Submission Guidelines
Case 1: (15 marks)
Case 2: (15 marks)
On 1 July 2017, Chancellor Ltd purchased 90% of the issued shares of Park Ltd for
$800,000. At this date, the fair value of the NCI in Park Ltd was $88,500. The following balances appeared in the records of Park Ltd at this date:
Share capital | $400,000 |
General reserve | 40,000 |
Retained earnings | 200,000 |
At 1 July 2017, all the identifiable assets and liabilities of Park Ltd were recorded at fair value except for the following:
Carrying amount | Fair value | |
Equipment (cost $720,000) Inventories | $600,000 320,000 | $800,000 400,000 |
Land | 360,000 | 400,000 |
The equipment had a remaining useful life of 4 years beyond 1 July 2017, with benefits to be received on a straight-line basis over the period. By 30 June 2018, all the inventories were sold externally. Any adjustments for differences at acquisition date between carrying amounts and fair values are made in the consolidation worksheet.
For the year ended 30 June 2019, the following information is available:
$20,000 at a before-tax profit of $4,000. Chancellor Ltd treated the asset as part of its inventory and it was still on hand at 30 June 2019.
Profit after tax
Retained earnings (1/7/18) |
312,000
400,000 |
712,000 | |
Interim dividend paid | 160,000 |
Final dividend declared | 80,000 |
240,000 | |
Retained earnings (30/6/19) |
$472,000 |
Required:
Prepare the following for the preparation of consolidated financial statements for Chancellor Ltd and its subsidiary Park Ltd for the year ended 30 June 2019 assuming that Chancellor Ltd uses the full-goodwill method:
Case 3: (10 marks)
Cobber Ltd is an Australian company and its functional currency is A$ (i.e. Australian dollars).Thecompanyhasreportingperiodsendingon31Decemberand30June.During the year ended 30 June 2019, Cobber Ltd entered into the following foreign currency transactions denominated in Euros(€):
Applicable exchange rates are as follows:
1 July 2018 | €1 = A$1.45 |
22 Nov 2018 | €1 = A$1.42 |
4 Dec 2018 | €1 = A$1.39 |
31 Dec 2018 | €1 = A$1.49 |
3 Feb 2019 | €1 = A$1.28 |
30 June 2019 | €1 = A$1.25 |
Required:
InaccordancewithAASB121/IAS21TheEffectsofChangesinForeignExchangeRates, prepare the journal entries in the books of Cobber Ltd for the half year to 31 December 2018 and the full year to 30 June 2019 to account for the various foreign currency transactions.
Case 4: (10 marks):
Sippy Ltd owns 30% of the issued shares of its associate, Downs Ltd. At the date of acquisition, there were no differences between the fair values and the carrying amounts of the identifiable net assets of Downs Ltd.
For the year ended 30 June 2018, Downs Ltd recorded an after-tax profit of $786,000. The tax rate is 30%.
The following transactions have occurred between Sippy Ltd and Downs Ltd:
Sippy Ltd applies the equity method to account for its investment in Downs Ltd and does not prepare consolidated financial statements.
Required:
Calculate Sippy Ltd’s share of Downs Ltd’s profit for the year ended 30 June 2018.
End of Assessment
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