hi can you upload the solution of it?

and do you have exam paper of 5953 last semeter?

OFFICE USE ONLY Mock Examination Faculty of Business and Economics Department of Accounting EXAM CODES: ACF5953 TITLE OF PAPER: FINANCIAL ACCOUNTING - PAPER 1 EXAM DURATION: 3 hours writing time READING TIME: 10 minutes THIS PAPER IS FOR STUDENTS STUDYING AT:( tick where applicable) o Berwick o Clayton o Malaysia o Off Campus Learning o Open Learning Caulfield o Gippsland o Peninsula o Enhancement Studies o Sth Africa o Parkville o Other (specify) During an exam, you must not have in your possession, a book, notes, paper, electronic device/s, calculator, pencil case, mobile phone or other material/item which has not been authorised for the exam or specifically permitted as noted below. Any material or item on your desk, chair or person will be deemed to be in your possession. You are reminded that possession of unauthorised materials, or attempting to cheat or cheating in an exam is a discipline offence under Part 7 of the Monash University (Council) Regulations. No exam paper or other exam materials are to be removed from the room. AUTHORISED MATERIALS OPEN BOOK o YES NO CALCULATORS YES o NO (If YES, only calculators with an 'approved for use' Faculty sticker are permitted) SPECIFICALLY PERMITTED ITEMS o YES NO if yes, items permitted are: This paper consists of two (2) parts printed on a total of thirteen (13) pages. Part A comprises 10 multiple choice questions. Part B comprises 4 questions. Students must attempt to answer ALL questions. Candidates must complete this section if required to write answers within this paper STUDENT ID: __ __ __ __ __ __ __ __ DESK NUMBER: __ __ __ __ __ PLEASE CHECK THE PAPER BEFORE COMMENCING. THIS IS A FINAL PAPER. THIS EXAMINATION PAPER MUST BE INSERTED INTO THE ANSWER BOOK AT THE COMPLETION OF THE PAPER. ACF5953 Mock Exam Page 1 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING PART A (Each question is worth two marks) There are ten (10) multiple-choice questions in this section. You are to choose the most appropriate answer by CROSSING the letter on the answer sheet provided on page 15. Question 1 A statement of comprehensive income that includes revenue, cost of sales, selling expenses, and financial expenses would have been prepared using the: (a) nature of expense method. (b) narrative method. (c) revenues and gains approach. (d) function of expense approach. Question 2 Which consolidation concept mainly underlies the approach adopted in AASB 10 Consolidated Financial Statements? (a) proprietary concept (b) accrual concept (c) entity concept (d) parent-entity concept Question 3 Non-controlling interests are defined, according to AASB 10 Consolidated Financial Statements, as: (a) that portion of profit or loss and net assets of a subsidiary attributable to equity interests that are not owned directly by the parent. (b) that portion of net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. (c) that portion of profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. (d) the largest single shareholding, less fifty per cent, not owned, directly or indirectly through subsidiaries, by the parent. ACF5953 Mock Exam Page 2 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question 4 Aladdin Ltd sold inventory items (with a cost of $100,000) to its subsidiary Genie Ltd for $120,000. Half of the inventory items were sold by Genie Ltd to external parties before the financial year end. Ignoring taxes, which of the following statements is correct with respect to this transaction only? (a) Consolidated sales will decrease by $60,000. (b) Consolidated sales will decrease by $100,000. (c) Consolidated profit will decrease by $10,000. (d) Consolidated profit will decrease by $20,000. Question 5 A company has a loan with a carrying value of $60,000. The payment of the loan is not deductible for tax purposes. The tax rate is 30%. What is the tax base for this item? (a) $0 (b) $60,000 (c) $18,000 (d) $78,000 Question 6 Under the approach of AASB 112 Income Taxes, a taxable temporary difference creates which account? (a) provision for tax payable (b) deferred tax asset (c) general reserve (d) deferred tax liability Question 7 An argument to support the requirement that all companies over a certain size should comply with accounting standards in preparing their financial statement is: (a) Larger companies have greater political and economic importance and this increases the demand for financial information about the entity by external users. (b) Larger companies can afford to pay for complex accounting systems and the experts necessary to design and maintain them. (c) The Conceptual Framework and accounting standards are designed for larger enterprises. (d) The Australian Securities and Investment Commission should only be responsible for large enterprises. ACF5953 Mock Exam Page 3 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question 8 Mr and Mrs K Urban are partners in Urban Ltd, a music shop with sales revenue of $5,000,000 per annum, total assets of $10,000,000 and employees totalling 15. Urban Ltd is: (a) a reporting entity