acctg 211 financial accounting    

Reference: Assignment 4               

                                                                

Note:

 

(a) You must use the Assignment 4 Answer Booklet provided on Canvas to submit your answers online.

 

Do not change the format of the answer booklet when submitting it online. At times, more space has been provided than is necessary to answer a question.

 

(b) It is your responsibility to ensure this assignment is successfully submitted as a pdf  before 6 pm on Friday, 13 October 2023.

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) This assignment counts for 4% of the final grade for the course.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QUESTION 1  

 

Part A

Determine the Parent and the Subsidiaries (if any) in the following diagram, which shows direct ownership interests among five entities:

 

 

                                                              6%

 

 

                                                  49%                 

                                                                                  40%

                       10%                                                                                         30%

 

                                      80%                                            5%

 

 

                                                                                                                     

                                                                40%

 

 

 

 

                                                                                                                                  

Part B

Parent Ltd acquired 60% of the equity in Subsidiary Ltd on 1 April 2002 for $580 000. At that date, the equity of Subsidiary Ltd comprised:

 

Share capital	$400 000
Retained earnings	200 000

 

Because Subsidiary Ltd used the cost model for its recognised property, plant, and equipment, it had several items whose book values were lower than their fair values. The book value of these assets was $280 000, and the fair value of these assets at the date of acquisition was $462 000.

 

At the date of acquisition, Subsidiary Ltd had an unrecognised intangible asset with a fair value of $120 000 and an unrecognised contingent liability of $40 000.

 

Required:

 

Prepare the notional journal entry, as at 31 March 2023, to eliminate the Parent Ltd asset ‘Investment in Subsidiary Ltd’ and to eliminate the parent’s portion of equity in the Subsidiary Ltd, in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations.

 

 

Question 1 continued:  

 

Part C  

Parent Ltd acquired equity in Subsidiary Ltd on 1 April 2008. At that date, the identifiable net assets were considered to be fairly valued, and the equity of Subsidiary Ltd comprised:

 

Share capital	$370 000
Retained earnings	190 000
Asset revaluation surplus	35 000
	$ 595 000

 

Parent Ltd requested your help in the preparation of their consolidated financial statements for the financial year ended 31 March 2023 and has provided you with the following information:

· In 2010 the total goodwill of Subsidiary Ltd was considered by the directors to be impaired by $ 3 200 and then again in 2019 by $3 000.  The directors of Parent Ltd believe that the total goodwill has been further impaired, during this financial year ended 31 March 2023, by $2 000.

 

· Subsidiary Ltd borrowed $70 000 from Parent Ltd on 8 August 2021 at an interest rate of 4.5% per annum; the loan is repayable in 2024.  Subsidiary Ltd paid the interest expense for the year ended 31 March 2023 on 31 March 2023.  

 

· During March 2022, Subsidiary Ltd made sales to Parent Ltd of $8 000 and recognised a profit of $3 000. Parent Ltd had not sold this purchase of inventory as at 31 March 2022.

 

· During March 2023, Subsidiary Ltd made sales to Parent Ltd of $7 800 and recognised a profit of $2 900. Parent Ltd's inventory on hand on 31 March 2023 included this purchase from Subsidiary Ltd.

 

Required:

 

(a) Assume Parent Ltd acquired 100% of the equity in Subsidiary Ltd on 1 April 2008. Complete the consolidation worksheet, in the examination answer booklet, for Parent Ltd for the financial year ended 31 March 2023 in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations. Note: Space for notional journal entries has been provided in the answer booklet. The notional journal entries must be prepared, but  will not be marked.

 

(b) Assume Parent Ltd only acquired 60% of the equity in Subsidiary Ltd for $372 000 on     1 April 2008.

Prepare the notional journal entry at 31 March 2023 to identify the non-controlling interest (NCI), in Subsidiary Ltd to be reported in the group accounts in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations. The directors of Parent Ltd require the NCI in Subsidiary Ltd to be measured at fair value. Where will you include this NCI account in the Consolidated Statement of Financial Performance?

 

 

 

 

 

QUESTION 2                 

 

The 2022 Financial Results/Report for Air NZ and Auckland Airport are provided on Canvas/Modules/Assignments 1 to 5. Answer the questions in the answer booklet; all questions relate to 2022.

 

 

QUESTION 3

 

Determine the amount of goodwill for (a) and (b) in the answer booklet.