Please go ahead and help me with 1 and 3. Please show the calculations, would really appreciate that. Thank you :)

UNIT CODE: ACT305 UNIT NAME: CORPORATE ACCOUNTING Assignment Information Semester 2 2016 Assessment 20% Submission Requirements. This assignment is to be submitted before 8.00pm Friday 7th October in Week 11 Assignments are to be submitted by one of the following means; DO NOT LODGE BY FAX nor EMAIL nor at LECTURER'S OFFICE KEEP A COPY The assignment must be lodged on or before the due date indicated in the assignment details. Only word docs and/or Excel converted to pdf will be acceptable. Handwritten answers will be rejected.- The assignment must conform to the requirements set out in this assignment The assignment must be lodged online via the ACT305 Learnline Assignment Lodgement link on the ACT305 Learnline site. Ensure your file is named using a file naming convention that allows the lecturer to identify to whom it belongs. Failure to use an acceptable file naming convention may result in your assignment lodgement being rejected. DO NOT LODGE VIA EMAIL or FAX - assignments lodged by email or fax will not be accepted. KEEP A COPY - Ensure you have a copy of the assignment lodged. If you have submitted assessment work electronically please make sure you have a backup copy. Assignment lodgements will be acknowledged automatically on the Learnline site, on submission. DO NOT submit an assignment front sheet. Resubmission As a general rule resubmission of assessment items is NOT possible, however the Lecturer may ask for resubmission if it is deemed appropriate. Details for such resubmission will be made available by the Lecturer if and when the situation occurs. University Plagiarism policy Plagiarism is the unacknowledged use of material written or produced by others or a rework of your own material. All sources of information and ideas used in assignments must be referenced. This applies whether the information is from a book, journal article, the internet, or a previous essay you wrote or the assignment of a friend. Plagiarism policy is available at: http://learnline.cdu.edu.au/studyskills/studyskills/avoidingplagiarism.html and Student Breach of Academic Integrity Procedures http://www.cdu.edu.au/governance/doclibrary/pro-092.pdf EXTENSIONS AND LATE LODGEMENTS LATE ASSIGNMENTS WILL GENERALLY NOT BE ACCEPTED UNLESS AN EXTENSION TO THE DUE DATE HAS BEEN GRANTED BY THE HEAD OF SCHOOL. Exceptions will only be made where assignments are late due to special circumstances that are supported by documentary evidence, and may be subject to a penalty of 5% of assignment marks per day. Partially completed assignments will be accepted with appropriate loss of marks for the incomplete portion. CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 1 of 7 Should students foresee potential difficulties with submission of assessment items, they should contact the lecturer immediately the difficulties come to notice, to discuss suitable arrangements etc. for the submission of those assessment times. An Application for Assignment Extension or Special Consideration should be completed and provided to the Head of School, School of Law and Business. This application form, explanation and instructions is available on the ACT305 CDU Learnline course site or direct from http://learnline.cdu.edu.au/units/lb_school_templates/deployed/assignment_extension.docx Please note that it is now Faculty policy that all extension requests must be approved by the Head of School. The lecturer is no longer able to personally approve extension requests. Leaving a request for an extension, special assessment or special consideration until the last moment, based on grounds that students could have reasonably been able to foresee, may result in the application being rejected. ASSIGNMENT INFORMATION This Assignment is worth 20% of the total assessment for this unit. This assignment will be marked out of 100 and scaled down to being out of 20. The assignment has 5 questions. Q1. Harbour Cruises Limited started business on 1 July 2015 and completed its first statement of comprehensive income and first statement of financial position on 30 June 2016. The statements are prepared before considering taxation. The following information is available: Statement of comprehensive income for the year ended 30 June 2016 Gross profit Expenses