Assessment Task – Tutorial Questions Assignment

Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit

The questions to be answered are;

Question 1 Week 7 (7 marks)Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful
life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to
depreciate the asset over 4 years.
The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the
company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid.
Also the company has included $70,000 interest as income that the company has not yet received. The tax rate
is 30%.
Required:
(a) Calculate the company’s taxable profit and hence its tax payable for 2017. (2 marks)
(b) Determine the deferred tax liability and/or deferred tax asset that will result. (2 marks)
(c) Prepare the necessary journal entries on 30 June 2017. (3 marks)

Question 2 Week 8 (7 marks)
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each
valued at $1.50. The summary statement of the financial position of the subsidiary company immediately
following the acquisition is:
Fair value of assets acquired $2,640,000
Fair value of liabilities acquired $720,000
Total shareholders’ equity of the subsidiary company $800,000
Retained earnings of the subsidiary company $1,120,000
Required:
(a) Pass the necessary journal entry to record the acquisition (2 marks)
(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (2 marks)
(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (2 marks)
(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase
consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 (1 marks)

Question 3 Week 4 (7 marks)
Aqua Ltd issues a prospectus inviting the public to subscribe for 30 million ordinary shares of $2.00 each. The
terms of the issue are that $1.00 is to be paid on application and the remaining $1.00 within one month of
allotment.
Applications are received for 36 million shares during July 2019. The directors allot 30 million shares on 15
August 2019. The shares were allotted on a first-come, first-serve basis. The directors refunded the application
money for 6 million shares on 15 August 2019. The amounts payable on the allotment are due by 20 September
2019.
By 20 September 2019, the holders of 5 million shares have failed to pay the amounts due on allotment. The
directors forfeit the shares on 30 September 2019. The shares are resold on 15 October 2019 as fully paid. An
amount of $1.90 per share is received. The remaining balance of forfeited shares were refunded on 20 October
2019.
Required
Provide the journal entries necessary to account for the above transactions and events.

Question 4 Week 10 (7 marks)
(a) Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the
intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on
consolidation? (2 marks)
(b) What is a non-controlling interest, and how should it be disclosed? (2 marks)
(c) How are non-controlling interests affected by intra-group transactions? (2 marks)
(d) What are the three steps we use to calculate total non-controlling interest? (1 mark