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ACC301 Advanced Financial Accounting Assignment 2

ACC301Advanced Financial AccountingAssignment 2 – Group-based AssignmentJuly 2016: 2024 – Do my homework – Help write my assignment online PresentationACC301Assignment 2Group-based AssignmentThis assignment is worth 30% of the final mark for ACC301 Advanced Financial Accounting.The cut-off date for this assignment is 10 October 2016: 2024 – Do my homework – Help write my assignment online, 2359 hrs.This is a group-based assignment. You should form a group of 3 members from your seminargroup. Each group is required to upload a single report to Blackboard via your respectiveseminar group. Please elect a group leader. The responsibility of the group leader is to uploadthe report on behalf of the group.It is important for each group member to contribute substantially to the final submitted work.All group members are equally responsible for the entire submitted assignment. If you feel thatthe work distribution is inequitable to either yourself or your group mates, please highlight thisto your instructor as soon as possible. Your instructor will then investigate and decide on anyaction that needs to be taken. It is not necessary for all group members to be awarded the samemark.___________________________________________________________________________Question 1XYZ Ltd recorded a profit before tax of $2,500,000 for the year ended 31 December 2013. Thetax rate for 2013 was 24% while that of 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap was 22%. Deferred tax liability as at 31 December2014: 2024 – Essay Writing Service. Custom Essay Services Cheap was $26,400.On 1 January 2011, XYZ Ltd purchased plant and machinery costing $120,000.The useful life of the plant and machinery was five years, but the capitalallowances were to be claimed over a three year period.On 1 July 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap, XYZ Ltd purchased specialized equipment costing $150,000.The useful life of the equipment was five years from the date of acquisition.However, for tax purposes, capital allowances were claimed in full during 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap.XYZ Ltd completed the development phase of a new drug on 1 January 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap,which amounted to $50,000. The expenditures were not deductible for taxpurposes but were deemed to have an economic useful life of five years foraccounting purposes.The movement in the provision for impairment losses is as follows:Balance as at 1 JanuaryExpensesUtilizationBalance as at 31 December31 December 2013$55,00030,000(50,000)$35,000Impairment losses were allowable for tax purposes in the period of utilization.SIM UNIVERSITYAssignment 2 – Page 2 of 5ACC301Assignment 2Dividends received during 2013 amounted to $50,000 while dividend incomefor 2013 was $60,000. Dividends receivable as at 1 January 2013 were $20,000.Dividend income was taxed when received.Unearned revenue balance arising from service fees collected in advance as at31 December 2013 was $14,000. Cash received during the year in respect ofunearned revenue was $32,000. Earned revenue from service fees for 2013 was$30,000. Service fees were taxable during the year when the proceeds werereceived.Disallowed items for the year ended 31 December 2013 are as follows:Entertainment expenses$9,600Donations to non-qualifying charities $9,500Disallowed transport expenses$13,000Tax-exempt income and reliefs granted for the year ended 31 December 2013are as follows:Tax-exempt incomeDouble-deductions$14,000$65,000Required:(a)Prepare the tax computation for the year ended 31 December 2013 based on the aboveinformation.(18 marks)(b)Using the balance sheet approach, compute the cumulative taxable (deductible)temporary differences arising from each asset or liability as at 31 December 2013.(7 marks)(c)Determine the deferred tax liability as at 31 December 2013.(5 marks)(d)Examine the details provided and perform an analytical check on tax expense for 2013.(5 marks)Question 2Holding Ltd holds 80% of S Ltd and 40% of A Ltd. It acquired its investments in 2001, whenS Ltd’s retained profit was $100,000 and A Ltd’s retained profit was $50,000.The excesspayments are goodwill.All the companies have adopted FRS103 and FRS 28 since 1 January 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers. Prior to that date(1/1/2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers), both the goodwill arising from acquisition of S Ltd and A Ltd were amortized overfive years under FRS22.SIM UNIVERSITYAssignment 2 – Page 3 of 5ACC301Assignment 2In 2005, all three companies revalued their respective fixed assets for the first time. In 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers,all three companies revalued their respective fixed assets again. The amounts of revaluationsurplus were credited to the respective revaluation reserve account.In December 2007, Holding Ltd sold goods invoiced at $20,000 (cost plus 100% mark-up) toA Ltd. All these goods were in store of A Ltd as at 31 December 2007, but were sold in January2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers.During the year 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers. Both S Ltd and A Ltd sold goods to Holding Ltd at cost plus 50%. SLtd’s sales to Holding Ltd was $100,000, and A Ltd’s sales to Holding Ltd was $50,000. On31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers, Holding Ltd’s stock included goods purchased from S Ltd and A Ltd of$60,000 and $30,000 respectively.All the companies have adopted the one-tier system for dividend since 1 January 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers.The financial statements of the three companies are as follows:Statements of financial position as at 31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers (SOFP)Fixed assetsInvestment in S LtdInvestment in A LtdNet current assets (CA- CL)Share capitalRevaluation reservesRetained profitsH Ltd S Ltd A Ltd$’000 $’000 $’00040070030042000700080507097075037050010037097040010025075010050220370Statement of comprehensive income for the year ended 31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers (SOCI)SalesCost of salesGross profitDividend from S LtdDividend from A LtdOperating expensesProfit before taxTaxProfit after taxOther comprehensive income (OCI):Revaluation surplusTotal comprehensive incomeSIM UNIVERSITYH Ltd S Ltd A Ltd$’000 $’000 $’00010008005004003002006 – Write a paper; Professional research paper writing service – Best essay writers00500300112283002001004403002009010060350200140604105025030170Assignment 2 – Page 4 of 5ACC301Assignment 2Statement of changes in equity (partial) for the year ended 31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro WritersH Ltd S Ltd A Ltd$’000 $’000 $’000Revaluation reserve:Beginning balanceSurplus for the year (SOCI)Ending balance (SOFP)Retained profit:Beginning balanceProfit for the year (SOCI)-PATDividendEnding balance(SOFP)40601005050100203050120350(100)370190200(140)250150140(70)220RequiredApply the principles underlying the elimination of intragroup balances and transactions inconsolidation. Illustrate the consolidation process by doing the following:(a)Prepare the consolidated journal entries for the Holding Ltd group for the year 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers,using acquisition method to deal with subsidiary S Ltd, and equity method to deal withAssociate A Ltd. Show the narration for each journal.(38 marks)(b)Prepare the consolidated worksheet with appropriate numbering of the consolidationjournals from part (a) unto the adjustment columns (Debit/Credit) and show the finalconsolidated balances for consolidated financial statements.(9 marks)(c)Prepare the consolidated financial statements as follows:(i)Statement of profit or loss and other comprehensive income for the year ended31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers.(ii)Statement of changes in equity (Partial) as at 31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers.(iii)Statement of financial position as at 31 December 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers.Show all workings to support key figures in the above statements.(18 marks)—- END OF ASSIGNMENT —-SIM UNIVERSITYAssignment 2 – Page 5 of 5

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