Administration expenses Salaries Long-service leave Warranty expenses Depreciation expense-plant Insurance Accounting profit before tax $912,500 $100,000 250,000 25,000 37,500 100,000 25,000 537,500 $375,000 Assets and-liabilities (extract) Statement of financial position as at 30 June 2016 Assets Cash Inventory Accounts receivable Prepaid insurance Plant-cost less Accumulated depreciation Total assets Liabilities Accounts payable Provision for warranty expenses Loan payable Provision for long-service leave expenses Total liabilities Net assets $25,000 125,000 125,000 12,500 500,000 100 000 400,000 $687,500 $100,000 25,000 250,000 25,000 $400,000 $287,500 Other information AlI administration and salaries expenses incurred have been paid as at year end. None of the long-service leave expense has actually been paid. It is not deductible until it is actually paid. Warranty expenses were accrued and, at year end, actual payments of $12,500 had been made (leaving an accrued balance of $2,500). Deductions are available only when the amounts are paid and not as they are accrued. CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 2 of 7 Insurance was initially prepaid to the amount of $37,500. At year end, the unused component of the prepaid insurance amounted to $12,500. Actual amounts paid are allowed as a tax deduction. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. The plant is depreciated over five years for accounting purposes, but over four years for taxation purposes. The tax rate is 30 per cent. Q2. REQUIRED Calculate the taxable income, complete a deferred tax worksheet and identify the changes for the year to deferred taxation and complete the taxation journal entries at the year-end. (18 marks) Required: For each of the following Independent situations you are to establish whether control does or does not exist. If control does exist you are to state which party controls the entity. In your answer you are to give reasons for your answers and make reference to, and show the relevance of, the appropriate paragraphs in AASB10. (a) Alfred Ltd is owned 50 per cent by Victoria Ltd and 50 per cent by Kaiser Ltd (the founding shareholders). Each has two seats on the board, with no party having a casting vote, although Victoria Ltd appoints the managing director. Profits are split 50-50 after the provision of the managing director's salary. Kaiser Ltd has agreed that it will pay a management fee to Victoria Ltd, equivalent to 50 per cent of the results for the year, in the event of a loss. Victoria Ltd is the holder of 10 options, which are exercisable at any time at a 10 per cent discount to the fair value of the shares as at the exercise date. (b) Ludmilla Ltd, Milner Ltd and Gray Ltd are each 33.3 per cent shareholders of Northern Properties Pty Ltd, a small proprietary company that is involved in the fishing Industry. Ludmilla Ltd and Gray Ltd are passive shareholders with one board seat each out of a total of three. Milner Ltd has one board seat and is also involved in the day-to-day running of the business. Wanguri Ltd is a 51 per cent shareholder in Driver Ltd and currently has two out of five board seats. Brinkin Ltd is the remaining 49 per cent shareholder and currently has the other three seats. Wanguri Ltd is a passive shareholder as it is happy with the way Brinkin Ltd has been running the company. (c) (d) Red Stocking Pty Ltd is a family-run business that has not managed to keep up with technical innovations within the industry. As a result the company has lost market share to its competitors. This year the company's bank, Sue and Grabbit, seized the company's assets. The bank converted all the debt into equity and had two of the bank's directors appointed to Red Stocking Pty Ltd's board. The board has a total of four members. The bank has not decided what to do with the company's assets, as they have little recoverable value and would not realise a great deal if sold. One option is to invest further equity into the company, buy more up-to-date equipment and attempt to trade on and sell the business as a going concern. (e) Nim Ltd is a 30 per cent shareholder of Rod Co. Pty Ltd. The other shareholders have smaller shareholdings (around 8 to 12 per cent) and are always too busy to attend annual general meetings. Nim Ltd has two nonexecutive seats on the board and the remaining three are