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BFA301 Advanced Financial Accounting

Semester 2 2019 Individual Case Study Assignment: 20% Thyme Publishing Ltd


Thyme Publishing Ltd is a publicly listed company located in Melbourne. The company, founded in 2001, has undertaken a growth and expansion phase in recent years, particularly with its online business and diversification into graphic design. It is now recognised as a major Australian bookseller, publisher, and digital graphic designer in Australia and New Zealand.

Thyme Publishing Ltd has three entities that it controls:

  • Island Publications Ltd (Hobart, Tasmania) (60% of the share capital owned).
  • Creative Design Pty Ltd (Paradise, Tasmania) (100% of the share capital owned).  Cloud Press Ltd (Christchurch, NZ) (100% of the share capital owned).

You have been appointed as group accountant for Thyme Publishing Ltd. As such you are required to prepare consolidated financial statements for the Parent and its Subsidiaries for the year ended 30 June 2019. In addition, the board have requested that you provide a brief report on the consolidation policies of an ASX 200 company to assist in their deliberations for Thyme Publishing’s 2020 vision & strategic planning for the future. Further details are provided at the end of this document.  Questions about the content of this assignment MUST be posted on MyLO.

General Information about Thyme Publishing Ltd

  • The presentation currency for the group is AUD.
  • Thyme Publishing Ltd treats Cloud Press (NZ) Ltd as a foreign entity according to AASB121 and uses the current rate method to translate financial information.
  • The functional currency for Cloud Press Ltd is NZD. You will first need to translate the New Zealand operations into the presentation currency of the group before applying consolidation principles.
  • The management of Thyme Publishing Ltd values any non‐controlling interest at the proportionate share of Island Publications identifiable net assets, using the partial goodwill method (AASB3).
  • Thyme Publishing Ltd recognises a receivable for dividends when they are declared by a subsidiary. o All entities within the group use the perpetual inventory method. o The group uses the direct method to present cash flows from operating activities. o Round to the nearest dollar for ALL journal entries and calculations (NOT ‘000s or $m). o Expenses need to be classified by function in the consolidated financial statements. o For all financial statements, you may use either $ OR $’000 (NOT $m) but all must be the same. o The Australian income tax rate is 30%. New Zealand’s company tax rate is 28%.

Additional Information relating to Island Publications Ltd:

  1. On 1 July 2017, Thyme Publishing Ltd acquired 60 per cent of the share capital of Island Publications Ltd for $1 500 000 cash. An extract of Island Publications Ltd’s balance sheet immediately before the acquisition is shown below:
  2. Island Publications Ltd

    Shareholders' equity

    Share capital


    General reserve


    Retained profits


  3. On 1 July 2017, Island Publications Ltd had recorded all its identifiable net assets at fair value, except for plant which cost $550 000 and had a carrying amount of $450 000. The fair value of the plant was assessed at $480 000. It was expected to have a further useful life of 5 years and the benefits are expected to be consumed evenly over this period. The plant had not been revalued in the books of Island Publications Ltd prior to consolidation.
  4. On 30 June 2018, 10% of Island Publications Ltd’s inventory was sold to Thyme Publishing Ltd at a profit of $35 000. All of this inventory had been sold to external entities by 30 June 2019.
  5. Additional Information relating to Creative Design Pty Ltd:

  6. On 1 July 2016, Thyme Publishing Ltd purchased 100 per cent of the shares of Creative Design Pty Ltd for $700 000 cash. An extract of Creative Design Ltd’s balance sheet immediately before the acquisition is shown below:
  7. Creative Design Pty Ltd

    Shareholders' equity

    Share capital


    General reserve


    Retained profits


  8. At the time of investment, the liabilities of Creative Design Pty Ltd were all recorded at fair value, except for a contingent liability relating to an ongoing legal dispute. Creative Design Pty Ltd was being sued for an amount of $75 000 in a wrongful dismissal case. Lawyers advised that there was an 80% chance they will lose. The case remained outstanding at acquisition and therefore a contingent liability was disclosed in the notes of Creative Design Pty Ltd. Six months after acquisition Thyme Publishing Ltd intervened and negotiated a $60,000 payment to settle the case out of court. Creative Design Pty Ltd recorded an expense for the $60,000 for the period ending 30 June 2017.
  9. A comparison of the carrying amounts and fair values of its identifiable assets indicated no differences except for an internally generated intangible asset (a publishing title with a fair value of $20,000) and the furniture shown below, which is depreciated on a straight‐line basis and has an
  10. expected further useful life of 7 years (from acquisition). It has no residual value.

