can anyone please help me with this assignment. it is due after 3 days. subject corporate accounting

Corporate Accounting (BBAC401) Assignment (Group of Two) (Total Marks 30) Due Date: Session 6.1 (2 May) Problem # 1 (15 Marks) The summarised trial balance of Star Ltd as at 30 June 2017 is shown below. Debit Credit Ordinary share capital (1 500 000 shares) $1 062 50 0 General reserve (1/7/16) 175 000 Revaluation surplus (1/7/16) 60 000 Retained earnings (1/7/16) 104 500 Bank loan (long-term) 43 500 Deferred tax liability (1/7/16) 3 000 Mortgage (long-term) 50 000 Accounts payable 132 000 Provision for employee benefits (long-term) 75 000 Allowance for doubtful debts 37 500 Accumulated depreciation: Plant 9 500 Office furniture 850 Buildings 2 500 Land (at cost) $ 211 500 Factory buildings (at cost) 250 000 Accounts receivable 542 950 Plant (at cost) 90 000 Inventory 651 100 Office furniture (at cost) 6 000 Goodwill 200 000 Cash at bank 278 800 WorkfileContents.docx Page 1 Employee benefits expense 12 500 Sales 1 730 500 Raw materials and consumables used 1 083 100 Changes in inventories of finished goods and work in progress Other expenses (excluding depreciation but including interest expense $31 000 on bank loan and mortgage) 3 100 163 500 $3 489 450 WorkfileContents.docx Page 2 $3 489 45 0 The accountant for the company seeks your assistance in preparing the financial statements for external reporting purposes and advises you of the following information that needs to be taken into account before finalising the financial statements. Additional information (a) Depreciation is to be provided for: Plant $9 000 Office furniture Buildings 800 2 500 (b) The estimated total income tax expense relating to profit or loss items only for 2017 is $200 000, consisting of $150 000 for the current liability and $50 000 as a deferred tax liability. (c) Final dividends of 2 cents per share were declared by directors. (d) Directors decided to transfer $10 000 from retained earnings to general reserve. (e) Following expert advice, the directors decided on 30 June 2017 to revalue the land and factory buildings to reflect current fair values. Consequently, directors placed a value of $300 000 on land and $350 000 on the buildings. (f) Company tax rate is 30%. Required: Based on the ledger balances and the additional information provided, prepare a statement of profit or loss and other comprehensive income (classify expenses by nature), a statement of financial position and a statement of changes in equity for Star Ltd for the year ended 30 June 2017, to comply with AASB 101. WorkfileContents.docx Page 3 Problem # 2 (15 Marks) The profit before tax of Perfect Skin Ltd for the year ended 30 June 2017 is $600 000 and includes the following revenue and expense items: Rent revenue $ 30 000 Bad debts expense 60 000 Depreciation expense - plant 50 000 Long-service leave expense 75 000 Extracts from the statements of financial position of the company at 30 June 2017 and 30 June 2016 showed the following assets and liabilities: PERFECT SKIN LTD Statement of Financial Position (Extract) as at 30 June 2017 2016 Assets Cash $ 80 000 $ 85 000 Inventory 170 000 155 000 Accounts receivable 500 000 480 000 Allowance for doubtful debts (55 000) (40 000) 25 000 22 000 500 000 500 000 (260 000) (210 000) 300 000 300 000 (148 000) (140 000) 70 000 70 000 ? 40 500 Accounts payable 290 000 260 000 Provision for employee benefits 100 000 75 000 25 000 20 000 ? 38 100 Other current assets Plant Accumulated depreciation Buildings Accumulated depreciation Goodwill Deferred tax asset Liabilities Rent received in advance Deferred tax liability WorkfileContents.docx Page 4 Additional information (a) Depreciation for tax purposes for Plant for the year ended 30 June 2017 amounted to $75 000. (b) Rent is taxed when received. (c)Assume a tax rate of 30% for the year ended 30 June 2017. Required Prepare a current tax worksheet for the year ended 30 June 2017 to calculate taxable income and the company's current tax liability, and then record the entries for current tax (show all workings). Calculate the end-of-period adjustments required for the deferred tax asset and liability accounts, and record the entries for deferred tax and show the balances of deferred tax asset and deferred tax liability as at 30 June 2017(show all workings). Source: Adapted from Leo, K, Knapp, J, McGowan, S & Sweeting, J (2015) Company Accounting, 10th Edition, John Wiley & Sons Australia, Queensland. WorkfileContents.docx Page 5 Assignment Marking Criteria The following assignment criteria are designed to give the student a guide as to what markers are looking for in the assignment. Marks are allocated based on the increment of 0.5. WorkfileContents.docx Page 6 Problem 