The accounting profit before tax of Baby Shark Ltd for the year ended 30 June 2019 was $92,550. It included the following revenue and expense items:
Accounting fees
|
$5,500
|
Amortisation of development costs
|
15,000
|
Carrying amount of plant sold
|
30,000
|
Depreciation expense - equipment |
5,500 |
Depreciation expense – plant
|
24,000
|
Doubtful debts expense
|
8,100
|
Employee expense
|
15,400 |
Entertainment expense
|
13,200
|
Goodwill impairment |
2,000
|
Government grant (exempt income)
|
2,200
|
Insurance expense
|
12,900
|
Proceeds from insurance claim for loss of profits
|
41,200
|
Proceeds from sale of plant
|
33,000
|
Warranty expense
|
1,500
|
The draft statement of financial position as at 30 June 2019 included the following assets and liabilities:
|
2019
|
2018
|
Assets
|
|
|
Cash
|
$15,500
|
$17,500
|
Trade receivable
|
35,000
|
40,500
|
Allowance for doubtful debts
|
(4,200)
|
(4,000)
|
Inventory
|
21,000
|
19,600
|
Prepaid insurance
|
3,400
|
5,600
|
Development costs
|
45,000
|
-
|
Accumulated amortisation
|
(15,000)
|
-
|
Plant – at cost
|
240,000
|
290,000
|
Accumulated depreciation – plant
|
(134,400)
|
(130,400)
|
Equipment – at cost
|
58,000
|
58,000
|
Accumulated depreciation – equipment
|
(24,500)
|
(19,000)
|
Land – at fair value
|
450,000
|
300,000
|
Deferred tax asset
|
?
|
10,140
|
Goodwill
|
6,000
|
6,000
|
Goodwill - accumulated impairment losses
|
(4,000)
|
(2,000)
|
Other debtors
|
142,400
|
0
|
|
|
|
Liabilities
|
|
|
Provision for employee benefits
|
14,100
|
9,700
|
Provision for warranties
|
3,100
|
2,200
|
Deferred tax liability
|
?
|
42,804
|
Borrowings
|
150,000
|
130,000
|
Other creditors
|
12,000
|
-
|
Additional information:
a) In November 2018, the company received an amended assessment for the year ended 30 June 2018 from the Australian Taxation Office (ATO). The amended notice indicated that an amount of $6,000 claimed as a deduction had been disallowed. Baby Shark Ltd has not yet adjusted its accounts to reflect the amendment.
b) In the previous year, Baby Shark Ltd has made a tax loss of $17,000. Baby Shark Ltd recognised a deferred tax asset in respect of this loss.
c) For tax purposes, the carrying amount of plant sold was $26,000. This sale was the only movement in plant for the year.
d) The tax deduction for plant depreciation was $28,800. Accumulated depreciation at 30 June 2018 for taxation purposes was $156,480.
e) The tax deduction for equipment was $7,000. Accumulated depreciation at 30 June 2018 for tax purposes was $28,000.
f) The original cost of the land was $200,000.
g) Other creditors at 30 June 2019 include an accrual for accounting fees of $4,500 for work not yet performed. For tax purposes, the accounting fees are deductible only if work has been performed.
h) Other debtors at 30 June 2019 include $41,200 relating to an insurance claim that is in process. Income is assessable for tax purposes only after the insurance proceeds have been received.
i) No deduction is allowed for taxation purposes in relation to entertainment.
j) A tax deduction for development expenditure of 125% of the $45,000 spent during the year is available under the Tax Act. The profit reflects the amount of development costs amortised in the current period.
k) No journal entries related to tax have been recorded for the year ended 2019. Assume the tax balances at 30 June 2018 are correct.
l) The tax rate is 30%.
Required:
1.Prepare the journal entry necessary to record the amendment to the prior year’s taxation return.(1 Mark)
2.Prepare the current tax worksheet to calculate the current tax liability for the year ended 30 June 2019 (show all working).(15 Marks)
3.Prepare the deferred tax worksheet to calculate the deferred tax asset and liability balances and adjustments for the year ended 30 June 2019. Include all accounts and net balances where appropriate.(12 Marks)
4.Prepare the journal entries to recognise the current tax liability, deferred tax assets and liabilities at 30 June 2019. (2 Marks)
(Source: adapted from
Loftus, J., Leo, K., Picker, R., Wise, V., & Clark, K. (2013). Understanding Australian Accounting Standards (1st edition). Brisbane, Australia: John Wiley & Sons.)
