I need belp with question 5 of this document. I have attempted it but am unable to tally it.

UNIT CODE: ACT503 UNIT NAME: CORPORATE ACCOUNTING Assignment One Information Semester one 2017 Assessment 30% Maximum Marks: 90 Instructions: If you create your worksheets in excel, please copy and paste them into MSWord. Points are given for the quality of your calculation formats even if your final calculations are not correct. Once you have completed the assignment, it needs to be lodged through Safe Assign in the Assessments section of Learnline with an appropriate CDU cover sheet. Your assessments must be lodged using MSWord. Note: PDF, Excel or paper copies will not be accepted. Required: 1) Make sure your entire assignment can be readily printed on A-4 paper in portrait (preferred) or landscape format with appropriate page breaks. Do not have a portion of a \"wide\" worksheet expand beyond 1 page. 2) Make sure your name and student number are on every page of your submission. ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 Assignment 1 Page | 1 Question 1: (Marks 15) MyOwnWork Ltd commences operations on 1 July 2018 and presents its first statement of profit and loss and other comprehensive income and first statement of financial position on Page | 2 30 June 2019. The statements are prepared before considering taxation. The following information is available: Statement of profit or loss and other comprehensive income for the year ended 30 June 2019 Gross Profit 730,000 Expenses Administration expenses 80,000 Salaries 200,000 Long-service Leave 20,000 Warranty expenses 30,000 Depreciation expense - plant 80,000 Insurance 20,000 430,000 Accounting profit before tax 300,000 Other comprehensive income Nil Assets and liabilities as disclosed in the statemet of financial positions as at 30 June 2019 Assets Cash 20,000 Inventory 100,000 Accounts receivable 100,000 Prepaid Insurance 10,000 Plant - cost 400,000 Less: Accumulated depreciation 80,000 320,000 Total assets 550,000 Liabilities Accounts payable 80,000 Provision for warranty expenses 20,000 Loan payable 200,000 Provision for long service leave expenses 20,000 Total liabilities 320,000 Net assets 230,000 Other information All administration and salaries expenses incurred have been paid as at year end. None of the long service leave expense has actually been paid. Warranty expenses were accrued, and at year end, actual payments of $10 000 have been made (leaving an accrued balance of $20 000). ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 Assignment 1 Insurance was initially prepaid to the amount of $30 000. At year end, the unused component of the prepaid insurance amounted to $10 000. Amounts received from sales, including those on credit terms, are taxed at the time of sale is made. The plant is depreciated over five years for accounting purposes, but over four years for Page | 3 taxation purposes. The tax rate is 30 per cent Required: Prepare Deferred Tax worksheet for MyOwnWork Ltd as at 30 June 2019 and provide the Journal entries to account for tax in accordance with AASB 112 Question 2: (Marks 10) MyNextProblem Ltd has acquired a new building called Next In Line Building for $2 000 000. It has incurred incidental costs of $30 000 in the acquisition process for legal fees, real estate agent's fees and stamp duties. At the quarterly Board meeting, the management believes that these costs should be expensed because they have not increased the value of the building and, if the building was immediately resold, these amounts would not be recouped. In other words, the fair value of the building is considered to still be $2 000 000. Required: Discuss how these costs should be accounted for in the books of MyNextProblem Ltd. Maximum 200 words. Question 3: (Marks 15) A recent annual report of the City of Darwin Council did not include library books on the statement of financial position, notwithstanding the existence of a substantial library collection. The City of Darwin Council's accounting policy for library books is to expense them at the time of acquisition. A note in the annual report reveals that in applying this policy the council considered the following factors: As soon as the book is purchased its fair value is minimal compared with its cost. The acquisition costs of individual books are below the council's capitalisation policy. The useful life of a book is variable and indeterminable, making depreciation difficult. Required Critically evaluate the council's accounting policy for its library collection. Suggest an alternative accounting policy or supplemental information that could be reported, if appropriate. Maximum 400 words ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 Assignment 1 Question 4 (Marks 30) ChallengeMe Pty Ltd is a manufacturer of tennis equipment and fashion wear. The statement of financial position as at 30 June 2020 and details of expenses and revenues for the year ending 30 June 2020 are as follows: Page | 4 Statement of financial position as at 30 June 2020 Current assets Cash Inventory Prepayments Accounts receivable Allowance of doublful debts Total current assets Non-current assets Investment - associated company Investments Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Deferred tax asset Total non-current assets Total assets Current liabilities Accounts payable Accruals Lease liability Income tax payable Provision for employee entitlements Provision for deferred payments (relating to investment in Squash Pty Ltd) Provision for warranty Total current liabilities Non-current liabilities Lease liability Deferred tax liability Borrowings Total non-current liabilities Total liabilities Net assets 2020 ($000) 2019 ($000) 135 2,774 115 2,897 (150) 5,771 274 2,486 2,654 (120) 5,294 1,050 1,216 1,500 800 (200) 1,025 (100) 312 5,603 11,374 948 1,750 800 (160) 768 (548) 302 3,860 9,154 1,637 1,575 5 243 205 1,483 1,110 83 298 50 314 4,029 2,974 15 240 3,500 3,755 7,784 3,590 - ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 75 3,800 3,875 6,849 2,305 Assignment 1 Statement