1: General format Marks allocated 2 Workings (calculation) 7 Data presentation 6 Excellent Satisfactory (1.5 - 2 marks) The format of financial statements is in accordance with AASB 101, including name of entity, name of statement, year and the sequence of items contained in each statement (5.5 - 7 marks) Show all workings clearly, including the necessary formula. Almost (two-thirds) all the calculations are correct with reference to the formulas and data available. (1 - 1.5 marks) The format of financial statements is reasonably in accordance with AASB 101 with some items not included or put in sequence in the statements (3 - 5 marks) Show all workings clearly, including the necessary formula. More than one-third and less than 2thirds of the calculations are correct with reference to the formulas and data available. (3 - 4.5 marks) Most data (numbers) corresponding to each item on the statements are presented correctly, with a maximum of 6 mistakes. The balance between total assets and total equity is achieved (2-3.5 marks). Relevant data in one statement must be the same as that in the other statement (1 marks) (5 - 6 marks) All data (numbers) corresponding to each item on the statements are presented correctly, with a maximum of 3 mistakes. The balance between total assets and total equity is achieved. (4-5 marks). Relevant data in one statement must be the same as that in the other statement (1 marks) Problem 2: WorkfileContents.docx Page 7 Needs improvements (0 -0.5 marks) The format of the financial statement is not consistent with AASB 101 guidance (0 - 2.5 marks) Workings are not shown clearly. Less than one-thirds of the calculations are correct with reference to the formulas and data available. (0 - 2.5 marks) Almost data (numbers) corresponding to each item on the statements are presented incorrectly, and the balance between total assets and total equity is not achieved. Workings (calculations of individual items of income and expenses for tax purpose) Marks allocated 5 Workings (calculations of taxable income based on accounting income and of current taxable liability) Presentation and explanation of calculation of deferred tax assets and liabilities WorkfileContents.docx Excellent Satisfactory Needs improvements (4 - 5 marks) All workings are shown clearly, demonstrating a thorough understanding of the differences between accounting tax treatment for income and expenses. Up to 1 mistake made (or 1 working omitted) on the necessary workings. (2.5 - 3.5 marks) All workings are shown clearly, demonstrating a moderate understanding of the differences between accounting tax treatment for income and expenses. Up to two mistakes can be made (or 2 workings are omitted) on the necessary workings. (2.5 - 3.5 marks) Show the understanding of calculation of taxable income based on accounting profit (0.5 marks). Up to 5 mistakes are made with respect to individual items added back or deducted from accounting profit. (2-3 marks). (0 -2 marks) Showing lack of an understanding of the differences between accounting tax treatment for income and expenses. None of the necessary workings is correct. (2.5 - 3.5 marks) The calculation of deferred tax liabilities and deferred tax assets are based on the derived results (1 mark). Up to 2 mistakes are made with reference to the calculation of deferred tax. (1-2 marks) Reasonably appropriate entry for current tax liability (0.5 mark). (0 - 2 marks) Show lack of an understanding of calculation of deferred tax liabilities and deferred tax assets More than 2 mistakes are made with reference to the calculation of deferred tax. 5 (4 - 5 marks) Show the understanding of calculation of taxable income based on accounting profit (0.5 marks). Up to 2 mistakes are made with respect to individual items added back or deducted from accounting profit. (3.5-4.5 marks). 5 (4 - 5 marks) The calculation of deferred tax liabilities and deferred tax assets are based on the derived results (1 mark). Up to 1 mistake is made with reference to the calculation of deferred tax. (2-3 marks) Reasonably appropriate entry for current tax liability (1 mark). . Page 8 (0 - 2 marks) Show lack of an understanding of calculation of taxable income based on accounting profit. Less than 5 individual items added back or deducted from accounting profit are correct. \fProblem-1 Solution STAR LTD Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017 Revenue Changes in inventories of finished goods and work in progress Raw materials and consumables used Employee benefits expense Depreciation* Other expenses** Finance costs Profit before income tax Income tax expense Profit for the period Other comprehensive income Items that will not be reclassified to profit or loss Gain on revaluation of land*** Gain