document.
The questions to be answered are:
Week 1
Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration: Cash
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$20,000
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Land
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In the books of Tea Tree Bay Ltd the land is recorded
at its cost of $100,000. It has a fair value of $140,000.
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Equipment:
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In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of $50,000. The equipment has an accumulated depreciation balance of $20,000. The fair value of the equipment is $23,000
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Assumption of liability
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Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loan of $30,000 as part of the Gizmo Machine acquisition.
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Other associated costs
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Tea Tree Bay Ltd also spend $5,000 as the installation cost. Testing cost was $2,500. Transportation cost for the machine was $700.
During first year of operation, the company paid $650 as the maintenance cost for the machine.
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Assessment Task – Tutorial Questions Unit Code: HI5020 Unit Name: Corporate Accounting Assignment: Tutorial Questions 1 Due: 11:30pm 22nd May 2020 Weighting: 25% Total Assignment Marks: 50 marks Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit Unit Learning Outcomes Assessed: 1. Examine conceptual issues and the sources of authority for the accounting requirements which apply to reporting by Australian companies and corporate groups, including Company Law, International and Australian Accounting Standards, and Stock Exchange requirements; 2. Critically analyse and interpret the financial statements and other disclosures produced by Australian companies and corporate groups; 3. Apply Australian Accounting Standards and Corporate Legislation to the financial reporting processes of a range of corporate forms including companies and joint ventures; 4. Evaluate financial accounting problems and select appropriate accounting strategies for the accounting entity; 5. Prepare accounting reports for companies and other corporate forms that meet the compliance requirements of the professional and legal bodies in Australia; 6. Make judgments about appropriate use of accounting standards and accurately apply appropriate treatments and communicate these outcomes to a diverse range of stakeholders. Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for weeks 1 to 5 inclusive and submit these answers in a single document. The questions to be answered are: Week 1 Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration: Cash $20,000 Land In the books of Tea Tree Bay Ltd the land is recorded at its cost of $100,000. It has a fair value of $140,000. Equipment: In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of $50,000. The equipment has an accumulated depreciation balance of $20,000. The fair value of the equipment is $23,000 Assumption of liability Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loan of $30,000 as part of the Gizmo Machine acquisition. Other associated costs Tea Tree Bay Ltd also spend $5,000 as the installation cost. Testing cost was $2,500. Transportation cost for the machine was $700. During first year of operation, the company paid $650 as the maintenance cost for the machine. Required: a) Calculate the acquisition cost of the Gizmo Machine that will be used as the base for future depreciation charge. (3 marks) b) Provide the journal entries that would appear in Tea Tree Bay Ltd’s books to account for the acquisition of the Gizmo Machine. (5 marks) c) Will the maintenance cost be included in the acquisition cost of the machine? Justify your answer. (2 marks, maximum 100 words) Week 2 a) What factors should be considered in determining the issue price of a debenture. (2 marks) b) On 1 July 2018 Bombo Ltd issues $2 million in six-year debentures that pay interest each six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective-interest method. Required: (i) Determine the issue price of the debenture. (2 marks) (ii) Provide the journal entries at: (6 marks) 1 July 2018, 30 June 2019, & 30 June 2020. Week 3 RCK Ltd issues a prospectus inviting the public to subscribe for 90 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 108 million shares during July 2018. The directors allot 90 million shares on 15 August 2018. All applicants receive shares on a pro rata basis. The amounts payable on allotment are due by 20 September 2018. By 20 September 2018 the holders of 18 million shares have failed to pay the amounts due on allotment. The directors forfeit the shares on 30 September 2018. The shares are resold on 15 October 2018 as fully paid. An amount of $2.00 per share is received. The balance of forfeited shares is refunded on 20 October 2018. Required: Provide the journal entries necessary to account for the above transactions and events. Week 4 Provide some examples of items that would be adjusted directly against equity, rather than being included as part of profit or loss. (10 marks, maximum 650 words) Week 5 Fool’s Paradise Ltd had cash and cash equivalents at 1 January 2019 of $400,000. The transactions of Fool’s Paradise Ltd for the year to 31 December 2019 are as follows: Borrowed $850,000 with a 9-month loan payable Received $6,340,000 cash for customer accounts Sold for $360,000 cash a plant asset with a carrying amount of $180,000 Issued ordinary shares for $480,000 cash Purchased a plant asset for $650,000; $237,500 in cash and $412,500 in loan Exchanged 60,000 shares for land with a fair value of $1,000,000 Received a $350,000 dividend in cash Received $25,000 interest from term deposit Invested $500,000 cash on the short-term money market Paid fixed-term loan principal of $900,000 and interest of $90,000 Cash payments for supplier’s accounts $6,300,000 Dividend paid during the period $200,000 Wages expense shown in the income statement is $75,000. At the end of the year the balance sheet shows prepaid Wages expense of $65,000. There was a prepaid Wages expense of $35,000 at the beginning of the year. Required: Prepare the statement of cash flows of Fool’s Paradise Ltd for the year to 31 December 2019. (10 marks) Submission Directions: The assignment has to be submitted via Blackboard. Each student will be permitted one submission to Blackboard only. Each student needs to ensure that the document submitted is the correct one. Academic Integrity Academic honesty is highly valued at Holmes Institute. Students must always submit work that represents their original words or ideas. If any words or ideas used in a class posting or assignment submission do not represent the student’s original words or ideas, the student must cite all relevant sources and make clear the extent to which such sources were used. Written assignments that include material similar to course reading materials or other sources should include a citation including source, author, and page number. In addition, written assignments that are similar or identical to those of another student in the class is also a violation of the Holmes Institute’s Academic Conduct and Integrity Policy. The consequence for a violation of this policy can incur a range of penalties varying from a 50% penalty through to suspension of enrolment. The penalty would be dependent on the extent of academic misconduct and the student’s history of academic misconduct issues. All assessments will be automatically submitted to SafeAssign to assess their originality. Further Information: For further information and additional learning resources, students should refer to their Discussion Board for the unit.