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corporate accounting

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BUACC5932 CORPORATE ACCOUNTING;ASSIGNMENT SEMESTER 2 2014;On 1 July 2008 Max Ltd acquired 100% of the issued shares of Millie Ltd at a cost of $550,000. At this date the capital of Millie Ltd was as follows;Share Capital $300,000;General Reserve 10,000;Retained Earnings 70,000;At 1 July 2008 all the identifiable net assets of Millie Ltd were recorded at fair value with the exception of;Carrying Amount Fair Value;Plant and Equipment * $83,000 $100,000;Inventory** 32,500 35,000;Contingent Liability - 10,000;*At acquisition date Plant and Equipment had a further 5 years of useful life;**Sold during year ended 30 June 2009;Additional Information;a) Inventory;- Closing inventory of Max Ltd at 30 June 2009 included goods purchased from Millie Ltd for $2,100. Max Ltd purchases inventory from Millie Ltd at cost plus 25%;- Total purchases by Max Ltd from Milly Ltd for year ended 30 June 2010 was $9,000.;- At 30 June 2010 Max Ltd held $6,000 inventory purchased from Millie Ltd.;- During the year ended 30 June 2010 Max Ltd sold inventory to Millie Ltd for $12,000. All this inventory had been sold outside the group by 30 June 2010.;b) Non current asset transfers;- A Motor Vehicle was sold by Millie Ltd to Max Ltd on 1 July 2008. The before tax gain on this sale was $4,800. Details of asset sold;Original Cost $29,000;Carrying Amount at 1 July 2008 19,000;Remaining useful life at 1 July 2008 4 years;- An item of Plant and Equipment was sold by Max Ltd to Millie Ltd on 31 December 2009 for $47,000;Original Cost $49,500;Accumulated Depreciation at 31 December 2009 $7,700;Depreciation Rate 25% per annum Straight Line;c) Intra group dividends;All dividends paid/declared were from post acquisition profits with the exception of the interim dividend paid by Millie Ltd of $43,000;Dividends from other group entities are recognised as revenue at the time the dividend is declared;d) Interest on Loan;Interest of $3,000 was paid on the intra group loan during the year ended 30 June 2010;e) Impairment of goodwill;The directors of Max Ltd believe that an impairment charge of $10,000 should be recorded on goodwill at 30 June 2010;Trial balances of each entity at 30 June 2010 are as shown below;Trial Balances as at 30 June 2010;Max Ltd Millie Ltd;Dr Cr Dr Cr;Share Capital 500000 300000;Retained Earnings (1 July 2009) 200000 95000;General Reserve 50000 15000;Current Tax Liability 37500 19000;Deferred Tax Liability 19000 18000;Dividend Payable 35000 37500;Loan from Max Ltd 53000;Payables 85000 72000;Land 100000 170000;Plant and Equipment 105000 185000;Accumulated Depreciation Plant 38050 102000;Motor Vehicles 52000 72500;Accum. Deprec MV 24800 34000;Loan to Millie 53000 -;Dividends Receivable 37500 2500;Other Receivable 28530 43970;Shares in Millie Ltd 550000;Accum Impairment Losses 43000;Inventory 35000 32500;Cash 50000 120000;Other Investments - 30000;Sales Revenue 140000 110000;Interest Revenue 3180 -;Service Fee Revenue ? Millie 12200 -;Dividend Revenue 80500 10000;Other Income 8800 9400;Cost of Sales 70000 55000;Interest Expense - 3230;Service Fee Expense - 12200;Impairment Loss Investment in Millie 43000 -;Other Expenses 55000 47500;Income Tax Expense 30000 20000;Dividend Paid 33000 43000;Final Dividend Declared 35000 37500;1277030 1277030 874900 874900;Required;Using the information provided;A;Prepare the consolidated financial statements for the year ended 30 June 2010 for Max Ltd. including;- Acquisition analysis;- Consolidation journal entries for year ended 30 June 2010;- Consolidation worksheet at 30 June 2010;- Consolidated statement of comprehensive income for year ended 30 June 2010;- Consolidated statement of changes in equity for year ended 30 June 2010;- Consolidated statement of financial position at 30 June 2010;1 + 10 + 4 + 3 = 18 marks;Note;- Income tax rate is 30%;- Max Ltd share capital consists of 500,000 x $1 shares fully paid;B;Discuss the issues arising from the choice between making asset revaluation (BCVR) adjustments on consolidation or in the records of the subsidiary;(Maximum 500 words);2 marks;Key assignment details and assessment criteria;1. Group assignment with no more than three students in each group;2. Submission due date: Week 11;Assessment Criteria;The criteria used to assess the submitted assignment will be;? Ability to work collegially in a group environment for shared success.;? Evidence of relevant research and demonstrated understanding of research materials. As a minimum students should consult the references listed under additional resources in the Unit Description;? The structure, coherence and logic of arguments and analysis presented.;? Demonstrated understanding of the subject matter that is the focus of the assignment topic.

 

Paper#78428 | Written in 18-Jul-2015

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