because there are at least two users of a financial report. (b) not likely to be a reporting entity because it is unlikely to have users dependent on its financial reports. (c) likely to be a reporting entity because there are two shareholders and it is an exempt proprietary entity. (d) not a reporting entity because small proprietary companies are frequently not considered as reporting entities Question 9 A joint operation should be accounted for using the: (a) cost method in the venturer's own books and the equity method in the group accounts (if they are prepared). (b) net market method in the books of the venturer and also in the group accounts. (c) cost method in the venturer's own books and the equity method in the group accounts, if they are prepared. Where group accounts are not prepared, the equity method should be applied in the venturer's own books. (d) line-by-line method in the joint operator's statement of financial position. Question 10 AASB 116 Property, Plant and Equipment prescribes that, if assets within the same class are revalued and some assets increased in value while others decreased in value: (a) the net decrement for the class of asset should be recognised as loss in the income statement. (b) the net increment for the class of asset should be credited to a revaluation reserve. (c) the total increment for all assets in the same class that increased in value should be credited to a revaluation reserve and total decrement for all assets in the same class of asset should be recognised as loss in the income statement. (d) All of the given answers are correct. (10 x 2 = 20 marks) ACF5953 Mock Exam Page 4 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING PART B Question One Read the extract from an article by John Addis, entitled 'ASIC finally wakes up to everyone else's nightmare' in The Age. Please answer the following questions. (a) The article mentioned the Australian Securities and Investment Commission (ASIC). Discuss the role of ASIC and the Australian Securities Exchange (ASX) in formulating and enforcing accounting regulations within Australia. What is the relationship between the two regulatory bodies? (b) Describe the main concern identified in the article, making reference to the mentioned "Stockholm Syndrome". (c) Based on the reading of this article, do you think that the ASIC can fulfil its role in regard to accounting regulations in Australia? Why? (5 + 4 + 4 = 13 marks) ASIC finally wakes up to everyone else's nightmare John Addis The AGE, June 16, 2014 The Stockholm Syndrome is a psychological process whereby a hostage identifies with their kidnapper, to the point of defending the kidnapper's reasons for their own capture. For the past eight years ASIC appears to have been suffering from a similar condition, with only the public revelation of wrongdoing, rather than wrongdoing itself, provoking action. The Senate hearing into ASIC's performance shows the regulator emerging from its captive state to see the true state of financial planning at Commonwealth Bank. The daily revelations of big bank malpractice and regulatory inaction is a real-life horror show. In her work covering ASIC's investigation into Financial Wisdom and Commonwealth Financial Planning, both owned by CBA, Fairfax's Adele Ferguson reported on a 'mystery shopper' exercise conducted by ASIC in 2007. Covering 51 randomly selected planners, the advice of 38 of them was rated as 'critical'. According to an ASIC letter sent to Tim Gunning, the CBA's former general manager of wealth management, in February 2008, the reason for a 'critical' rating included 'fraud and dishonest conduct', 'deliberate or reckless failure to disclose fees, costs, charges, relationship and warnings' and 'no evidence of appropriate advice'. Surely the bank would be keen to rid themselves of these 38 planners, especially as two similar surveys at CBA's Financial Wisdom's branch in Cairns and Commonwealth Financial Planning's Bankstown office in 2006 revealed similar concerns? Err, no. It got rid of just 12. ACF5953 Mock Exam Page 5 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question One (cont'd) The annexures in ASIC's letter to Gunning, detailing cases where 'the product recommended was more expensive than the client's existing product' and 'the recommended product would cost the client $6,280 more than if he had remained in the existing product', give a hint as to why. ASIC put two and two together, stating that there might be a 'correlation' between the amount of business that representatives wrote and CBA keeping them on. But ASIC did not pursue the 26 'critical' planners CBA retained and on Saturday - a full eight years after it became aware of the problems - Ferguson revealed that nine still work for the bank. Eight months after the Gunning letter, whistleblower Jeff Morris warned ASIC about dodgy planner Don Nguyen and the bank cover-up of his activities. After substantial prodding, the corporate cop stumbled to its feet and dusted down its excuses. But for the Senate inquiry, Morris and a handful of Fairfax reporters led by Ferguson, in one of the more obvious