HI5020 Corporate Accounting Question3 (7 marks) You are provided with the following information: Sales for the year $400 000 Discounts provided during the year to customers for early payment $10 000 Doubtful debts expense for the year $5 000 Opening balance of accounts receivable $90 000 Closing balance of accounts receivable $80 000 Opening balance of the provision for doubtful debts $9 000 Closing balance of the provision for doubtful debts $8 000 Cost of goods sold for the year $60 000 Purchases for the year (on credit terms) $80 000 Discounts received for early payment to suppliers $2 000 Stock write-offs owing to water damage caused by melting ice in the Antarctic $5 000 Opening balance of trade creditors $40 000 Closing balance of trade creditors $35 000 Opening balance of inventory $10 000 Closing balance of inventory $25 000   Required: Calculate the cash receipts from customers during the year

HI5020 Corporate Accounting

Question3 (7 marks)

You are provided with the following information:

Required:

1. Calculate the cash receipts from customers during the year. (3.5 marks)
2. Calculate the cash payments to suppliers during the year. (3.5 marks)

ANSWER (a): 

ANSWER (b): 

Question 4                                                                                                                                    (7 marks)

Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are:

1. What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at fair value? (1 marks)

2. What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets? (1 marks)

3. Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. (4 marks)

4. What are some of the implications of allowing the group to have two options in accounting for goodwill on consolidation? (1 marks)

ANSWER (a) to (d): 

Question 5                                                                                                                                 (11 marks)

Large Ltd owns 100% of the shares of Small Ltd. These shares were acquired on 1 July 2019 for $1 million when the shareholders’ funds of Small Ltd were:

All assets of Small Ltd were fairly stated at acquisition date, except for a land that had a fair value $50000 more than carrying value.

During the 2019/2020 financial year, Small Ltd sold inventory to Large Ltd at a sales price of $200,000. The inventory cost Small Ltd $120,000 to produce. At 30 June 2010 half of the stock was still on hand with Large Ltd. In addition, Small Ltd paid an interim dividend of $40,000 out of post-acquisition profits to Large Ltd during the 2009/2010 financial year. The tax rate is 30%.

Based on the above information, prepare the consolidation journal entries that Large Ltd will need to pass on 30 June 2020. 

ANSWER: