SEMI FINAL ASSESSMENTUnit
Details
Name
Code
Trimester, Year
Corporate Accounting
HI5020
Trimester 1, 2023
Assessment
Details
Name
Due Date
Due Time
Weight
Final Assessment
15 August, 2023
12.00 pm
70%
Student Number
First Name
Family Name
INSTRUCTIONS
Duration
•
6 hours
LATE SUBMISSIONS ARE NOT ACCEPTED
Answers
•
All responses must be entered using the answer boxes provided in this
paper.
DO NOT CUT AND PASTE INTO A NEW DOCUMENT
File Format
•
MS Word only. No other format is accepted
Submission
Information
•
Instructions are listed at the end of this paper and must be followed.
Academic
Integrity
Information
•
Capella Univeristy is committed to ensuring and upholding academic
integrity. All assessments must comply with academic integrity guidelines.
Important academic integrity breaches include plagiarism, collusion,
copying, impersonation, contract cheating, data fabrication and
falsification. Violating academic integrity is serious and punishable by
penalties that range from deduction of marks, failure of the assessment
task or unit involved, suspension of course enrolment, or cancellation of
course enrolment.
Penalties
•
Reference sources must be cited in the text of the assessment, and listed
appropriately at the end in a reference list using Holmes Institute Adapted
Harvard Referencing.
Penalties are associated with incorrect citation and referencing.
Question 1
(10 marks)
KB Ltd purchased a machine on 1 July 2014 for $320,000. The machine is expected to have a useful life
of 4 years (straight-line basis) and no residual value. The ATO allows the company to depreciate the
asset over 5 years for taxation purposes. The profit before tax for the company for the year ending 30
June 2015 is $500,000. The tax rate is 30%.
Required:
a) Calculate the company’s taxable profit and hence its tax payable for 2015.
(3 marks)
ANSWER a: (answer box will enlarge as you enter your response)
b) Determine the deferred tax liability or deferred tax asset that will result.
(3 marks)
ANSWER b:
c) Prepare the necessary journal entries on 30 June 2015.
ANSWER:
(4 marks)
Question 2
(10 marks)
Sky Ltd acquired all the issued shares of Jupiter Ltd on 1 January 2019. The following transactions
occurred between the two entities:
•
On 1 June 2020, Sky Ltd sold inventory to Jupiter Ltd for $12 000; By 30 June 2020, Jupiter Ltd had
sold 20% of this inventory to other entities for $3000. The other 80% was all sold to external
entities by 30 June 2021 for $13 000.
•
During the 2020–21 period, Jupiter Ltd sold inventory to Sky Ltd for $6000 at cost plus 20% markup.
Of this inventory, 20% remained on hand in Sky Ltd at 30 June 2021. The tax rate is 30%.
Required:
a) Prepare the consolidation worksheet entries for Sky Ltd at 30 June 2021 concerning the
intragroup inventory transfers.
(5 marks)
ANSWER a:
b) Compute the cost of goods sold to be reported in the consolidated income statement for 2021
relating to this intra-group sale.
(5 marks)
ANSWER b:
Question 3
(10 marks)
Mammoth Ltd acquired 80 percent share capital of Tinny Ltd. On 1 July 2021, for a cost of $1600000.
As at the date of acquisition, all assets and liabilities of Tinny Ltd were fairly valued except land that
has a carrying value of $150000 less than the fair value. The recorded balance of equity of Tinny Ltd as
of 1 July 2021 was as:
Share capital
$800000
Retained earnings
$200000
Revaluation surplus
$400000
………………..
Total
$1400000
Additional information:
•
The management of Mammoth Ltd values non-controlling interest following the net method.
•
Tinny Ltd has a profit after tax of $200000 for the year ended 30 June 2022.
•
During the financial year to 30 June 2022, Tinny Ltd sold inventory to Mammoth Ltd for
$120000. The inventory costs Tinny Ltd $60000 to produce. 25 percent of the inventory is still
in Mammoth Ltd’s hand as of 30 June 2022.
•
During the year, Tinny Ltd paid Mammoth Ltd $60000 in management fees.
•
The tax rate is 30 percent.
Required:
a) Based on the above information, calculate the non-controlling interest as at 30 June 2022.
(6 marks)
ANSWER a:
b) Pass necessary journal entries to recognise the non-controlling interest as of 30 June 2022.
(4 marks)
ANSWER b:
Question 4
Company A has two subsidiaries, S1 and S2, and two associates, AS1 and AS2.
Company A has ownership interests in the subsidiaries and associates as follows:
S1
100 Percent Owned
(10 marks)
S2
AS1
AS2
70 Percent Owned
30 Percent Owned
20 Percent Owned
The following inter-entity transaction took place:
AS1 sold goods to S1 at a profit of $20000. 60 percent of this profit is unrealised by the end of the
year.
AS1 sold goods to S2 at a profit of $20000. 60 percent of this profit is unrealised by the end of the
year.
AS1 sold goods to AS2 at a profit of $20000. 60 percent of this profit is unrealised by the end of
the year.
AS1 sold goods to Company A at a profit of $20000. 60 percent of this profit is unrealised by the
end of the year.
Required:
In determining the investor’s share of the associates’ profits, what adjustments would be necessary
as a result of these transactions? (Consider each of these transactions as independent, and ignore
taxes). (2.5*4 = 10 Marks)
ANSWER:
(10 marks)
(a) Why do we need to translate the financial statement of foreign operations?
(2.5 marks)
ANSWER a:
(b) Explain the concepts of local currency, functional currency and presentation currency with
example.
(2.5 marks)
ANSWER b:
(c) How is the profit or loss from translating foreign operations’ financial statements from local
currency to functional currency treated?
(2.5 marks)
ANSWER c:
(d) How are the profit and loss from translating foreign operations’ financial statements from
functional currency to presentation currency treated?
(2.5 marks)
ANSWER d:
.
END OF FINAL ASSESSMENT
Please complete the following details:
Integrity
Declaration
I have read and understand academic integrity policies and practices and my
assessment does not violate these.
Student Number
Full Name
Submission Date
Submission instructions:
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•
You have entered your Student Number and name on the first page
•
You have signed the submission declaration
•
You have named your file with your Student Number and Unit Code e.g. GWA1995-HI5020
It is critical you follow this file name instruction to ensure the file belongs to you.
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