examples of regulatory capture, ASIC may well have been happy to let the matter slip. After all, even former ASIC insiders claim the regulator favours big business'. This space has been intentionally left blank ACF5953 Mock Exam Page 6 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question Two Gisborne Ltd acquired a business unit of Westport Ltd on 1 March 2008. At the date of acquisition, the net assets of Westport Ltd's business unit were as follows: Carrying amount Fair value Accounts receivable $50,000 $50,000 Inventory 30,000 15,000 Motor vehicles 10,000 5,000 Plant, property and equipment 300,000 350,000 Total assets 390,000 420,000 Bank overdraft 70,000 70,000 Accounts payable 40,000 40,000 Total liabilities 110,000 110,000 Net assets $280,000 $310,000 In exchange for the net assets of the business unit, Gisborne Ltd agreed to provide the following purchase consideration to Westport Ltd on 1 March 2008: 1) Cash of $200,000 of which $100,000 is to be paid on 1 March 2008 and another $100,000 (discounted at a rate of 5% per annum interest) to be paid one year later, on 1 March 2009. 2) 200,000 new ordinary shares in Gisborne Ltd that were issued at $1 per share on 1 March 2008. Gisborne Ltd agreed to pay cash to the value of any decrease in the share price below $1. This guarantee lasted until 1 March 2009. There was a 70% chance that share price would remain at $1 and a 30% chance that it would fall to $0.70 by 1 March 2009. 3) The share issue cost of $10,000 was paid by Gisborne on 1 March 2008. 4) At acquisition date, Westport Ltd was being sued by a customer for defective products. Expected damages were estimated at $50,000. Gisborne Ltd agreed to bear the damages in relation to this court case. The lawyer estimated that the probability of losing the court case was 50%. On 1 March 2009 (that is, one year after the date of acquisition), Gisborne's share price remained at $1. Required: (a) (b) Prepare the acquisition analysis on 1 March 2008. Prepare the journal entries for the following transactions in Gisborne Ltd's books: (i) The acquisition of Westport Ltd's net assets on 1 March 2008 and the probable damages of losing the court case. (ii) The issuance of Gisborne's new ordinary shares and the payment of share issue costs on 1 March 2008. (iii) The reversal of the provision for loss in value of shares on 1 March 2009. (iv) The payment of the remaining consideration payable on 1 March 2009. (5 + 10 = 15 marks) ACF5953 Mock Exam Page 7 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question Three Skyblue Ltd, an energy company, in order to diversify its operations, acquired 60% of River Ltd's shares on 1 July 2011. River Ltd's core business operation is in recycling energy. Skyblue Ltd paid $550,000 cash. On that day, the equity of River Ltd was as follows: Share capital $500,000 Retained earnings 130,000 630,000 At the time of acquisition, Skyblue Ltd considered that a building and a block of land in the accounts of River Ltd were less than their fair value. The building was purchased on 1 July 2008 at a cost of $360,000 and had a useful life of 6 years. The fair value was assessed at $200,000 as at 1 July 2011. The remaining useful life of the building was changed and considered to be 4 years with no residual value. The land was recorded in the accounts of River Ltd at $60,000 and Skyblue Ltd considered its fair value to be $80,000. The land was sold two years after the date of acquisition. Skyblue Ltd decided to revalue the building and land in its consolidation accounts. This space has been intentionally left blank ACF5953 Mock Exam Page 8 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question Three (cont'd) On 30 June 2014 (that is, three years after the date of acquisition), the financial statements of Skyblue Ltd and River Ltd are as follows. Statements of Financial Position of Skyblue Ltd and River Ltd as at 30 June 2014 Assets Cash Accounts Receivable Less: Allowance for doubtful accounts Dividend Receivable Inventory Total Current Assets Non-current assets Deferred Tax assets Investment in River Ltd Land Property, Plant and Equipment Less: Accumulated depreciation Total non-current assets Total Assets Liabilities and Equity Current Liabilities Accounts Payable Dividend Payable Income tax payable Other payable Total current liabilities Non-Current Liabilities Bank Loan Total Liabilities Shareholders' Equity Share capital Revaluation Reserve Retained earnings Total shareholders' equity Total Equity and Liabilities ACF5953 Mock Exam Skyblue Ltd 235,000 (25,000) 1,600,000 (500,000) River Ltd 190,000 210,000 130,000 (10,000) 180,000 120,000 80,000 310,000 790,000 70,000 550,000 120,000 900,000 0 230,000 530,000 40,000 0 80,000 (300,000) 600,000 1,100,000 1,840,000 2,630,000 10,000 210,000 150,000 50,000 420,000 180,000 600,000 1,000,000 103,000 900,000 2,030,000 2,630,000 720,000 1,250,000 150,000 100,000 120,000 104,000 474,000 96,000 570,000 500,000 30,000 150,000 680,000 1,250,000 Page 9 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question Three (cont'd) Statements of Comprehensive Income of Skyblue Ltd and River