of financial position as at 30 June 2020 (cont.) Shareholders' equity Share capital Retained earnings Revaluation surplus Total shareholders' equity 2020 ($000) 2019 ($000) 2,750 280 560 3,590 2,000 130 175 2,305 Statement of profit or loss and other comprehensive income for the year ending 30 June 2020 Income Sales Dividends income Expenses Bad debts Cost of sales Doubtful debts Inventory write-off Warranty expenses (taken to provision for warranty) Depreciation - Building - Plant and equipment Interest Rent Salaries and wages Finance charges Profit before tax Income tax Profit after tax Other comprehensive income Reduction in revaluation surplus as a result of reduction in value of land Increase in revaluation surplus as a result of increase in value of plant and equipment Total comprehensive income 2020 ($000) 2019 ($000) 31,394 51 27,346 47 (90) (28,205) (35) (50) (314) (85) (24,611) (40) 0 0 (40) (100) (315) (600) (1,324) (7) 365 (215) 150 (40) (60) (418) (600) (1,231) (90) 218 218 ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 (175) 560 535 218 Assignment 1 Page | 5 Statement of changes in equity for the year ending 30 June 2020 Opening balance 1 July 2019 Statement of profit and loss and other comprehensive income Issue of shares as part consideration for acquisition of associated company Balance 30 June 2020 Share capital ($000) 2,000 Retained earnings ($000) 130 Revaluation surplus ($000) 175 Total ($000) 2,305 - 150 385 535 750 2,750 280 560 750 3,590 Additional information An additional investment of $80 000 is acquired for consideration of tennis equipment costing $80 000. Land is devalued against a previous increment in the revaluation reserve. The previous increment is fully reversed. Plant and equipment with a cost of $700 000 and accumulated depreciation of $500 000 are revalued to $1 000 000 during the year Plant and equipment with a fair value of $25 000 are acquired under a finance lease. The residual is guaranteed by the lessee. Plant and equipment are sold for $20 000 cash. Cost is $68 000 and no profit or loss is made on the sale. During the year, one line of wooden tennis racquets is scrapped at a loss of $50 000, as there is a little demand for the range. During the year, an investment is made in an associated company, Squash Pty Ltd. Consideration is $1 000 000, funded by cash of $250 000 and the balance by the issue of 500 000 shares at $1.50 per share. The purchase agreement includes a clause stating that if profits exceed $110 000 in the first financial year after purchase, additional amounts are payable. Using the formula, an extra $50 000 is provided. Provision for warranty is based on 1 per cent of sales Rent expense of $600 000 is accrued within 'Accruals'. Interest expense is paid during the year and dividends are received. Salaries and wages expense includes the expense for employee entitlements. Tax rate is 30 per cent. Required Prepare the statement of cash flows in accordance with AASB 107 for ChallengeMe Pty Ltd for the year ending 30 June 2020. Comparatives are not required. Show necessary workings. ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 Assignment 1 Page | 6 Question 5 (Marks 20) FinalHeadache Ltd acquires all of the shares in Solutions Ltd on 30 June 2018. The financial statements for FinalHeadache Ltd and Solutions Ltd at 30 June 2019 (one year after acquisition) are provided below. Page | 7 Reconciliation of opening and closing retained earnings Sales revenue Costs of goods sold Other expenses Profit Retained earnings opening balance Retained earnings at 30 June 2019 FinalHeadache Ltd ($000) 2,000 (800) (300) 900 1,100 2,000 Solutions Ltd ($000) 610 (240) (70) 300 500 800 FinalHeadache Ltd ($000) Solutions Ltd ($000) 2,000 1,100 800 350 700 150 1,100 4,900 700 2,000 150 450 200 250 1,200 2,600 (600) 1,100 4,900 750 1,000 (200) 2,000 Statements of financial position Shareholders' equity Retained earnings Share capital Current liabilities Accounts payable Non-current liabilities Loans Current assets Cash Accounts receivable Non-current assets Land Plant Accumulated depreciation - plant Investment in Solutions Ltd Additional information FinalHeadache Ltd acquires Solutions Ltd on 30 June 2018 for $1.1 million cash. The directors of FinalHeadache Ltd consider that in the year to 30 June 2019 the value of goodwill has been impaired by an amount of $20 000. There are no intragroup transactions. Solutions Ltd did not issue any shares during 2019. ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 Assignment 1 The tax rate is 30 per cent. On the date at which FinalHeadache Ltd acquires Solutions Ltd, the carrying amount and fair value of the assets of Solutions Ltd are: Cash Accounts receivable Land Plant (cost of $1 000 000, accumulated depreciation of $200 000) Carrying amount ($000) 150 200 750 Fair value ($000) 150 200 800 800 1,900 900 2,050 No revaluations are undertaken in Solutions Ltd's accounts before consolidation. At the date of acquisition of Solutions Ltd, Solutions Ltd's liabilities amount to $1.050 million and there are no contingent liabilities. The plant in Solutions Ltd is expected to have a remaining useful life of 10 years from 30 June 2018, and no residual value. Required Provide the consolidated accounts of FinalHeadache Ltd and Solutions Ltd as at 30 June 2019 with the following: Goodwill computation Consolidation journal entries to: o Revalue the assets of Solutions Ltd so that goodwill can subsequently be accounted for o Eliminate the investment in Solutions Ltd and the pre-acquisition capital and reserves of Solutions Ltd o Recognise impairment of goodwill o Additional depreciation and decrease in Deferred tax liability Consolidation worksheet for FinalHeadache Ltd and its controlled entity for the period ending 30 June 2019 showing columns of Eliminations and adjustments and Consolidated amounts Consolidated statement of financial position of the FinalHeadache group Hard work pays off. Good Luck ACT 503 Corporate Accounting Due Date: 11.59 pm Friday 12th May in Study Week 10 Assignment 1 Page | 8