Assessment Task 1
Question no. 1
Assessment Task:
Bilby Co's income statement for the year ended 31 December 2015 and statements of financial position at 31 December 2014 and 31 December 2015 were as follows:
Bilby co's extract of income statement for the year ended 31 December 2015
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$'000
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$'000
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Sales
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720
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Raw materials consumed
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70
|
|
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Staff costs
|
94
|
|
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Depreciation
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118
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Loss on disposal of non-current asset
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18
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(300)
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Gross Profit
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420
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Interest payable
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(28)
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Profit before tax
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392
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Taxation
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(124)
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Profit for the period
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268
|
Bilby Co's extract of statements of financial position as at 31 December
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20X2
$'000
|
$'000
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20X1
$'000
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$'000
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Assets
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|
|
|
|
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Property, plant and equipment
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|
|
|
|
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Cost
|
1,596
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|
1,560
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|
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Depreciation
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318
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|
224
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|
|
|
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1,278
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1,336
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Current assets
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|
|
|
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Inventory
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24
|
|
20
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|
|
Trade receivables
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76
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|
58
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|
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Bank
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?
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56
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|
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134
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Total assets
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|
?
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1,470
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Equity and liabilities
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|
|
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Capital and reserves
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|
|
|
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Share capital
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360
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|
340
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|
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Share premium
|
36
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|
24
|
|
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Retained earnings
|
686
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|
490
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|
|
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|
1,082
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|
854
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Non-current liabilities
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|
|
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Non-current loans
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200
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500
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Current liabilities
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|
|
|
|
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Trade payables
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12
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|
6
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|
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Taxation
|
102
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|
86
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Proposed dividend
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30
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24
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|
|
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144
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116
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|
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?
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1,470
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During the year, the company paid $90,000 for a new piece of machinery.
Dividends paid and proposed for the year (before the reporting date) totaled $72,000.
Required:
Prepare a statement of cash flows for BILBY Co for the year ended 31 December 2015 in accordance with the requirements of AASB 107, using the indirect method.
Question no. 2
Marks Ltd was formed on 1 August. On 1 September the company issued a prospectus inviting applications for the issue of 1,500,000 $1 ordinary shares.
The terms of the issue were:
• 50 cents payable on application.
• 50 cents payable on allotment.
The prospectus allowed for any excess moneys on application to be applied towards any allotment moneys due. The issue was oversubscribed when applications closed on 30 September. On 15 October, the allotment of shares was made as follows:
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Shares Applied for
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Amount Received ($)
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Shares Allotted
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500,000
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500,000
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500,000
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1,200,000
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600,000
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1,000,000
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100,000
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50,000
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NIL
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1,800,000
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1,150,000
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1,500,000
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The balance of the allotment money due was received by 31 October.
Required:
(a) Complete a worksheet for the over-subscriptions.
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Shares Applied for
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Amount Received
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Shares Allotted
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Application
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Allotment
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Refunds
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$
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$
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$
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$
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500,000
1,200,000
100,000
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500,000
600,000
50,000
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500,000
1,000,000
NIL
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|
|
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1,800,000
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1,150,000
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1,500,000
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(b) Prepare general journal entries to record the share issue
Question no. 3
Prepare entries in general journal form to record the following unrelated transactions:
(a) Lindsay Ltd issued a prospectus inviting applications for 280,000 $100 8%debentures, payable in full on application. The issue was subscribed for in full by the closing date of 30 September.
(b) Interest payments on the following debentures. 150,000 $100 5% debentureswith interest paid semi-annually on 1 March and 1 September.
(c) Burnley Ltd redeemed $7,500,000 worth of 8% debentures on their maturitydate of 30 June.
(d) Sharks Ltd issued 225,000 $100 9% Debentures on 1 January. Maturity date is31 December. On 15 May the company purchased on the ASX 45,000 of thedebentures at a price of $106.
(e) Drucker Ltd issued 150,000 $100 7.5% Debentures on 1 April 2014 withinterest payable semi-annually. On 1 December 2014, the company purchasedon the ASX 55,000 of the debentures, at a price of $97. Record all transactionsincluding the interest payments on 30 September 2014 and 31 March 2015.
Question no. 4
Foreshore Ltd was incorporated on 1 July 2014, to acquire the business of Sharpe Trading as a going concern, the purchase consideration being settled by the issue of 102,000 $1.00 ordinary shares in Foreshore Ltd fully paid. The ordinary shares of Foreshore Ltd have a fair value of $1.00. The Statement of Financial Position of Sharpe Trading at the date of acquisition was as follows:
Sharpe Trading - Statement of Financial Position as at 1st July 2014:
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$
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$
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$
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Accounts receivable
Less : Allow for Doubtful Debts
Inventory
Freehold Property
Plant & Machinery
Less: Depreciation
Patents
|
8,000
500
50,000
10,000
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7,500
10,500
50,000
40,000
15,000
123,000
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Bank Overdraft
Accounts Payable
Mortgage on Freehold
Owner's Equity
|
8,000
5,000
20,000
90,000
123,000
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Foreshore Ltd assesses the fair value of assets acquired to be:
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Freehold Premises
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$90,000
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Plant and Machinery
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$30,000
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Patents
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$ 7,400
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Inventory
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$ 8,600
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Accounts Receivable
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$ 7,000
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All liabilities of Sharpe Trading were accepted at book value by Foreshore Ltd.