Marking Guide - Question 1
|
Max. marks awarded
|
1. |
|
Journal entry and workings |
1 |
2. |
|
Determination of taxable income and current tax liability
|
13 |
Workings |
2 |
3. |
|
Determination of deferred tax balances and adjustments |
12 |
4. |
|
Journal entries |
2 |
Total |
30 |
Question 2 (20 Marks)
Part A (12 marks)
Scruffy Ltd is a manufacturer of pet food and looking to take over the company Smuckos Ltd. Financial information of Smuckos Ltd at 1 December 2019 included the following:
Assets |
|
Cash |
$13,800 |
Trade receivables |
46,800 |
Inventory |
23,200 |
Plant |
133,800 |
Accumulated depreciation - plant |
(32,000) |
Land |
20,800 |
Total assets |
206,400 |
Liabilities |
|
Trade payables |
24,800 |
Provisions |
24,000 |
Loans |
17,200 |
Total liabilities |
66,000 |
Equity |
|
Share capital - 60,000 ordinary shares |
48,000 |
- 40,000 ordinary shares |
32,000 |
Retained earnings |
60,400 |
Total equity |
140,400 |
All the assets and liabilities of Smuckos Ltd were recorded at amounts equal to fair value except as follows:
Plant |
$112,000 |
Land |
35,800 |
Inventory |
28,000 |
Smuckos Ltd also had a brand ‘Scuby Snacks’ that was not recorded by the company because it had been internally generated. It was valued at $10,000.
Smuckos Ltd has also not recorded the interest accrued on the loans amounting to $22,800 and annual leave entitlements of $13,000.
Scruffy Ltd decided to acquire all the assets of Smuckos Ltd except for the cash. In exchange for these assets, Scruffy Ltd agreed to provide:
a) Two shares in Scruffy Ltd for every three A ordinary shares held in Smuckos Ltd. The fair value of each Scruffy Ltd share was agreed to be $2.16.
b) Artworks to the owners of the B ordinary shares held in Smuckos Ltd. (These artworks were held in the records of Scruffy Ltd at $40,000 and valued at $58,000.
c) Sufficient additional cash to enable Smuckos Ltd to pay off its liabilities including the expected liquidation costs of $4,000.
The business combination occurred on 1 December 2019. Legal and accounting costs incurred by Scruffy Ltd in undertaking this business combination amounted to $800. Costs to issue the shares to the A ordinary shareholders of Smuckos Ltd were $400.
Required:
1.Prepare the acquisition analysis in relation to the acquisition to determine the gain on bargain purchase or goodwill.(6 marks)
2.Prepare the journal entries in the records of Scruffy Ltd to record its acquisition of Smuckos Ltd on 1 December 2019.(6 marks)
(Source: adapted from Loftus, J., Leo, K., Daniliuc, S., Boys, N., Luke, B., Ang H., Byrnes, K. (2017). Financial Reporting. (2nd ed.). Brisbane, Australia: John Wiley & Sons.)
Part B(8 marks: maximum 350 words)
What is a business combination? Discuss the important aspects of AASB 3's definition of a business combination. What are the different forms a business combination might take? (8 marks)
(Source: adapted from Dagwell, R., Wines, G & Lambert, C. (2012) Corporate Accounting in Australia. Melbourne, Australia: Pearson Education.)
Marking Guide - Question 2 |
Max. marks awarded |
Part A
|
|
1. |
|
Acquisition analysis |
6 |
2. |
|
Journal entries |
6 |
Part B
|
|
Explanation of ‘business combination’ |
1.5 |
Discussion of the important aspects |
3 |
References to accounting standard(s) |
1.5 |
Discussion of forms |
2 |
Total |
20 |
Question 3 (35 Marks)
On 1 July 2017, Cat Ltd acquired all the shares of Fish Ltd on acum
-div.basis. Acquisition-related expenses were $5,000. On this date, the equity and liabilities of Fish Ltd included the following balances:
Share capital
|
200,000
|
General reserve
|
25,000
|
Retained earnings
|
45,000
|
Dividend payable
|
10,000
|
Provisions
|
206,500
|
At acquisition date, all the identifiable assets and liabilities of Fish Ltd were recorded at amounts equal to fair value except for:
|
Carrying amount
|
Fair value
|
Plant (cost $300,000)
|
$186,000
|
$190,000
|
Trademark
|
100,000
|
110,000
|
Inventory
|
70,000
|
80,000
|
Equipment (cost $80,000)
|
50,000
|
53,000
|
Land
|
50,000
|
70,000
|
Machinery (cost $18,000)
|
15,000
|
16,000
|
Fittings (cost $15,000)
|
10,000
|
10,000
|
Goodwill
|
25,000
|
|
Additional information in relation to the acquisition:
a) Both the plant and equipment had a further 5-year life at acquisition date and was expected to be used on a straight-line basis over that time.
