ACC/ACF2100 Financial Accounting Semester Two 2022
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ACC/ACF2100 Financial Accounting Semester Two 2022
Group Assignment
Submission
The assignment is to be typed (not handwritten) and submitted via Moodle as a single word file.
General assignment instructions:
This is a group assessment task. Groups will consist of 2-3 members. It is up to students to maintain communication with group members and to make sure that all group members are contributing to the final product in an equitable manner. For effective management, all members should ensure that they have each other's contact details, i.e. email address, phone numbers, and that regular contact is maintained between all members of the group.
Where a dispute arises between group members, an attempt should be made in the first instance by members of the group to resolve that dispute. Failing this, any member of the group may contact the Chief Examiner for assistance, after which they may set up a meeting with all group members present. Once the assignment has been completed, the Chief Examiner and other teaching staff will not be available for such assistance. Therefore, it is crucial that disputes arising between group members are dealt with as soon as possible and well before the submission date.
Useful Resources
The lecture materials, tutorial questions, and textbook are a good starting point in completing your assignment. You may also wish to refer to the relevant accounting standard(s).
Penalties for late lodgement
A penalty of 10% of the total mark allocated to this assessment task will be deducted for each day, or part thereof, it is late. Tasks submitted more than seven days after the due date will receive a mark of zero for that task.
Special consideration
Information about special consideration and extensions is available here: https://forms.monash.edu/special-consideration
Return of marks:
Marks will be made available on Moodle within 10 working days.
Need help?
If you are unsure of any aspect of this assignment, or if you are experiencing difficulties, please contact the Chief Examiner, Dr Lisa Powell: [email protected]
Task Details
On 1 July 2020, Cloudy Ltd acquired all of the shares of Sunhill Ltd, on a cum-div. basis, for
$5,850,000. At this date, the financial statements of Sunhill Ltd showed the following balances:
|
Share capital – 500 000 shares General reserve Retained earnings Revaluation surplus Dividend payable |
$ |
2,500,000 850,000 1,450,000 280,000 85,000 |
At acquisition date, all the identifiable assets and liabilities of Sunhill Ltd were recorded at amounts equal to fair value except for the following:
|
|
Carrying amount |
Fair value |
|
Inventory |
$265,000 |
$325,000 |
|
Land |
950,000 |
1,220,000 |
|
Plant (cost $900 000) |
540,000 |
680,000 |
The dividend payable at acquisition date was subsequently paid in August 2020. The inventory on hand in Sunhill Ltd at 1 July 2020 was sold in August 2020. In May 2022, the land was sold to Sunnyside Ltd for $1,450,000. The plant was estimated to have a further five-year life with no residual value. Goodwill was impaired by $40,000 at 30 June 2021. The tax rate is 30%.
During the period 1 July 2020 to 30 June 2022, the following intragroup transactions have occurred between Cloudy Ltd and Sunhill Ltd:
(T1) At 30 June 2022, Cloudy Ltd approved and declared a final dividend of $90,000, and Sunhill Ltd declared and approved a final dividend of $75,000. These dividends were paid on 31 July 2022.
(T2) From February 2021 to June 2021, Cloudy Ltd provided management services to Sunhill Ltd for $70,000. Sunhill Ltd paid $50,000 of this balance in May 2021, and the remaining
$20,000 was paid in August 2021.
(T3) In May 2021, Cloudy Ltd sold inventory to Sunhill Ltd for $73,000. Cloudy Ltd had previously purchased the inventory for $49,000. By 30 June 2021, Sunhill Ltd had sold one-quarter of this inventory to Billow Ltd for $28,000.
(T4) On 1 July 2020, Sunhill Ltd sold equipment to Cloudy Ltd for $120,000. The equipment had been purchased by Sunhill Ltd on the same day for $100,000. Equipment has a further five-year life, with zero residual value, and is depreciated on a straight-line basis.
(T5) On 30 November 2021, Sunhill Ltd sold inventory to Cloudy Ltd for $56,000. The inventory had previously cost Sunhill Ltd $48,000. The inventory remained unsold by Cloudy Ltd at 30 June 2022.
Required
a) Prepare the acquisition analysis at 1 July 2020. (9 marks)
b) Prepare the consolidation journal entries at 1 July 2020. All workings and narrations must be provided. (15 marks)
c) Prepare the consolidation journal entries at 30 June 2021. All workings and narrations must be provided. (27 marks)
d) Prepare the consolidation journal entries at 30 June 2022. All workings and narrations must be provided. (32 marks)
e) Referring to your journal entries for Part d), explain the adjustment(s) required for T5 (inventory), noting the adjustment to each account separately. (12 marks)
Assignments should be typed with all narrations, workings, and intragroup adjustments correctly labelled as T1 – T5. (5 marks)
(9 + 15 + 27 + 32 + 12 + 5 = 100 Marks)
2022-10-14