HI5020 Corporate Accounting

Assessment Task – Tutorial Questions
Unit Code: HI5020
Unit Name: Corporate Accounting
Assignment: Tutorial Questions 2
Due: 11:30pm 26th June 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 6 to 10 inclusive and submit these answers in a single document.
The questions to be answered are:
Question 1
At 30 June 2019, Beta Ltd had the following deferred tax balances:

Deferred tax liability$18,000
Deferred tax asset15,000

Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the
following items:

Depreciation expense – plant
Doubtful debts expense
Long-service leave expense4,000

For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:

Tax depreciation – plant
Bad debts written off

Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate
of 30% applies.
a) Determine the taxable income and income tax payable for the year to 30 June 2020. (2.5 Marks)
b) Determine by what amount the balances of the deferred liability and deferred tax asset will
increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and
long-service leave. (3 marks)
c) Prepare the necessary journal entries to account for income tax assuming recognition criteria are
satisfied. (2.5 marks)
d) What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020? (2
Question 2
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd
issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado
Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.
At this date the statement of financial position of Eldorado Ltd was as follows:

Carrying amount
Fair value
Fixtures & fittings
Current assets
Current liabilities
Total net assets$129,000
Share capital (80,000 shares at $1.00 per share) $80,000
General reserve20,000
Retained earnings29,000
Total equity$129,000

Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition. (10
Question 3
a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions
occurred between the two entities:

On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously
costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other
entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.
During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost

plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The
tax rate is 30%.
(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the
intragroup transfers of inventory. (4 marks)
(ii) Compute the amount of cost of goods sold to be reported in the consolidated income
statement for 2017 relating to the relevant intra-group sales. (2 marks)
b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying value
in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). This plant
has a remaining useful life of five (5) years form the date of sale. The group measures its property
plants and equipment using a costs model. Tax rate is 30 percent.
Prepare the necessary journal entries in 30 June 2017 to eliminate the intra-group transfer of
equipment. (4 marks)
Question 4
Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018 for a cost of $1,600,000. As
at the date of acquisition, all assets and liabilities of Expert Ltd were fairly valued except a land that
has a carrying value $150,000 less than the fair value. The recorded balance of equity of Expert Ltd as
at 1 July 2018 were as:

Share capital
Retained earnings
General Reserve$400,000

Additional information:

The management of Giant Ltd values non-controlling interest at the proportionate share of Expert
Ltd identifiable net assets.
Expert Ltd has a profit after tax of $200,000 for the year ended 30 June 2019.
During the financial year to 30 June 2019, Expert Ltd sold inventory to Giant Ltd for a price of
$120,000. The inventory costs Expert Ltd $60,000 to produce. 25 percent of the inventory are still
on the hand of Giant Ltd as at 30 June 2019.
During the year Expert Ltd paid $60,000 in consultancy fees to Giant Ltd.
On 1 July 2018, Expert Ltd sold an item of plant to Giant Ltd $80000. The equipment had a carrying
value of $60,000 (Cost $100,000, accumulated depreciation $40,000). At the date of sale, it was
expected that the equipment had a remaining life of 4 years and no residual value.
The tax rate is 30 percent.

a) Based on the above information, calculate the non-controlling interest as at 30 June 2019. (6.5
b) Prepare the necessary journal entries to recognise the non-controlling interest as at 30 June 2019.
(3.5 marks)
Question 5
The Daddy Group has the following group structure:

Daddy Ltd
Son 1 Ltd

Son 2 Ltd Son 3 Ltd
30 %

Son 4 Ltd

Son 5 Ltd
45% 95%
Son 6 Ltd Son 7 Ltd
(a) Reproduce and complete the following controlling and non-controlling interest table. Show
your calculations. ( 7 marks)
(b) What percentage of the voting in Son 7 Ltd will be controlled by the Daddy Ltd?
(1.5 marks)
(c) What percentage of the dividend declared by Son 7 Ltd will be received by the Daddy Ltd?
(1.5 marks)

Daddy InterestSon 1Son 4Son 2Son 5Son 7Son 6Son 3
Direct %
Indirect %
Direct %
Indirect %

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.

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