b) The trademark was considered to have an indefinite life.
c) The machinery, which was estimated to have a further 4-year life at acquisition date, was sold on 1 January 2019.
d) At 1 July 2017, Fish Ltd had not recorded a liability relating to a guarantee that was considered to have a fair value of $10,000. An amount of $6,000 was paid by Fish Ltd in June 2019 in part payment of this liability. The balance of this liability was still considered to be $4,000 at 30 June 2019.
e) Fish Ltd registered a patent on 28 June 2017 but has not yet recognised it as an asset. Cat Ltd believes the fair value of the patent was $30,000. The patent is legally enforceable for a period of 10 years. On 30 June 2018, Fish Ltd determined that the patent was impaired by $9,000. On 1 January 2019, Fish Ltd sold the patent for $17,000.
f) During the year ended 30 June 2018, all inventory on hand at acquisition date was sold, and the land was sold on 1 June 2019.
g) Goodwill was written down by $5,000 at 30 June 2018 by Cat Ltd as a result of an annual impairment test.
h) Any adjustments for differences between carrying amounts at acquisition date and fair values are made on consolidation. Any valuation reserves created are transferred on consolidation to retained earnings when assets are sold or fully consumed. The movement in Asset revaluation surplus was from post-acquisition equity.
Additional information in relation to intragroup translations:
a) The interim dividend of $5,000 was paid by Fish Ltd in the current year. Shareholder approval is not required in relation to the payment of dividends.
b) On 1 July 2018, Fish Ltd has on hand inventory worth $12,000, being transferred from Cat Ltd in June 2018. The inventory had previously cost Cat Ltd $8,000. All the inventory is sold to external parties in the year ending 30 June 2019.
c) On 31 March 2019, Fish Ltd transferred an item of plant with a carrying amount of $10,000 to Cat Ltd for $15,000. Cat Ltd treated this item as inventory. The item was still on hand at the end of the year. Fish Ltd applied a 20% depreciation rate per year on a straight-line basis to this plant.
d) During the 2019 year, Cat Ltd sold inventory to Fish Ltd for $9,000, this being at cost plus 20% mark-up. Of this inventory, $1,800 remained on hand at 30 June 2019.
e) During the 2019 year, Fish Ltd sold inventory costing $12,000 to Cat Ltd for $18,000. One-third of this was sold to external parties for $9,000.
f) On 1 January 2018, Cat Ltd sold furniture to Fish Ltd for $8,000. This had originally cost Cat Ltd $12,000 and had a carrying amount at the time of sale of $7,000. Both entities charge depreciation at a rate of 10% per year on a straight-line basis.
g) Cat Ltd purchased a new block of land for $25,000 in August 2018. This block of land was sold to Fish Ltd in December 2018 for $50,000. To help Fish Ltd pay for the land, Cat Ltd gave Fish Ltd an interest-free loan of $12,000. Fish Ltd has not as yet made any repayments on the loan.
h) On 1 January 2019, Fish Ltd sold an item of inventory to Cat Ltd who regarded the item as plant. The inventory cost Fish Ltd $9,000 to manufacture and was sold for $12,000. Cat Ltd assesses the plant’s useful life to be 5 years.
i) On 1 January 2018, Cash Ltd sold a motor vehicle to Fish Ltd. On this date, the motor vehicle had a carrying amount of $10,000 and was sold to Cat Ltd for $20,000. The motor vehicle is depreciated at 20% per year on a straight-line basis by Cat Ltd.
