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Microsoft Word - CAC305 Final Exam_T3 2020.docx © Macleay College 2020. 1 FINAL EXAMINATION COVER SHEET TRIMESTER 3 - 2020 STUDENT INFORMATION NAME Date ID NUMBER Signature EXAMINATION INFORMATION SUBJECT CAC305- CORORATE ACCOUNTING NO. OF PAGES INCLUDING COVER SHEET AND BLANK PAGE TOTAL MARKS IN EXAM 100 % OF FINAL GRADE 50 EXAMINATION STRUCTURE Sections Weighting Marks Multiple choice questions (2 marks each) 10 questions 20% 20 Short ans. Questions (5 marks each) 4 questions 20% 20 Practical problems (15 marks each ) 4 questions 50% 60 INSTRUCTIONS 1. This is a Take-home exam. Text books, dictionaries and notes are allowed in the exam. 2. This is an individual exam. You must not speak to other students or look at others work. 3. Create a new word document and on top of the first page type your StudentID_First Name_Last Name_Lecturer’s Name_T3 2020. 4. Do NOT rewrite the question in your exam answers. Just mention the each part (A/B or C) and write the number of the question. 5. The typed answers must need to be submitted in Turnitin in Moodle within the 24 hours of the given timeframe © Macleay College 2020. 2 PART A – Multiple-choice questions (Total Marks 20) “You are required to attempt all the questions below. Each question is worth 2 marks.” Question 1 The following segment information relates to Tolkein Enterprises: Applying the tests for identifying a reportable segment in accordance with AASB 8, which of the above segments qualify for reporting and do the segments satisfy the 75 per cent test? A. mechanical engineering and retailing, 75 per cent test satisfied . B. industrial manufacturing, mechanical engineering and retailing, 75 per cent test satisfied C. project consulting, mechanical engineering and retailing, 75 per cent test satisfied . D. industrial manufacturing, project consulting, mechanical engineering and retailing, 75 per cent test satisfied . Question 2: Aus Co Ltd has a foreign operation based in New Zealand. The following information was extracted from the foreign operation's accounts for the period ended 30 June 2015: Exchange rate information is: © Macleay College 2020. 3 What is the amount at which each item will be translated (rounded to the nearest A$)? A. B. C. D. Question 3: Richmond Ltd has the following potential ordinary shares on issue as at 30 June 2009: The closing price for Richmond Ltd shares on 30 June 2009 was $3.35 and the average share price for the period was $3.20. What is the total number of shares deemed issued for no consideration for all of above potential ordinary shares that is in accordance with AASB 133 Earnings per Share? A. 14 063 B. 18 750 C. 31 343 D. 33 582 © Macleay College 2020. 4 Question 4: Tucson Ltd reported basic EPS was $5.70 for the year ended 30 June 2014. It also has the following potential ordinary shares outstanding for the entire period. The share price on 30 June 2014 is $21.00. Which of the above potential ordinary shares is the most dilutive and least dilutive POS in accordance with AASB 133 Earnings per Share, respectively? A. employee options; convertible preference shares B. employee options; convertible notes C. executive options; convertible preference shares D. executive options; convertible notes Question 5: Which of the following statements is incorrect with regards to non-controlling interests in subsidiaries? A. A non-controlling interest is defined as equity in a subsidiary not attributable, directly or indirectly, to a parent. B. Under the entity concept, if subsidiaries are partly owned by the parent entity, both the parent entity and the non-controlling interests will have an ownership interest in the subsidiary's profits, dividend payments, and share capital and reserves. C. Under the entity concept, non-controlling interests will be shown as a liability. D. Under the proprietary concept, non-controlling interests will be shown as a liability. Question 6: Companies A, B and C are all part of the one economic entity, but are all separate legal entities required to prepare their own financial statements. Company A sold Company B inventory that cost $60, 000 for $80 000. At the end of the same period Company B has three-quarters of that inventory still on hand and the rest has been sold to an entity outside the economic group. At what amount should the inventory remaining in Company B be recorded in the consolidated statements? © Macleay College 2020. 