held by other shareholders, one chief executive officer who is a shareholder and two non-executives, who do make an attempt to attend board meetings. (f) Side Mount Ltd, a diving equipment supplier, started business 12 years ago and is 60 per cent owned by Dual Tank Ltd. Side Mount Ltd has been very successful generating on average profits of $500 000 annually. Unfortunately due to the downturn in the industry the company has had financial problems and has failed to meet its loan commitments with its bank. The bank has taken a more hands on approach to monitoring the company's activities so that it can obtain repayment of its debt. The company is now required to seek the bank's authorisation prior to any expenditure over $5000. Changes to the way the company operates can only be implemented with the bank's approval. (18 marks) CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 3 of 7 Q3. The following information has been extracted from the financial statements of Luke Ltd and its subsidiary John Ltd at 30 June 2016. Luke Ltd ($) Reconciliation of opening and closing retained earnings Sales revenue Cost of goods sold Gross profit Dividends revenue from John Ltd Management fee revenue Profit on sale of plant Expenses Administrative expenses Depreciation Management fee expense Other expenses Profit before tax Tax expense Profit for the year Retained earnings-30 June 2015 Dividends paid Retained earnings-30 June 2016 Statements of financial position Shareholders' equity Retained earnings Share capital Current liabilities Accounts payable Tax payable Non-current liabilities Loans Current assets Accounts receivable Inventory Non-current assets Land and buildings Plant -at cost Accumulated depreciation Investment in John Ltd John Ltd ($) 1,380,000 (928,000) 452,000 148,800 53,000 70,000 1,160,000 (476,000) 684,000 ------- (61,600) (49,000) --(202,200) 411,000 123,000 288,000 638,800 926,800 (274,800) 652,000 (77,400) (113,600) (53,000) (154,000) 286,000 84,400 201,600 478,400 680,000 (186,000) 494,000 652,000 700,000 494,000 400,000 109,400 82,600 92,600 50,000 347,000 1,891,000 232,000 1,268,600 118,800 184,000 124,600 58,000 448,000 599,700 (171,500) 712,000 1,891,000 652,000 711,600 (277,600) --1,268,600 Other information Luke Ltd acquired its 80 per cent interest in John Ltd on 1 July 2007, that is nine years earlier. At that date the capital and reserves of John Ltd were: Share capital Retained earnings $400,000 $340,000 $740,000 At the date of acquisition all assets were considered to be fairly valued. The management of Luke Ltd use the partial goodwill method. During the year Luke Ltd made total sales to John Ltd of $130,000, while John Ltd sold $104,000 in inventory to Luke Ltd. CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 4 of 7 . The opening inventory in Luke Ltd as at 1 July 2015 included inventory acquired from John Ltd for $84,000 that cost John Ltd $70,000 to produce. The closing inventory in Luke Ltd includes inventory acquired from John Ltd at a cost of $67,200. This cost John Ltd $56,000 to produce The closing inventory of John Ltd includes inventory acquired from Luke Ltd at a cost of $24,000. This cost Luke Ltd $19,200 to produce. The management of Luke Ltd believe that goodwill acquired was impaired by$6,000 in the year to 30th June 2016. The balance on the accumulated impairments of goodwill account brought forward was $45,000. On 1 July 2015 Luke Ltd sold an item of plant to John Ltd for $232,000 when its carrying value in Luke Ltd's accounts was $162,000 (cost $270,000, accumulated depreciation $108,000). This plant is assessed as having a remaining useful life of six years. John Ltd paid $53,000 in management fees to Luke Ltd. The tax rate is 30 per cent. REQUIRED Prepare the consolidation worksheet JOURNAL ENTRIES for the preparation of consolidated financial statements by Luke Ltd at 30 June 2016. NOTE a consolidation worksheet is NOT required. Your answer should include an acquisition analysis with a calculation of goodwill, pre-acquisition entries, dividend adjustments, intragroup sales and transfers, and a calculation of the non-controlling interest. (14 marks) Q4. On 1 July 2015 Rapid Ltd purchased 40 per cent of the ordinary shares of Creek Ltd for $3 250 000. The remaining 60 per cent of the ordinary shares of Creek Ltd are owned by two shareholders, Market Ltd, which