On 30 June 2019, the trial balances of Cat Ltd and Fish Ltd were as follows:
Debit balances
|
CatLtd
|
FishLtd
|
Cash
|
$9,800
|
$43,000
|
Shares in Fish Ltd
|
320,000
|
—
|
Trade receivables
|
6,000
|
5,000
|
Inventory
|
23,000
|
20,000
|
Deferred tax assets
|
10,200
|
20,000
|
Motor vehicle
|
10,000
|
20,000
|
Fittings
|
—
|
15,000
|
Machinery
|
15,000
|
15,000
|
Plant
|
203,000
|
324,000
|
Equipment
|
53,000
|
80,000
|
Land
|
25,000
|
50,000
|
Furniture
|
7,000
|
8,000
|
Trademark
|
—
|
100,000
|
Goodwill
|
—
|
25,000
|
Cost of sales
|
162,000
|
128,000
|
Other expenses
|
53,000
|
31,000
|
Income tax expense
|
20,000
|
18,000
|
Interim dividend paid
|
12,000
|
5,000
|
Final dividend declared
|
6,000
|
4,000
|
Loan to Fish Ltd
|
12,000
|
—
|
|
$947,000
|
$911,000
|
Credit balances
|
|
|
Share capital
|
$312,000
|
$200,000
|
General reserve
|
20,000
|
25,000
|
Asset revaluation surplus
|
—
|
5,000
|
Retained earnings (1/7/18)
|
30,000
|
45,000
|
Final dividend payable
|
6,000
|
4,000
|
Current tax liabilities
|
8,000
|
2,500
|
Provisions
|
50,000
|
108,500
|
Deferred tax liabilities
|
20,000
|
11,000
|
Loan from Cat Ltd
|
—
|
12,000
|
Sales
|
220,000
|
182,000
|
Other income
|
84,000
|
30,000
|
Gains/(losses) on sale of non-current assets
|
50,000
|
80,000
|
Accumulated depreciation – plant
|
114,000
|
138,000
|
Accumulated depreciation – Machinery
|
1,000
|
3,000
|
Accumulated depreciation – furniture
|
1,000
|
2,000
|
Accumulated depreciation – fittings
|
—
|
7,000
|
Accumulated depreciation – equipment
|
30,000
|
50,000
|
Accumulated depreciation – vehicles
|
1,000
|
6,000
|
|
$947,000
|
$911,000
|
The tax rate is 30%.
Required:
1.Determine the gain on bargain purchase or goodwill as at acquisition date.(2 marks)
2.Prepare the consolidation journal entries for Cat Ltd immediately after acquisition on 1 July 2017.(5 marks)
3.Prepare the consolidation journal entries for Cat Ltd as at 30 June 2019.(16 marks)
4.Prepare the consolidation worksheet for the preparation of the consolidated financial statements as at 30 June 2019.(6 marks)
5.Prepare the following financial statements as at 30 June 2019:(6 marks)
a)Consolidated statement of profit or loss and other comprehensive income;
b)Consolidated statement of financial position;
c)Consolidated statement of changes in equity.
(Source: adapted from
Leo, K. J., Knapp, J., McGowan, S. & Sweeting, J. (2017). Company Accounting, (11th ed.). Brisbane, Australia: John Wiley & Sons.
)
Marking Guide - Question 3 |
Max. marks awarded |
1. |
|
Acquisition analysis with workings |
2 |
2. |
|
Consolidation journal entries provided immediately after acquisition date |
5 |
3. |
|
Consolidation journal entries provided as at 30 June 2019 |
16 |
4. |
|
Consolidation worksheet as at 30 June 2019 |
6 |
5. |
|
Consolidated statement of profit or loss and other comprehensive income |
1.5 |
Consolidated statement of profit or loss and other comprehensive income – presentation |
0.5 |
Consolidated statement of financial position |
1.5 |
Consolidated statement of financial position - presentation |
0.5 |
Consolidated statement of changes in equity |
1.5 |
Consolidated statement of changes in equity - presentation |
0.5 |
Total |
35 |
Question 4 (35 marks)
High Ltd purchased 75% of the issued shares of Low Ltd for $260,000 on 1 July 2013 when the equity of Low Ltd was as follows:
Share capital |
$100,000 |
General reserve |
60,000 |
Retained earnings |
40,000 |
At this date, Low Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets:
|
Carrying amount |
Fair value |
Inventory |
$75,000 |
$100,000 |
Plant (cost $170,000) |
150,000 |
190,000 |
Land |
60,000 |
100,000 |
At 30 June 2019, the trial balances of High Ltd and Low Ltd are as follows:
|
High Ltd |
Low Ltd |
Debit balances: |
|
Current assets |
$162,000 |
$74,000 |
Shares in Low Ltd |
260,000 |
- |
Plant |
425,500 |
190,000 |
Land |
110,000 |
60,000 |
Cost of sales |
225,000 |
32,000 |
Other expenses |
65,000 |
8,000 |
Income tax expense |
50,000 |
16,000 |
|
1,297,500 |
380,000 |
Credit balances: |
|
Share capital |
400,000 |
100,000 |
General reserve |
60,000 |
80,000 |
Retained earnings (1/7/18) |
120,000 |
75,000 |
Sales revenue |
510,600 |
89,000 |
Trade payables |
82,900 |
12,000 |
Accumulated depreciation - plant |
124,000 |
24,000 |
|
1,297,500 |
380,000 |
All the inventory on hand at 1 July 2013 was sold by 30 June 2014. The plant has a remaining useful life of 10 years, with benefits to be received evenly over this period. Any adjustments for differences between carrying amounts at acquisition date and fair values are made on consolidation. The tax rate is 30%.