5 A. $14 625 B. $60, 000 C. $58 500 D. $45, 000 Question 7: Large Company owns 80% of the issued capital of Smaller Company and Large Company owns 60% of the issued capital of Medium Company. The three companies form an economic entity for the purposes of consolidated accounts. During the period Smaller Company sold inventory to Medium for $400 000. Medium sold the same inventory to Large for $560 000 and Large sold it to an entity external to the group for $790 000. What are the sales revenue reported in the consolidated statements for this item? A. $1 416 000 B. $1 720 000 C. $790 000 D. $400 000 Question 8: On 1 May 2015 Harriet's Importers Ltd acquires goods from a supplier in Britain. The goods are shipped f.o.b. from England on 1 May 2015. The cost of the goods is £200 000. The amount has not been paid at period end 30 June 2015. Exchange rates are as follows: Harriet's Importers Ltd uses a perpetual inventory system. What entries are required at transaction date and reporting date (rounded to the nearest whole A$)? A. © Macleay College 2020. 6 B. C. D. Question 9: Gandulf Ltd provides the following segment information. Which of the segments are reportable applying only the segment asset test? © Macleay College 2020. 7 A. business segments: industrial manufacturing, project consulting, mechanical engineering; geographical segments: Australia, US B. business segments: industrial manufacturing, mechanical engineering; geographical segments: Australia C. business segments: mechanical engineering; geographical segments: Australia D. business segments: industrial manufacturing, project consulting, mechanical engineering, retailing, agriculture; geographical segments: Australia, US Question 10: Emu Co Ltd purchased a foreign operation based in Singapore on 1 July 2012. The following information was extracted from the foreign operation's accounts for the period ended 30 June 2014: Exchange rate information is: What is the amount at which each item will be translated (rounded to the nearest A$)? A. B. © Macleay College 2020. 8 C. D. © Macleay College 2020. 9 PART B –Short Questions (Total Marks 20) Question 1 Briefly identify the types of information that must be disclosed in relation to key management personnel- related transactions. Question 2 What is a non-controlling interest, and how should it be disclosed? How are non-controlling interests affectted by intragroup transactions? Question 3 Explain what rates should be used for the assets, liabilities and equity items of a foreign entity items of a foreign entity when translating the financial statements from a functional currency to a presentation currency. Question 4 Briefly describe the steps involved in calculation of earnings per share. © Macleay College 2020. 10 PART C- Practical Questions (Total Marks 60) Question 1: (Marks 15) On 1st of July 2014, Silly Ltd leased a machine from Andre Ltd. The machine had a fair value of $95,055 on 1 July 2014. The lease agreement contained the following provisions: Lease term 3yrs Annual Rental, first payment 30/06/2015 $30 000 Residual value at end of the lease term $20 000 Residual guaranteed by lease $10 000 Interest rate implicit in lease 7% The lease is cancellable only with the permission of the lessor. The expected useful life of the machine is 4 years. Silly Ltd intends to return the machine to the lessor at the end of the lease term. The annuity factor for Single Payment T1 (7%, n=3) = 0.8163 The annuity factor for T2 (7%, n=3) = 2.6243 Part A- ( 1 marks) Calculate Present value of Lease Payments. Part B- (5 marks) Prepare a Lease Payments Schedule for the lessee? Show all workings Part C- (2 marks) Prepare journal entries for the lessee to record the lease for the year ended 30.06.2016. Show all workings Part D- (5 marks) Prepare a Lease receipts Schedule for the lessor? Show all workings Part E- (2 marks) Prepare journal entries for the lessor to record the lease on 30.06.2016. Show all workings © Macleay College 2020. 11 Question 2: Intragroup transactions (15 marks) On 1 July 2018, Dark Ltd acquired 100 per cent interest in Sandy Ltd On 1 July 2018, Dark Ltd Ltd sells an item of plant to Sandy Ltd for $650, 000 This plant cost Dark Ltd $950,000, is five years old and has accumulated depreciation of $500 000 at the date of the sale The remaining useful life of the plant is assessed as five years The