on revaluation of buildings*** Income tax relating to items not reclassified Other comprehensive income for the year, net of tax Total comprehensive income for the year Working*Depreciation: Plant Office furniture Buildings 3100 -1083100 -12500 -12300 -132500 -31000 462200 200000 262200 88500 105000 -58050 135450 397650 9000 800 2500 12300 **Other expenses: Other expenses Less interest expense 163500 -31000 132500 ***Gain arising during the year on revaluation of: Land (300 000 -211 500) Buildings (350 000 - (250 000 - (2 500 acc. dep. + 2 500 dep.))) STAR LTD Statement of Financial Position as at 30 June 2017 ASSETS 1730500 88500 105000 Current assets Cash and cash equivalents Trade and other receivables* Inventories Total current assets Non-current assets Property, plant and equipment** Goodwill Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables*** Current tax payable Total current liabilities Non-current liabilities Long-term borrowings**** Deferred tax liabilities***** Long-term provisions Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Retained earnings Total equity Workings: *Trade and other receivables: Accounts receivable Allowance for doubtful debts **Property, plant and equipment: Freehold land Factory buildings Plant 90000 Accumulated depreciation [9 500 + 9 000] (18 500) Office furniture 6000 Accumulated depreciation [850 + 800] (1 650) ***Trade and other payables: Accounts payable 278800 505450 651100 1435350 725850 200000 925850 2361200 162000 150000 312000 93500 111050 75000 279550 591550 1769650 1062500 380450 326700 1769650 542950 -37500 505450 300000 350000 650000 71500 4350 725850 132000 Dividend payable (1 500 000 shares x 2 cents per share) ****Long-term borrowings: Bank loan Mortgage ***** Deferred tax liabilities: Balance 1/7/2016 Deferred tax portion of income tax expense Revaluation of: Land (30% x [300 000 - 211 500]) Buildings (30% x [350 000 - (250 000 - (2 500 + 2 500)])) 30000 162000 43500 50000 93500 3000 50000 26550 31500 111050 STAR LTD Statement of Changes in Equity for the year ended 30 June 2017 Balance at 1 July 2016 Total comprehensive income for the year Dividend declared - ordinary Transfer to general reserve Balance at 30 June 2017 Dividends: 2 cents per share Share Capital 1062500 1062500 General reserve 175000 10000 185000 Reval. Surplus 60000 135450 195450 Retained earnings 104500 262200 -30000 -10000 326700 Total 1402000 397650 -30000 1769650 Problem-2 Solution (A) Current Tax Worksheet for the year ended 30 June 2017 Accounting profit before tax Add Depreciation expense - buildings Bad debts expense Depreciation expense - plant Long service leave expense Annual leave expense Rent received Less Rent revenue Government grant received Tax depreciation Bad debts written off Long service leave and Annual leave paid Office supplies paid for Taxable income Current tax liability = 30% x $633 000 Journal entry Date 1 Account Titles & Explanation Income Tax Expense Current Tax Liability Working: Bad Debts written off Allowance for Doubtfu Bad debts written off Ending balance Rent received Rent Received in Ad Revenue Ending balance Long service leave and Annual leave paid Provision for Employee Cash Ending balance Part-B Deferr as a Carrying Amount Assets Accounts receivable Office supplies Plant Liabilities Provision for employee benefits Rent received in advance Temporary Diffs for deferred tax Deferred tax liability (30%) Deferred tax asset (30%) Beginning balances adjustments Adjustments Increase for year *Plant for tax purposes Carrying amount at 1 July 2016 ($500 000 - 315 000) Tax Depreciation Tax base at 30 June 2017 445000 25000 240000 100000 25000 185000 -75000 110000 Journal entry Date 1 Account Titles & Explanation Deferred Tax Asset Deferred Tax Liability Income Tax Expense Tax Worksheet ended 30 June 2017 600000 8000 60000 50000 45000 30000 35000 828000 30000 10000 75000 45000 50000 18000 228000 600000 180000 rnal entry Debit 180000 Credit 180000 Allowance for Doubtful Debts 45000 55000 100000 Beginning balance Expense 40000 60000 100000 Rent Received in Advance 30000 25000 55000 Beginning balance Cash 20000 35000 55000 Provision for Employee Benefits 50000 100000 150000 Deferred Tax Worksheet as at 30 June 2017 Future Deductible Amount Beginning balance LSL Expense A/L Expense 20000 45000 30000 150000 Tax Base Taxable Temp Diffs 0 0 110000* 500000 0 110000 25000 130000 100000 250000 0 0 155000 46500 38100 0 8400 rnal entry Debit 13500 Credit 8400 5100 Deductible Temp Diffs 55000 100000 25000 180000 54000 40500 0 13500 \fProblem-1 Solution STAR LTD Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017 Revenue Changes in inventories of finished goods and work in progress Raw materials and consumables used Employee benefits expense