owns 40 per cent of the shares, and Wholefoods Ltd, which owns 20 per cent of the shares. Creek Ltd's constitution provides that at general meetings of the company, ordinary shareholders are entitled to vote on resolutions and elect directors, on the basis of one vote per ordinary share. Creek Ltd's five-member board of directors consists of: two representatives of Rapid Ltd two representatives of Market Ltd one representative of Wholefoods Ltd.. Chapter 32: ACCOUNTING FOR INVESTMENTS IN ASSOCIATE S AND JOINT VENTURES 41 Each member of Creek Ltd's board of directors is entitled to one vote on issues/resolutions being considered by the board of directors. CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 5 of 7 The statement of financial position of Creek Ltd immediately before the investment was as follows: Creek Ltd Statement of financial position as at 1 July 2015 Assets Cash Accounts receivable Inventory Land Buildings (Accumulated depreciation) Plant and equipment (Accumulated depreciation) Total assets Liabilities Accounts payable Bank loans Deferred tax liability Shareholder's equity Share capital Revaluation surplus Retained earnings Total shareholder's equity and liabilities $ 132,000 690,000 1,320,000 3,300,000 9,720,000 (1,620,000) 2,760,000 (552,000) $15,750,000 $ 1,050,000 4,650,000 1,500,000 5,400,000 2,250,000 900,000 $15,750,000 Additional information: On 1 July 2015, all the identifiable net assets of Creek Ltd were considered to be recorded at fair value in Creek Ltd's statement of financial position, except land, which had a fair value of $4,050,000 on 1 July 2015. On 30 June 2016, the recoverable amount of goodwill relating to the purchase of Creek Ltd by Rapid Ltd was assessed to be $270,000. On 14 July 2015, Creek Ltd declared and paid an interim dividend of $240,000, out of profits earned during the 2014-15 financial year. During 2015-16, Creek Ltd earned a profit after income tax expense of $870,000, from which it paid a final dividend of $390,000. During 2016-17, Creek Ltd earned a profit after income tax expense of $1,020,000, from which it declared a final dividend of $480,000. On 30 June 2017, Creek Ltd revalued its land (to fair value as at that date) to $4,350,000 The income tax rate is 40 per cent. Required (a) Explain how Rapid Ltd should classify its investment in Creek Ltd, in accordance with accounting standards. (b) Prepare the journal entries to account for Rapid Ltd's investment in Creek Ltd, in Rapid Ltd's individual accounts, for the financial years ending 30 June 2016 and 30 June 2017, in accordance with AASB 128 Investments in Associates and Joint Ventures, assuming that Rapid is a parent entity. (c) Prepare the journal entries to account for Rapid Ltd's investment in Creek Ltd, in Rapid Ltd's individual accounts, for the financial years ending 30 June 2016 and 30 June 2017, in accordance with AASB 128 Investments in Associates and Joint Ventures, assuming that Rapid is not a parent entity. (d) Prepare the consolidation worksheet journal entries to account for Rapid Ltd's investment in Creek Ltd, for the financial years ending 30 June 2016 and 30 June 2017, in accordance with AASB 128 Investments in Associates and Joint Ventures, assuming that Rapid Ltd is a parent entity. (29 marks) CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 6 of 7 Q5. A liquidator was appointed after Oh Dear Pty Ltd was declared insolvent on 1 July 2016. The company's assets realised $71,250,000. This came from the sale of the secured land and buildings for $37,500,000 and other assets which were sold for $33,750,000. The creditors totalled $81,750,000, and were made up of the following amounts: Secured creditor $45,000,000, receiver's costs when realising secured asset $750,000, liquidator's expenses $3,000,000, unsecured trade payables $12,000,000, tax payable $5,250,000, local government rates $1,500,000, staff wages payable $4,500,000, executive directors' wages payable (5 directors) $2,250,000, staff leave entitlements $750,000, executive directors' leave entitlements (5 directors) $750,000, unsecured bank overdraft $3,750,000, and dividends payable $2,250,000. Required You are required to rank the above creditors and then to calculate how much each creditor would be paid. (21 marks) CDU Business School Faculty of Law, Education, Business and Arts Semester 2, 2016 Page 7 of 7