Assume a profit for Low Ltd for the year ended 30 June 2014 of $35,000 and no other changes in Low Ltd’s equity since the acquisition date.
During the 2018-2019 period, Low Ltd sold inventory to High Ltd for $14,000. This inventory had cost Low Ltd $9,000. At 30 June 2019, one-fifth of this inventory still remained in High Ltd.
Required:
1.Determine the gain on bargain purchase or goodwill as at acquisition date using the full goodwill method. Assume the fair value of the Non-controlling interest at 1 July 2013 was $77,100.(3 marks)
2.Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method.(2 marks)
3.Prepare the consolidation journal entries for High Ltd using the partial goodwill method at 1 July 2013, immediately after acquisition.(4 marks)
4.Prepare the consolidation journal entries for High Ltd using the partial goodwill method at 30 June 2014.(6 marks)
5.Prepare the consolidation journal entries for High Ltd using the partial goodwill method at 30 June 2019.(8 marks)
Note:Your consolidation journal entries for Required 5 should be prepared in the following format:
(a) Business combination valuation entries at 30 June 2019
(b) Pre-acquisition entries at 30 June 2019
(c) NCI share of equity at 1 July 2013
(d) NCI share of equity changes from 1 July 2013 to 30 June 2018
(e) NCI share of equity changes from 1 July 2018 to 30 June 2019
(f) Intragroup transaction adjustments required as at 30 June 2019
6.Prepare the consolidation worksheet for the preparation of the consolidated financial statements as at 30 June 2019.(6 marks)
7.Prepare the following financial statements as at 30 June 2019:(6 marks)
a)Consolidated statement of profit or loss and other comprehensive income;
b)Consolidated Statement of financial position;
c)Consolidated Statement of changes in equity.
(Source: adapted from Loftus, J., Leo, K., Daniliuc, S., Boys, N., Luke, B., Ang H., Byrnes, K. (2017). Financial Reporting. (2nd Ed.). Brisbane, Australia: John Wiley & Sons.).
Marking Guide - Question 4
|
Max. marks awarded
|
1.
|
|
Full goodwill acquisition analysis with workings |
3 |
2. |
|
Partial goodwill acquisition analysis with workings |
2 |
3. |
|
Consolidation journal entries provided immediately after acquisition date |
4 |
4. |
|
Consolidation journal entries provided as at 30 June 2014 |
6 |
5. |
|
Consolidation journal entries provided as at 30 June 2019 |
8 |
6. |
|
Consolidation worksheet as at 31 December 2019 |
6 |
7. |
|
Consolidated statement of profit or loss and other comprehensive income |
1.5 |
Consolidated statement of profit or loss and other comprehensive income – presentation |
0.5 |
Consolidated statement of financial position |
1.5 |
Consolidated statement of financial position - presentation |
0.5 |
Consolidated statement of changes in equity |
1.5 |
Consolidated statement of changes in equity - presentation |
0.5 |
Total
|
35
|
Rationale
back to topSubject learning outcomes
This assessment task will assess the following learning outcome/s:
- be able to compute and account for company income tax;
- be able to prepare consolidated financial statements for economic entities where the parent has a 100% ownership interest in subsidiary and where a non-controlling interest is involved.
- be able to account for and prepare relevant financial report disclosures in relation to investments in associates and business combinations.
This assessment task covers topics 1 to 5 and has been designed to ensure that you are engaging with the subject content on a regular basis.
Graduate learning outcomes
This task also contributes to the assessment of the followingCSU Graduate Learning Outcome/s:
- Academic Literacy and Numeracy (Application) - CSU Graduates consider the context, purpose, and audience when gathering, interpreting, constructing, and presenting information.