Ltd for the year ended 30 June 2014 Sales revenue Cost of goods sold Gross profit Other income (expense) Operating income Expenses Net profit before tax Income tax expenses Net profit after tax (NPAT) Retained earnings at 1 July 2013 Dividend declared and approved, but not yet paid Retained earnings at 30 June 2014 Skyblue Ltd $6,000,000 (2,000,000) 4,000,000 200,000 4,200,000 (3,870,000) 330,000 (130,000) $200,000 700,000 (200,000) $700,000 River Ltd $3,600,000 (1,600,000) 2,000,000 150,000 2,150,000 (2,015,000) 135,000 (35,000) $100,000 150,000 (100,000) $150,000 The following information is available at 30 June 2014: During the financial year ending 30 June 2014, Skyblue Ltd purchased inventory from River Ltd for $390,000. The cost of the inventory for River Ltd was $350,000. 80% of this inventory was still on hand with Skyblue Ltd at the end of the financial year. During the financial year ending 30 June 2014, River Ltd purchased inventory from Skyblue Ltd for $100,000. The cost of the inventory for Skyblue Ltd was $80,000 and all of the inventory had been sold by 30 June 2014. During the financial year ending 30 June 2013, River Ltd had sold inventory to Skyblue Ltd at a price of $250,000. The inventory cost River Ltd $200,000 to produce. Only 50% of this inventory had been sold by Skyblue Ltd to its customers for the financial year ended 30 June 2013. The remaining inventory was sold by Skyblue Ltd to their customers during the financial year ending 30 June 2014. River Ltd sold a piece of equipment to Skyblue Ltd for $400,000 on 1 July 2013. The original cost of this plant was $300,000 and the carrying amount was $250,000 as at 1 July 2013. The remaining useful life of plant remains unchanged at five years with no residual value. Skyblue Ltd sold an item of equipment to River Ltd for $360,000 on 30 April 2014. The carrying amount was $420,000 as at 30 April 2014, recorded in Bluesky Ltd's account. The equipment has an estimated remaining useful life of three years with no residual value. Dividend amounting to $100,000 was declared and approved by River Ltd on 1 April 2014. No other dividend had been paid by River Ltd during the financial year. ACF5953 Mock Exam Page 10 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question Three (cont'd) The recoverable amount of goodwill as at 30 June 2014 was determined at $100,000. The carrying amount of goodwill was assessed at 140,000 as at 30 June 2013 and there was no goodwill impairment loss recorded in 2012. Income tax rate is 30% Required: (a) Explain why losses recognised on sale of assets between entities within a group are reversed on consolidation. (b) Prepare the acquisition analysis in relation to the acquisition on 1 July 2011 and show the journal entries to record the acquisition of 60% interest in River Ltd by Skyblue Ltd in its books. (c) Prepare the relevant consolidated journal entries for the year ended 30 June 2014 (narrations are required). (d) Calculate non-controlling interest (NCI): (i) (ii) (iii) (iv) Net profit after tax for the financial year ended 30 June 2014. Opening retained earnings as at 1 July 2013. Closing retained earnings, share capital and revaluation reserve as at 30 June 2014. Prepare consolidated journal entries for NCI as at 30 June 2014. (3 + 3 + 20 + (5+2+2+2) = 37 marks) ACF5953 Mock Exam Page 11 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING Question Four On 1 July 2007, Happy Ltd acquired a 30% interest in Joy Ltd for cash consideration of $500,000. The fair value of net assets of Joy Ltd at the date of acquisition was presented as follows: Share capital $1,000,000 Retained earnings 500,000 Total Shareholders' equity $1,500,000 Additional information: For the financial year ended 30 June 2008, Joy Ltd recorded a profit after-tax of $200,000. Joy Ltd paid dividend of $50,000 on 1 March 2008. This dividend was taken from profits after acquisition. Happy Ltd recognised the dividend received from Joy Ltd as income. Joy Ltd revalued its land upward by an amount of $100,000 on 1 April 2008. Tax rate was 30%. Required: (a) Explain how goodwill on acquisition of an associate should be disclosed in the acquirer's financial statement. (b) Assuming that Happy Ltd is a parent entity, prepare the journal entries for the year ended 30 June 2008 to account for the investment in Joy Ltd, using the equity method of accounting. (c) Assuming that Happy Ltd is not a parent entity, prepare the journal entries for the year ended 30 June 2008 to account for the investment in Joy Ltd, using the equity method of accounting. (5 + 5 + 5 = 15 marks) END OF EXAMINATION ACF5953 Mock Exam Page 12 of 13 OFFICE USE ONLY ACF5953 FINANCIAL ACCOUNTING MOCK EXAM MULTIPLE CHOICE ANSWER SHEET Student Name ....................................................................... Desk No.............................. PLACE THIS ANSWER SHEET INSIDE THE FRONT COVER OF YOUR ANSWER BOOK. Please CROSS the correct answer. 1. A. B. C. D. 2. A. B. C. D. 3. A. B. C. D. 4. A. B. C. D. 5. A. B. C. D. 6. A. B. C. D. 7. A. B. C. D. 8. A. B. C. D. 9. A. B. C. D. 10. A. B. C. D. ACF5953 Mock Exam Page 13 of 13