Recent Question/Assignment

Assessment Task
The questions to be answered are;
Question 1 Week 1 (7 marks)
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 Week 4 (7 marks)
How are changes in accounting policies accounted for and disclosed?
Question 3 Week 5 (7 marks)
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 (1 mark)
(b) Cash paid to suppliers (2 marks)
(c) Cash paid to employees for wages and salary (1 mark)
(d) Cash spent on plant and equipment (1 mark)
(e) Proceeds from sale of equipment (1 mark)
(f) Cash paid for insurance (1 mark)
Question 4 Week 6 (7 marks)
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 (4 marks)
(b) Prepare the required tax journal entries for each year. (3 marks)
Question 5 Week 12 (11 marks)
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. (8 marks)
(b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary? (3 marks)

Question 6 Week 8 (11 marks)
(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. (2 marks)
(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. (2 marks)
(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. (2 marks)
(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. (2 marks)
(b) When are profits realised in relation to inventory transfers within the group? (1 mark)

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