- Information and Research Literacies (Application) - CSU Graduates synthesize and apply information and data to different contexts to facilitate planning, problem solving and decision making.
Marking criteria and standards
back to topFocus areas:
• Accuracy;
• Ability to apply accounting standards and statutory requirements;
• Presentation: format, vocabulary, legibility, spelling, structure.
The detailed allocation of marks for each question has been provided after each question for your information:
Criteria |
Required |
High Distinction (HD) |
Distinction (DI) |
Credit (CR) |
Pass (PS) |
Fail (FL) |
Question 1Account for both the current and future tax consequences of accounting transactionsApply relevant accounting principles in recognising and measuring income tax |
1. and 4. |
All journal entries are accurate |
All journal entries are accurate with a minor error or omission
|
Journal entries are complete but with a few errors and/or omissions |
Journal entries are complete but contain errors and/ or omissions throughout |
Most of the journal entries made are incomplete, contain a majority of errors, or omitted |
2. & 3. |
Current and Deferred tax balances determined with only minor or no errors |
Current and Deferred tax balances determined with some errors |
Current and Deferred tax balances determined with calculation errors or omissions, but key principles and processes are correct |
Current and Deferred tax balances determined with calculation errors or omissions, but key principles are correct |
Most of the Current and Deferred tax balances calculated are incorrect, illogical or omitted |
Workings shown are logical and well presented with only minor or no errors
|
Workings shown are logical and well presented with some minor errors
|
Workings shown are logical and well presented with some calculation errors
|
Workings shown are logical but contain errors throughout.
|
No workings provided or workings shown are inadequate and contain many errors |
Question 2
Part A
Apply relevant accounting principles to business combinations |
1. |
Preparation of the acquisition analysis and determination of goodwill or gain on bargain purchase with only minor or no flaws |
Preparation of the acquisition analysis and determination of goodwill or gain on bargain purchase with some minor flaws |
Preparation of the acquisition analysis and determination of goodwill or gain on bargain purchase with some errors |
Preparation of the acquisition analysis and determination of goodwill or gain on bargain purchase but with errors throughout |
Preparation of the acquisition contains numerous errors; fails to correctly determine goodwill or gain on bargain purchase |
1. & 2.
|
Workings/narrations shown are logical and well presented, with no errorsAll journal entries made to record the business combination are accurate with minor or no flaws |
Workings/narrations shown are logical and well presented with some calculation errorsAll journal entries made to record the business combination are accurate with minor flaws |
Workings /narrations shown are logical and well presented, with some calculation errorsJournal entries made to record the business combination are accurate with some errors |
Workings/narrations shown are logical and well presented, but with errors throughoutJournal entries made to record the business combination are mostly accurate but contain a number of errors |
No workings/ narrations provided or workings shownbut are inadequate and contain a majority of errorsMost of the journal entries made to record the business combination are incorrect |
Question 2
Part B
Analyse accounting issues and apply critical thinking |
|
‘Business combination’ explanation is exemplary and clear
Correctly discusses important aspects in determining a business combination and shows mastery of the topic by providing an exemplary and clear discussion of the different forms a business combination might take
Reference is made to AASB standard paragraph(s) which complements discussion |
‘Business combination’ explanation is clear and consistent
Correctly explains important aspects in determining a business combination and shows a high level of understanding of the topic by proving a clear discussion of the different forms a business combination might take
Reference is made to AASB standard paragraph(s) which supports discussion |
‘Business combination’ explanation is clear and contain some detail
Explains most important aspects in determining a business combination, shows some understanding of the topic and attempts to provide some discussion of the different forms a business combination might take
Reference is made to AASB standard paragraph(s) which assists discussion to some degree |
‘Business combination is clear but contain limited detail
Explain various aspects in determining a business combination, shows a basic understanding of the topic and attempts to provide some discussion of the different forms a business combination might take with some errors and/ or omissions
Reference is made to AASB standard paragraph(s) but nature of support for discussion is unclear |
‘Business combination’ explanations are inadequate
Explanation of the various aspects in determining a business combination and the different forms are inadequate and shows insufficient understanding of the topic
Does not discuss the importance of identifying the correct ‘acquirer’ and does refer to the scenario
Reference is made to AASB standard without paragraph(s) numbers, quoted incorrect paragraph or omitted reference entirely |
Question 3
Apply relevant accounting principles in accounting for the acquisition of a subsidiary
Prepare consolidation journal entries to eliminate the effects of intra-group transactions and balances
Apply relevant accounting principles for the preparation of a consolidation worksheet and financial statements
|
1. |
