There are 2 parts for this assignment-1. Case study analysis- 700 words2.worksheet practicalBoth in a single word file
ASSESSMENT BRIEF Subject Code and Name ACCT6005 Company Accounting Assessment Assessment 2 Case Study (Individual) 700 words (+/- 10%) Individual/Group Individual Length Part A: Case study analysis - Theory(40 Marks) Part B: Worksheet -Practical(60 Marks) Learning Outcomes This assessment addresses the following subject learning outcomes: a) Prepare consolidated financial statements and related accounting entries for incorporated entities. d) Generate and communicate strategic recommendations in various inter-entity relationship scenarios with reference to relevant accounting standards. Submission By 11:55pm AEST/AEDT Sunday of Week 9 (Module 5.1) Weighting 25% Total Marks 100 Marks Context: · Assessment coverage: Module 1-2 Fair Value adjustment and Intra group transactions. · You are required to demonstrate: the assumed knowledge and skills from Module 1 Introduction and Principles of Consolidation; understanding and ability to account for fair value adjustments and intra group transactions. · You are able to prepare: acquisition analysis, adjustment entries for group using the consolidation worksheet, and consolidated financial statements. · You are able to recommend and communicate strategic recommendations regarding fair value adjustment entries. Instructions: · Show all relevant workings where required. · Combine the answers for both Part A and Part B into one assessment document. ACCT6005 Assessment 2 Case Study Brief.docx Page 5 of 6 Submission Instructions: · Submit the assessment document in a Word or PDF format including a cover sheet. JPEG files or similar cannot be opened and will not be marked. · Submit via the Assessment link in the main navigation menu in ACCT6005 Company Accounting. Case Scenario PART A (40 Marks) Fox Ltd is a majority shareholder of Rabbit Ltd. Fox Ltd is a company that produces films and television shows. It also owns a media streaming business that broadcasts Fox Ltd.’s movies and television shows. On 31 December 2020, Fox Ltd transferred its entire media streaming assets and share capital to Rabbit Ltd. As part of this transaction, Rabbit Ltd acquired $100 million in debt. Rabbit Ltd also acquired an additional media streaming business, incurring $1 million of debt. Fox Ltd. did not guarantee this debt. Several months after the transfer of assets and share capital, Rabbit Ltd issued ordinary shares in an initial public offering, raising nearly $1 billion in cash and reducing Fox Ltd.’s ownership interest in Rabbit Ltd to 41%. The remaining 59% of Rabbit Ltd.’s voting interest is widely held. Rabbit Ltd has entered into broadcast contracts with Fox Ltd, pursuant to which Rabbit Ltd must purchase 90% of their television shows from Fox Ltd. Fox Ltd. determines all payment terms and conditions. The agreement provides Rabbit Ltd all exclusive rights to broadcast Fox Ltd.’s movies and television shows in specific geographic areas. This covers approximately 45% of the country’s population. Fox Ltd provides promotional and marketing services for all its movies and television shows on behalf of Rabbit Ltd. Under this contract, Rabbit Ltd has limited rights to engage in businesses other than the sale of Fox Ltd.’s movies and television shows. In its most recent financial year, 90% of Rabbit Ltd.’s sales were Fox Ltd movies and television shows. Additional information: Rabbit Ltd rents office space from Fox Ltd in its headquarters facility. The renewable lease agreement, which will expire in 10 years’ time. Required With reference to AASB10 and the relevant facts from the case study above, prepare a report to explain why Fox Ltd does or does not control Rabbit Ltd. Support your argument with appropriate definitions and references using the relevant Australian Accounting Standards. Word limit: 700 PART B (60 Marks) Parent Ltd acquired 100% interest in Subsidiary Ltd on 1 January 2019. At that date, Subsidiary Ltd’s net assets were represented by its shareholders’ equity consisting of share capital of $100,000 and retained earnings of $70,000. On the date of the acquisition, Parent Ltd and Subsidiary Ltd agreed the following; (a) Subsidiary’s Land had a fair value of $180,000 (carrying amount $100,000). (b) Subsidiary had a patent with a fair value of $100,000 (was not previously recognised in Subsidiary’s book). The patent is to amortise over 10 years on straight line basis. (c) Subsidiary had inventories that were $30,000 lower than fair value. These inventories were sold by 30 June 2019. The following intra-company transactions occurred during the year ending 30 June 2020. a) On 1 May 2020, Subsidiary Ltd purchased goods for $150,000 from Parent Ltd on credit at cost plus 50% mark up. As at 30 June 2020, 40% of the inventory was still on hand and 25% of the amount owing for the sales remain unpaid. b) On 1 June 2019, Parent Ltd sold inventory to Subsidiary Ltd for $85,000, recording a before-tax profit of $30,000. By 30 June 2019, Subsidiary Ltd has sold one-third of these to other entities making profits of $54,000 and the remaining inventory was sold by 30 June 2020 for $132,000 to external parties. c) On 1 December 2019, Parent Ltd sold an item of machinery for $104,000 to Subsidiary Ltd. At the date of