Required:
Prepare General Journal entries in the books of Foreshore Ltd to record:
(I) The acquisition of the net assets of Sharpe Trading by Foreshore Ltd.
(II) The Payment of the purchase consideration to Sharpe Trading by
Please note: Journal entries must comply with the requirements of Accounting Standards.
Question no. 5
Prepare general journal entries to record the following unrelated transactions.
(i) The payment of a declared final ordinary share dividend of $20,000.
(ii) The transfer of $150,000 to dividend equalization reserve.
(iii) The revaluation of land upwards by $50,000 and a subsequent bonusissue of ordinary shares for $50,000..
(iv) The declaration of a final dividend of $0.05 per share on 1,000,000 $2.00ordinary shares paid to $1.50.
Question no. 6
Hamish Ltd 2015
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Operating profit before tax
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540,000
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|
Included in the operating Profit:
Impairment loss goodwill
Depreciation Building
Profit on sale of Shares
Long Service Leave Expense
Depreciation Machinery
|
20,000
15,000
45,000
24,000
50,000
|
Additional Information:
- Impairment loss goodwill and depreciation of buildings are not tax deductible and represent permanent differences.
- Profit on sale of shares is not included as assessable income and is a permanent difference. The shares were purchased in 1980 (pre-CGT)
- Long service leave expense creates a temporary difference only allowable as a tax deduction in the year it is paid. An amount of $16,000 was paid in 2015 for LSL.
- Depreciation of machinery creates a temporary difference. Machinery cost $150,000 in July 2014 with 3 years useful life. Taxation depreciation is $75,000 in 2015.
- The company, tax rate is 30%.
Required:
(a) Reconcile accounting profit before tax to taxable income for 2015.
(b) Prepare general journal entries recording Current Tax Payable under the taxpayable method for 2015.
Assessment Task 2
Activity 1 -Explain in brief the following: 1) Statement of Comprehensive Income 2) Cash Flow statement.
Activity 2 - Explain in brief the following; 1) Statement of Changes in Equity 2) Statement of Financial Position.
Activity 3 -Describe each type of organisation and give an example: 1) Merchandising 2) Manufacturing 3) Serviced 4) Governmental 5) Nonprofit
Activity 4 - Listed below are typical accounts or titles that appear on financial statements. For each item, identify the financial statement(s) on which it appears.
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Account
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Financial statement(s) on which it appears
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1) Wages expense
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2) Cost of goods sold
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3) Sales revenue
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4) Merchandise inventory
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5) Net income
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6) Retained earnings
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7) Contributed capital
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8) Rent expense
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9) Cash
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Account Financial statement(s) on which it appears
1) Wages expense
2) Cost of goods sold
3) Sales revenue
4) Merchandise inventory
5) Net income
6) Retained earnings
7) Contributed capital
8) Rent expense
9) Cash
Activity 5 - Other than business managers, who relies on financial reports to make decisions?
Activity 6 -Briefly describe (1) Goodwill (2) Intangible Assets.
Activity 7 - In relation to ‘Issue of Shares', briefly describe ‘Call' and ‘Unpaid Calls'.
Activity 8 -Prepare Journal entries to record:
a) The issue of $100,000 of 8% debentures at 10% premium. All cash is received.
b) The buying back of $100,000 of 8% debentures at 110 per 100.
Activity 9 - Describe (1) Taxable Temporary Differences (2) Deductible Temporary Differences
Activity 10 - Given the following information calculate the Carrying Amount, the Tax Base and the type of Temporary Difference as at financial year end.
i. Plant and Machinery
Balance as at 1 July was $300,000
Accounting depreciation to be charged = 10% per annum
Taxation depreciation to be charged = 15% per annum
ii.Accounts Receivable
The balance at 1 July was $250,000
Bad Debts written off during the year $10,000
Doubtful Debts expensed at the end of year $25,000
Activity 11 -Describe in brief:
i. Bonus issue
ii. Dividend
iii. Dividend Equalisation reserve:
Activity 12 - Describe in brief (a) Current Assets (b) Current Liabilities
Activity 13 - Describe briefly the Related Party Disclosures to be made as per AASB 124
Activity 14 - Describe Impairment of Assets, give examples of three assets that are excluded
from impairment testing as per AASB 136.
Activity 15 -The acquired goodwill value for Daffodil Ltd is $50,000. The Goodwill is tested for impairment and the appropriate carrying amounts were established at $45,000. Record the journal entry to account for any goodwill impairment.
Activity 16 -On 1 July 2010 Kawan Ltd acquired all the issued shares of Katumba Ltd for $200,000.
Extract of Katumba's statement of equity revealed the following:
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Balances as at 1 July 2010 Amount($)
General reserve 10,000
Share Capital 80,000
Retained Earnings 15,000
|
Record the journal entries to eliminate the investment in Katumba Ltd by Kawan Ltd.
Attachment:- Assessment Task.zip