Goodwill or gain on bargain purchase determined only minor or no flaws
Workings shown are logical and well presented, with no or only minor errors |
Goodwill or gain on
bargain purchase determined
with minor flaws
Workings shown are
logical and well presented, with only some minor errors |
Goodwill or gain on bargain purchase
determined with some errors
Workings shown are logical and well presented, with a few errors |
Determined
goodwill or gain on bargain purchase but with errors throughout
Workings shown are logical but with errors throughout |
Fails to determine
goodwill or gain
on bargain purchase
No workings
provided or
workings shown are inadequate
and contain many errors |
2. & 3. |
Consolidation Journal entries made are accurately provided with only minor or no flaws |
Consolidation Journal entries made are accurately provided with minor flaws
|
The majority of consolidation journal entries made are accurate with some calculation errors
|
Most of the consolidation journal entries made are correct, but with a number of calculation errors
|
Most of the consolidation journal entries made are incorrect, with a majority of calculation errors
|
4. |
Consolidation worksheet is prepared with only minor or no flaws
|
Consolidation worksheet is prepared with minor flaws
|
Consolidation worksheet is prepared with some calculation errors
|
Consolidation worksheet is prepared but with calculation errors throughout
|
Consolidation worksheet contains a majority of errors
|
5. |
All financial statements contain correct title, current/ non-current classification and net assets equal equity. Includes other comprehensive income with only minor or no flaws
|
All financial statements contain the correct title, current/ non-current classification and net assets equal equity. Includes other comprehensive income with minor flaws
|
Consolidated financial statements are prepared with some errors
Most financial statements contain the correct title, current/ non-current classification and net assets equal equity. May include other comprehensive income but with some flaws
|
Majority of consolidated financial statements contain the correct title, current/ non-current classification and net assets equal equity. Other comprehensive income is either omitted or has flaws throughout
|
Consolidated financial statement contains a majority of errors
Financial statements are incomplete or do not contain correct title, current/ non-current classification and net assets do not equal equity
|
Question 4
Apply relevant accounting principles in accounting for the acquisition of a subsidiary with a NCI
Prepare consolidation journal entries to eliminate the effects of intra-group transactions and balances
Apply relevant accounting principles for non-controlling interests and the preparation of consolidation worksheet and financial statements
Apply relevant accounting principles in accounting for the classification of a NCI
|
1. & 2.
|
Goodwill or gain on bargain purchase determined only minor or no flaws
Workings shown are logical and well presented, with no or only minor errors
|
Goodwill or gain on
bargain purchase determined
with minor flaws
Workings shown are
logical and well presented, with only some minor errors
|
Goodwill or gain on bargain purchase
determined with some errors
Workings shown are logical and well presented, with a few errors
|
Goodwill or gain on bargain purchase determined but with errors throughout
Workings shown are logical but with errors throughout
|
Fails to determine
goodwill or gain
on bargain purchase
No workings
provided or
workings shown are inadequate
and contains a majority of errors
|
3. 4. & 5.
|
NCI consolidation and adjusting entries determined with only minor or no flaw
All other consolidation journal entries made are accurate |
NCI consolidation and adjusting entries determined with some minor flaws
All other consolidation journal entries made are accurate, with some minor flaws
|
NCI consolidation and adjusting entries determined with a number of minor errors
Other consolidation journal entries made are accurate with a number of minor errors
|
NCI consolidation and adjusting entries determined with a number of errors
Other consolidation journal entries made are partially correct, with a number of errors
Incorrect NCI consolidation journal entry format is used
|
Fails to determine both NCI consolidation and the majority of NCI adjusting entries correctly
The majority of other consolidation journal entries made are incorrect or omitted
Incorrect NCI consolidation journal entry format is used
|
6. |
Consolidation worksheet is prepared with only minor or no flaws
|
Consolidation worksheet is prepared with minor flaws
|
Consolidation worksheet is prepared with some calculation errors
|
Consolidation worksheet is prepared with a number of calculation errors
|
Consolidation worksheet contains a majority of errors
|
7. |
All financial statements contain the correct title, current/ non-current classification and net assets equal equity. Includes other comprehensive income with only minor or no flaws
|
All financial statements contain the correct title, current/ non-current classification and net assets equal equity. Includes other comprehensive income with minor flaws
|
Consolidated financial statements are prepared with some errors
Most financial statements contain the correct title, current/ non-current classification and net assets equal equity. May include other comprehensive income but with flaws
|
Majority of financial statements contain the correct title, current/ non-current classification and net assets equal equity. Other comprehensive income is either omitted or has flaws throughout
|
Consolidated financial statement contains a majority of errors
Financial statements are incomplete or do not contain correct title, current/ non-current classification and net assets do not equal equity
|
.
