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23 Feb
2021

Statement of Financial position

Category:ACADEMICIAN

SOLUTION AT Australian Expert Writers

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 RoadTimeCompany 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 rela

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