• Posted on February 13, 2021
• Unique Submission Team

_{Financial Accounting}

_{Answer 1}

_{There is a right to the investors to control the investee when it is exposed or possess rights for generating variable returns through the involvement of the investee and affect those returns by exerting power over the investee. As per the AASB 10, it is recommended to the finance director of MC is that the control model includes the three elements such as the power of an investor, power over the investee and return to the investor etc.}

_{in case of power over the investee, the investors should have voting rights in the equity, preferences share etc. It is finding that those fulfilling their responsibilities, governing bodies then have the right to become the members of a particular company (Walton, 2016). Return to the investor is another criterion that has an ability to use the power in order to influences the return of the investors. Besides that, the link between power and return helps the company to make a growth in future.}

_{Answer 2}

Consolidated statement of financial position
Particular	Amount ($000)
Assets
Cash	120
Accounts receivable	100
Inventory	263
Land	1000
Property Plant and  equipment	1600
Accumulated  depreciation	-613
Investment in TakeltEasy Ltd	900
Total  non-current assets	3370
Liabilities
Accounts payable	200
Dividends payable	150
Loan	810
Shareholders’ equity
Share capital	1500
Retained earnings	800
Total shareholders’ equity	3370

 

Reconciliation of opening and closing retained earnings
Profit after tax	400	190
Retained earnings — 30 June 2018	300	200
Interim dividend	90	-40
Final dividend	110	-50
Retained earnings — 30 June 2019	500	300

 

Goodwill paid
Consideration paid	900000
The fair value of non-controlling interest	720000	1620000
Assets acquired	530000
Liabilities assumed	300000	230000
Goodwill		1390000

 

_{Goodwill = (Consideration paid + Fair value of non controlling interest) – (Assets acquired – Liabilities assumed)}

_{(900000 + 720000) – (530000 – 300000)}

_{= 1390000}

_{NCI equity = Beginning NCI equity Fair Value + NCI’s interest in subsidiary income – NCI’s share of dividends}

_{700000 + 60000 – 40000}

_{= 720000}

_{Answer 3}

Deferred Tax worksheet for I Love Corporate Accounting Ltd
Statement of profit or loss and other comprehensive income for the year ended 30 June  2019
gross profit		7,30,000
Expenses
Administration expenses	80,000
Salaries	2,00,000
Long-service Leave	20,000
Warranty expenses	10,000
Depreciation expense – plant	64,000
Insurance	30,000	4,04,000
Accounting profit before tax		3,26,000
Other comprehensive income	Nil
Taxation 30%	97800
Less: Tax considered on credit sales (credit sales = 100000)	30000	67800
Profit after taxation		2,96,000
Assets and liabilities as disclosed in the statement of financial positions as at 30 June 2019
Assets
Cash		20,000
Inventory		1,00,000
Accounts receivable		1,00,000
Prepaid Insurance		10,000
Plant – cost	4,00,000
Less: Accumulated depreciation	64,000	3,34,000
Total assets		5,64,000
Liabilities
Accounts payable		80,000
Provision for warranty expenses		20,000
Loan payable		2,00,000
Warranty expenses were accrued	Paid	20,000
Total liabilities		3,20,000
Net assets		2,44,000

 

_{Answer 4}

428571. _{According to the provided information, it is found that Wiley & Sons Australasia Ltd is going to acquire to 70% share of Wiley Plus. As concerning concern for this, the remaining per cent will be known as the non-controlling interest and d fair value of the net controlling interest will be $428571. As concerning the fair value, the amount of goodwill pursuant will be recorded by $728571 (1000000 + 428571-700000).}
428572. _{As concerning the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, the goodwill pursuant was recorded by $321000 (1000000+70000*0.3 – 700000).}
428573. _{In the business environment, there are some implications of allowing the group to concern the goodwill. In this, the company should effective identify the assets acquired, liabilities assumed and other non-controlling interests in the acquisition.}

_{Answer 5}

Consolidated worksheet for FinalHeadache Ltd
	FinalHeadache Ltd	Solutions Ltd
	($000)	($000)
Sales revenue	600	500
Costs of goods sold	464	-238
Gross Profit	136	738
Dividends received from Solutions  Ltd	93	–
Management fee revenue	26.5	–
Gain on sale of plant	40	35
operating income	295.5	773.00
Expenses
Administrative  expenses	30.8	38.7
Depreciation	29.5	56.8
Management fee expenses	26.5	26.5
Other expenses	101.1	72
	187.9	194
Profit before tax	107.6	579
Tax expense	32.28	173.7
Profit for the year	75.32	405.3
Retained earning — 30 June  2018	319.4	239.2
	394.72	644.5
Dividends paid	137.4	93
Retained earnings at 30 June  2019	257.32	551.5
Statements of financial position
	FinalHeadache Ltd	Solutions Ltd
	($000)	($000)
Shareholders’ equity
Retained earnings	257.32	551.5
Share capital Current liabilities Accounts payable	350	200
Current liability	54.7	46.3
Tax payable	32.28	173.7
Non-current liabilities
Loans	173.5	116
	867.8	1087.5
Current assets
Accounts receivable	59.4	62.3
Inventory	61	48
Non-current assets
Land & Buildings	224	326
Plant – at cost	299.85	355.8
Accumulated depreciation – plant	-85.75	-138.8
Investment in Solutions Ltd	472	–
	945.5	634.3

 _References

_{Christensen, H.B., Lee, E., Walker, M. and Zeng, C. (2015) Incentives or standards: What determines accounting quality changes around IFRS adoption?. European Accounting Review, 24(1), pp.31-61.}   

_{Mora, A. and Walker, M. (2015) The implications of research on accounting conservatism for accounting standard-setting. Accounting and Business Research, 45(5), pp.620-650.}

_{Walton, P. (2016) Aiming for Global Accounting Standards–The International Accounting Standards Board 2001–2011.}

_{Wang, C. (2014) Accounting standards harmonization and financial statement comparability: Evidence from transnational information transfer. Journal of Accounting Research, 52(4), pp.955-992.}

_{Young, J.J. (2014) Separating the Political and Technical: Accounting Standard‐Setting and Purification. Contemporary Accounting Research, 31(3), pp.713-747.}