Depreciation* Other expenses** Finance costs Profit before income tax Income tax expense Profit for the period Other comprehensive income Items that will not be reclassified to profit or loss Gain on revaluation of land*** Gain on revaluation of buildings*** Income tax relating to items not reclassified Other comprehensive income for the year, net of tax Total comprehensive income for the year Working*Depreciation: Plant Office furniture Buildings 3100 -1083100 -12500 -12300 -132500 -31000 462200 200000 262200 88500 105000 -58050 135450 397650 9000 800 2500 12300 **Other expenses: Other expenses Less interest expense 163500 -31000 132500 ***Gain arising during the year on revaluation of: Land (300 000 -211 500) Buildings (350 000 - (250 000 - (2 500 acc. dep. + 2 500 dep.))) STAR LTD Statement of Financial Position as at 30 June 2017 ASSETS 1730500 88500 105000 Current assets Cash and cash equivalents Trade and other receivables* Inventories Total current assets Non-current assets Property, plant and equipment** Goodwill Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables*** Current tax payable Total current liabilities Non-current liabilities Long-term borrowings**** Deferred tax liabilities***** Long-term provisions Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Retained earnings Total equity Workings: *Trade and other receivables: Accounts receivable Allowance for doubtful debts **Property, plant and equipment: Freehold land Factory buildings Plant 90000 Accumulated depreciation [9 500 + 9 000] (18 500) Office furniture 6000 Accumulated depreciation [850 + 800] (1 650) ***Trade and other payables: Accounts payable 278800 505450 651100 1435350 725850 200000 925850 2361200 162000 150000 312000 93500 111050 75000 279550 591550 1769650 1062500 380450 326700 1769650 542950 -37500 505450 300000 350000 650000 71500 4350 725850 132000 Dividend payable (1 500 000 shares x 2 cents per share) ****Long-term borrowings: Bank loan Mortgage ***** Deferred tax liabilities: Balance 1/7/2016 Deferred tax portion of income tax expense Revaluation of: Land (30% x [300 000 - 211 500]) Buildings (30% x [350 000 - (250 000 - (2 500 + 2 500)])) 30000 162000 43500 50000 93500 3000 50000 26550 31500 111050 STAR LTD Statement of Changes in Equity for the year ended 30 June 2017 Balance at 1 July 2016 Total comprehensive income for the year Dividend declared - ordinary Transfer to general reserve Balance at 30 June 2017 Dividends: 2 cents per share Share Capital 1062500 1062500 General reserve 175000 10000 185000 Reval. Surplus 60000 135450 195450 Retained earnings 104500 262200 -30000 -10000 326700 Total 1402000 397650 -30000 1769650 Problem-2 Solution (A) Current Tax Worksheet for the year ended 30 June 2017 Accounting profit before tax Add Depreciation expense - buildings Bad debts expense Depreciation expense - plant Long service leave expense Annual leave expense Rent received Less Rent revenue Government grant received Tax depreciation Bad debts written off Long service leave and Annual leave paid Office supplies paid for Taxable income Current tax liability = 30% x $633 000 Journal entry Date 1 Account Titles & Explanation Income Tax Expense Current Tax Liability Working: Bad Debts written off Allowance for Doubtfu Bad debts written off Ending balance Rent received Rent Received in Ad Revenue Ending balance Long service leave and Annual leave paid Provision for Employee Cash Ending balance Part-B Deferr as a Carrying Amount Assets Accounts receivable Office supplies Plant Liabilities Provision for employee benefits Rent received in advance Temporary Diffs for deferred tax Deferred tax liability (30%) Deferred tax asset (30%) Beginning balances adjustments Adjustments Increase for year *Plant for tax purposes Carrying amount at 1 July 2016 ($500 000 - 315 000) Tax Depreciation Tax base at 30 June 2017 445000 25000 240000 100000 25000 185000 -75000 110000 Journal entry Date 1 Account Titles & Explanation Deferred Tax Asset Deferred Tax Liability Income Tax Expense Tax Worksheet ended 30 June 2017 600000 8000 60000 50000 45000 30000 35000 828000 30000 10000 75000 45000 50000 18000 228000 600000 180000 rnal entry Debit 180000 Credit 180000 Allowance for Doubtful Debts 45000 55000 100000 Beginning balance Expense 40000 60000 100000 Rent Received in Advance 30000 25000 55000 Beginning balance Cash 20000 35000 55000 Provision for Employee Benefits 50000 100000 150000 Deferred Tax Worksheet as at 30 June 2017 Future Deductible Amount Beginning balance LSL Expense A/L Expense 20000 45000 30000 150000 Tax Base Taxable Temp Diffs 0 0 110000* 500000 0 110000 25000 130000 100000 250000 0 0 155000 46500 38100 0 8400 rnal entry Debit 13500 Credit 8400 5100 Deductible Temp Diffs 55000 100000 25000 180000 54000 40500 0 13500