sale, Parent Ltd had recorded the asset at a carrying amount of $80,000 (accumulated depreciation: $20,000. depreciation rate: 10% p.a. straight-line method). d) Parent Ltd provided a warehouse to Subsidiary Ltd since 1 March 2019. The rent is $12,000 per annum and payable in arrears 6 monthly on 31 August and 28 February each year. Both companies record accruals. Required Prepare the following a) Acquisition analysis at 1 January 2019 (5 marks) b) A consolidation worksheet for the year ending 30 June 2020 (use the template provided, add more lines if necessary: show all workings. You do not need to submit the journal entries as these entries will not be marked) (51 marks) c) A consolidated Statement of Changes in Equity for the year ending 30 June 2020 (4 marks) (b) Consolidation Worksheet Parent Ltd Subsidiary Ltd Adjustments Consolidated Dr Cr Sales 1,050,000 509,100 Less Cost of Sales 510,000 281,000 Gross Profit 540,000 228,100 Add Dividend Income 35,000 0 Add Rental Income 12,000 0 Add Gain on Sale of Machine (Proceeds less Carrying amount) 24,000 0 Less Occupancy Expenses including Rent 37,000 29,500 Less Admin Expenses 46,000 15,000 Less Depreciation & Amortisation 62,000 40,000 Less Other Expenses 40,000 10,000 Profit before tax 426,000 133,600 Less Income Tax Expenses 80,000 24,600 Profit after tax 346,000 109,000 Retained earnings (1 July 2019) 124,000 90,000 Less Dividends (paid and declared) (70,000) (35,000) Retained earnings (30 June 2020) 400,000 164,000 General reserve 36,000 0 Share Capital 400,000 100,000 BCVR 0 0 Deferred tax liabilities 0 0 Trade & Other Payables 80,000 75,000 Dividend payable 70,000 20,000 Bank Overdraft 90,000 0 Total Shareholders’ equity and Liabilities 1,076,000 359,000 Land 142,000 100,000 Machinery, at cost 370,000 135,000 Less Accumulated Depreciation (120,000) (55,000) Patent at cost 40,000 0 Less Accumulated Amortisation 0 0 Investment in Subsidiary Ltd 340,000 0 Goodwill 0 15,000 Dividend receivable 20,000 0 Deferred tax assets 0 0 Inventories 169,000 60,000 Trade & Other Receivables 95,000 79,000 Cash and cash equivalent 20,000 25,000 Total Assets 1,076,000 359,000 Learning Rubric: Assessment 2 Assessment Attributes Fail (Unacceptable) 0%-49% Pass (Functional) 50%- 64% Credit (Proficient) 65%-74% Distinction (Advanced) 75%-84% High Distinction (Exceptional) 85% - 100% Knowledge and understanding (technical and theoretical knowledge) 40 Limited understanding of required concepts and knowledge Shows very little to no understanding of how to apply relevant accounting concepts to the case study questions. Key components of the practical questions are not addressed. Knowledge or understanding of the field or discipline. Resembles a recall or summary of key ideas. Shows limited understanding of how to apply relevant accounting concepts to the case study questions. Has answered some parts incorrectly. Thorough knowledge or understanding of the field or discipline/s. Demonstrates a capacity to explain and apply relevant accounting concepts to the case study questions. Highly developed understanding of the field or discipline/s. Well demonstrated capacity to explain and apply relevant accounting concepts. A sophisticated understanding of the field or discipline/s. Mastery of accounting concepts and application to the study. Quality of Recommendations 50 Demonstrates no awareness of content and/or purpose of the assignment. Specific position (perspective or argument) fails to take into account the complexities of the financial reporting issue(s). Makes assertions that are not justified. Demonstrates limited awareness of content and/or purpose of the assignment. Specific position (perspective or argument) begins to take into account the financial reporting issue(s). Justifies any conclusions reached with arguments not merely assertion. Demonstrates consistent awareness of content and/or purpose of the assignment. Specific position (perspective or argument) takes into account the complexities of the financial reporting issue(s) Others’ points of view are acknowledged. Justifies any conclusions reached with well-formed arguments not merely assertion. Demonstrates an advanced and integrated understanding of content and/or purpose of the assignment. Specific position (perspective or argument) is expertly presented and accurately takes into account the complexities of the financial reporting issue(s). Justifies any conclusions reached with well- developed arguments. Consistently demonstrates a systematic and critical understanding of content and purpose of the assignment. Specific position (perspective or argument) is presented expertly, authoritatively and imaginatively, accurately taking into account the complexities of the financial reporting issue(s). Limits of position are acknowledged. Justifies any conclusions reached with sophisticated arguments. ACCT6005 Assessment 2 Case Study Brief.docx Page 6 of 6 Use of academic and discipline conventions and sources of evidence. Grammar, spelling and referencing 10 Poorly written with errors in spelling, grammar. Demonstrates inconsistent use of good quality, credible and relevant research sources to support and develop ideas. There are mistakes in using the APA style. Is written according to academic genre (e.g. with introduction, conclusion or summary) and has accurate