCREASE IN DEFFERED TAX ASSEST = ( $ 4000 - $0)
*30%
= 1200
PART C
TAX ENTRIES FOR 30 JUNE 2020
AMOUNT
INCOME TAX EXPENSES 25200
CURRENT TAX EXPENSE 25200
CURRENT TAX LIABILITY 25200
JOURNAL ENTRY DEFFERED TAX
DEFFERED ASSEST 1500
DEFFERED TAX LIABILITY 300
INCOME TAX EXPENSES 1200
QUES 2
Deciding PURCHASE CONSIDERATION :
Buy CONSIDERATION = 80,000 SHARES * $ 2.40 = 192000
COST OF ISSUING SHARES ($ 1600) WILL BE REFLECTED IN PROFIT AND LOSS
STATEMENT
Brisk BUCK ACQUIRING ELRADO , THU FAIRVALUE OF EACH ASSET AND
LIABILITY IS DETREMINED BY THE NET IDENTIFIABLE ASSEST RATHER THAN
CARRYING VALUE .
Assuming BUYING A BOOK STORE IN YOUR LOCALITY . PROPERTY MAY BE
CARRIED AT SAY $ 85,000 IN BOOKS OF STORE , BUT BUILDING LIKE THAT
HAVE MARKET VALUE $ 200, 000
NET IDENTIFIABLE ASSEST = FAIR VALUE – FAIR VALUE LIABILITIES
ITEM AMOUNT
MACHINERY $ 67,000
FIXTURES AND FITTINGS $ 68,000
CURENT ASSESTS $ 35,000
VEHICLES $ 25,000
LESS
CURRENT LOABILITIES $18,000
NET IDENTIFIABLE ASSESTS $ 1,64,000
Altruism = PURCHASE CONSIDERATION – NET IDENTIFIABLE ASSEST = $192,000
- $1,64,000 = $ 28,000
JOURNAL ENTRIES :
DATE ITEMS DEBIT
JULY 1 2019 MACHINERY $ 67,000
VEHICLES $ 68,000
CURRENT ASSESTS $ 35,000
GOODWILL $ 12,000
CURRENT LIABILITIES $ 28,000
SHARE CAPITAL
JULY 1 2019 ACQUISTION COST $ 1,600
PROFIT AND LOSS A/C
ANS TO QUES 3 :
UPSTREAM
30 JUNE 2016 SALES A/C
TO COST OF GOODS SOLD A/C
CALCULATION OF UNREALISED GROSS PROFIT ON 30 JUNE 2016
PROFIT % 2000/12000 = 16.67%
80% REMAINING AS ON 2016
12000*80% = 9600
CALCULATING UNREALISED PROFIT
9600*16.67% 1600
COST OFGOODS SOLD A/C 1600
TO INVENTORY A/C 1600
AS ON JUNE 2017
NO ELIMINATION OF INTERCOMPANY PROFIT IS NEEDED ALL OF THE
INTERCOMPANY PROFIT HAS BEEN REALIZED THROUGH RESALE OF
INVENTORY
PART C
ITEM AMOUNT
INCOME TAX EXPENSES 25200
CURRENT TAX EXPENSES 25200
CURRENT TAX LIABILITY 25200
JOURNAL ENTRY DEFFERED TAX
DEFFERED ASSEST 1500
TAX LIABILITY 300
INCOME TAX EXENSES 1200
GOODWILL = PURCHASE CONSIDERATION – NET IDENTIFIABLE ASSEST =
$192,000 - $1,64,000 = $ 28,000
JOURNAL ENTRIES :
DATE ITEMS DEBIT
JULY 1 2019 MACHINERY $ 67,000
VEHICLES $ 68,000
CURRENT ASSESTS $ 35,000
GOODWILL $ 12,000
CURRENT LIABILITIES $ 28,000
SHARE CAPITAL
JULY 1 2019 ACQUISTION COST $ 1,600
PROFIT AND LOSS A/C
ANS TO QUES 3
UPSTREAM
30 JUNE 2016 SALES A/C
TO COST OF GOODS SOLD
CALCULATION OF UNREALISED GROSS
PROFIT ON 30 JUNE 2016
PROFIT % 2000/12000= 16.67
80% REMAINING AS ON 2016
12000*80%=9600
CALCULATING UNREALISED PROFIT
9600*16.67% 1600
COST OFGOODS SOLD A/C 1600
TO INVENTORY A/C 1600
AS ON JUNE 2017
NO ELIMINATION OF INTERCOMPANY PROFIT IS NEEDED ALL OF THE
INTERCOMPANY PROFIT HAS BEEN REALIZED THROUGH RESALE OF
INVENTORY
DOWSTREAM :
ITEM AMOUNT
CALCULATION OF UNREALIZED PROFIT 6000*20%=1200
20% REMAINED ON HAND 1200*20/120
UNREALISED PROFIT 200
RETAINED EARNINGS – BOTTOM A/C 200
TO COST OF GOODS SOLD 200
ADD 200
COST OF GOODS SOLD
DOWSTREAM
LESS
UNREALISED PROFIT
PART B
CONSOLIDATED ENTRY
ITEM AMOUNT
PLANT 50,000
EVENTUALLY PLANT IS SOLID THE ELIMINATION PROCESS 50,000
PLANT 50,000
TO LOSS 200000/5=40,00
AT YEAR END LIALA RECORDS A DEPRECIATION EXPENSE 30,000
CONSOLIDATION DEPRECIATION EXPENSE
CONSOLIDATED WORKSHEET ADJUSTMENT 10,000
INTRA ENTITY LOSS
‘
QUES 4:
PARTICULARS AMOUNT
SALE PRICE 120000
COST 60000
PROFIT BEFORE TAX 60000
TAX @30 % 18000
PROFIT AFTER TAX 42000
UNSOLD STOCK 25%
UNREALISED PROFIT 10500
NET GAINS ON SALES MACHINERY :
PARTICULARS AMOUNT
SALE PRICE 80000
COST 60000
PROFIT BEFORETAX 20000
UNDEPRICATED LIFE 75%
UNREALISED PROFIT 10500
PROFIT AFTER TAX 14000
QUES 5
REQUIREMENT A :
DADDY SON 1 SON 4 SON 2 SON 5 SON 7 SON 6 SON 3
INTEREST
DIRECT % 80% 0.00% 80% 0.00% 0.00% 5.00% 27.00%
INDIRECT % 0.00% 56.00% 0.00% 68.0% 64.60% 41.60% 0.00%
NON
CONTROLLIN
G INTEREST
DIRECT % 20.00% 30.00 20 15 5 40 73.00
INDIRECT % 0.00% 14.00 0 17 30.40 13.40 0.00
TOTAL 100 100 100 100 100 100 100
REQUIREMENTS B:
64.6% OF VOTING IN SON7 LTD IS CONTROLLED BY DADDY LTD
REQUIREENTS C :
64.6 % OF DIVIDEND DECLARED BY SON7 LTD WILL BE RECEIVED BY DADDY
REFRENCE :
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