Presentation
back to topAssessment submissions must be inMS WordorPDFformat. As a CSU student you are entitled to a free copy of Microsoft Office 2013 Suite (Office 365) on up to 5 PCs or Macs and other mobile devices, including Android, iPad and Windows tablets. To find out more information and how to download go to this link:http://charlie.student.csu.edu.au/2015/02/26/whats-that-you-say-office-365-is-now-free-for-csu-students/
Assessment item 3
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Final exam
Value:60%
Due Date:To be advised
Duration:2 hours 10 minutes
Submission method options:Alternative submission method
Requirements
back to topThe final exam will be two hours in length and held during the exam period at the end of session.
This examination paper consists 4 problem questions. Each question may contain multiple Parts. All questions must be attempted.
The 2015, 2016, 2017, or 2019 CA ANZ Financial Reporting Handbook (bound version only – loose leaf version not permitted, unmarked except for highlighting, underlining or tagging) may be taken into the examination room. Writing is strictly allowed only on the tags, and must be limited to a caption such as 'AASB 3 paragraph 32' or 'Business Combinations'.
Rationale
back to topThis assessment task will assess the following learning outcome/s:
- be able to compute and account for company income tax;
- be able to prepare consolidated financial statements for economic entities where the parent has a 100% ownership interest in subsidiary and where a non-controlling interest is involved.
- be able to account for foreign currency transactions.
- be able to translate the financial statements of an overseas controlled entity which have been denominated in a foreign currency.
- be able to account for and prepare relevant financial report disclosures in relation to investments in associates and business combinations.
Covering most topics, the final examination paper is designed to give you an opportunity to demonstrate your depth of knowledge and understanding of theoretical and practical aspects of company accounting. The examination will assess technical competency as well as underpinning and associated concepts and issues.
Marking criteria and standards
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Criteria |
HD |
DI |
CR |
PS |
FL |
Problem questions(60 marks)In response to each of the problem questions, you may be required to demonstrate, for a range of scenarios, their:- understanding of:the accounting process for entities required to prepare financial statements using AASB standards
-the ability to:Describe and provide examples to explain financial accounting concepts discussed in the subject-the ability to:Apply the tax-effect method of accounting for company income taxes, account for the establishment of a business combination, apply the equity method of accounting for an investment in an associate and joint venture, understand the parent-subsidiary relationship and apply the consolidation process in preparation of consolidated financial statements and account for foreign currency transactions and the translation of foreign currency financial statements. |
To meet this level you will attain a cumulative mark between 85%-100% for this section of the examination.A mark in this range (no less than 51 marks) indicates that you have answered three of the four questions to a high or exceptional level and no more than one question is answered at a basic level. Overall, in meeting this level you will demonstrate exceptional knowledge, understanding, and ability across the majority of topics in this subject. |
To meet this level you will attain a cumulative mark between 75%-84% for this section of the examination.A mark in this range (no less than 45 marks) indicates that you have answered three of the four questions to a high level or above and one question answered to a basic or limited level.Overall, in meeting this level you will demonstrate a comprehensive knowledge, understanding, and ability across the majority of topics in this subject. |
To meet this level you will attain a cumulative mark between 65%-74% for this section of the examination.A mark in this range (no less than 39 marks) indicates that you have answered at least two of the four questions to a high level of above and two questions are answered to a basic or limited level.Overall, in meeting this level you will demonstrate a sound knowledge, understanding, and ability across the majority of topics in this subject. |
To meet this level you will attain a cumulative mark between 50%-64% for this section of the examination.A mark in this range (no less than 30 marks) indicates that you have answered two of the four questions to a basic level or above and no more than two questions answered to a limited level.Overall, in meeting this level you will demonstrate a basic knowledge, understanding, and ability across the majority of topics in this subject. |
At this level you will attain a cumulative mark between 0%-49% for this section of the examination. A mark in this range (less than 30 marks – less than half the available marks) indicates that you have answered three of the four questions below a basic level and demonstrated limited knowledge, understanding, and ability across the majority of topics in this subject. |