    Carrying amount Fair Value Furniture (cost $108 500) $90 000 $94 500

    The publishing title has an indefinite life and is therefore tested for impairment annually. It has not

    been impaired.

  11. On 1 February 2017, Creative Design Pty Ltd entered into a rental agreement with Thyme Publications Ltd to rent a spare warehouse to use as a studio. The agreement was for 5 years and specified a payment of $6 000 p.a. to be paid annually in advance on 1 February.
  12. On 1 January 2018, Creative Design Pty Ltd sold equipment costing $125 000 to Thyme Publications Ltd for $130 000. Creative Design Pty Ltd had not charged depreciation on the equipment as it had only purchased it from an external entity on 28 December 2017 at an end of year sale. Both companies depreciated equipment at 10% straight‐line on cost.
  13. On 20 May 2019 Creative Design Pty Ltd purchased inventory from Thyme Publishing Ltd for $30 000. This inventory had previously cost Thyme $24 000. Creative Design Pty Ltd had not paid Thyme Publishing Ltd for these goods as at 30 June 2019, but at that date Creative Design Pty Ltd had already sold 58% to external parties. Creative Design Pty Ltd sold the remainder of the goods to an external party on the 9 July 2019 for a total profit of $20 000.
  14. Additional Information relating to Cloud Press (NZ) Ltd:

  15. On 30 June 2019, Thyme Publishing Ltd acquired all the issued shares of Cloud Press Ltd, an online publishing company based in Christchurch, New Zealand, for AUD$420 000 cash. Cloud Press (NZ) Ltd’s income statement and balance sheet (given in NZ dollars) immediately before the acquisition is shown in the attached excel worksheet.
  16. Sales and other expenses were incurred evenly throughout the period ended 30 June 2019.
  17. Relevant exchange rates are as follows: (these are fictitious for the purposes of this assignment)
  18. 1 July 2016

    1 NZD = AUD$0.90

    1 July 2017

    1 NZD = AUD$0.92

    1 July 2018

    1 NZD = AUD$0.94

    30 June 2019

    1 NZD = AUD$0.95

    Average rate for the year 2019

    1 NZD = AUD$0.93

    Ending inventory acquired

    1 NZD = AUD$0.96

The working income statements and balance sheets of Thyme Publishing Ltd, Island Publications Ltd, Creative Design Pty Ltd and Cloud Press (NZ) Ltd for the year ended 30 June 2019 are provided to you, as group accountant, by the financial accountants of the respective entities. They are shown in the accompanying excel spreadsheet document (in the worksheet tab).


Thyme Publishing Ltd has asked you to prepare a full set of Consolidated Financial Statements for the group for the year ended 30 June 2019 in accordance with applicable accounting standards. In addition, you have been asked to provide a brief report on the subsidiaries and consolidation policies of the ASX 200 company assigned to you. The purpose is to compare and contrast the policies, decisions and outcomes (financial statements) with those of Thyme Publishing to assist the Thyme board with their 2020 vision & strategic planning for the future.

Specific Requirements:

In a WORD document prepare a professionally presented report that sets out the following in this ORDER:

  1. COVER PAGE: An original cover page that includes your name, ID number, unit, assignment name, date. DO NOT include the TSBE assignment coversheet. You declared in your MyLO student agreement that you agreed to abide by the university plagiarism rules and that ALL work you submit for assessment is your own work. Turnitin plagiarism detection software will be used.
  2. An executive summary (150 words) explaining the content of your report. This should be presented on the next page by itself. You may include a separate content page on the following page if you wish but this is not required.
  3. ASX200 Co. comparison: In your own words write a brief report (250 words) on the consolidation policies and latest consolidated financial statements of the ASX200 company you chose to research. Reference accounting standards used. Choose ONE company from the list provided on Self‐selection will be OPEN for 1 week from 12noon on 12/9/19 to 19/9/19 (similar to tutorial sign‐ups on MyLO Announcement). Only ONE student per company. After this time unenrolled users will be allocated a company – no choice. Please double check the list before submitting your assignment. If you submit on another company (not the one allocated on MyLO) you forfeit all marks assigned to this component. Your report must include a discussion that compares and contrasts what you have prepared for Thyme Publishing Ltd with the ASX200 company. You may use a table to compare and contrast. Google your company’s website to download their latest Annual Report and financial statements. Alternatively, go to ASX https://www.asx.com.au/asx/research/listedCompanies.do - Scroll to find your company then click on the code to access all your company’s information including the latest Annual Report (see on right hand side under ‘Resources’).
  4. SAMPLE statement ‐ASX200 Co: Scan or use ‘print screen’ or ‘snipping tool’ to cut and paste a copy of ANY ONE current financial statement from your ASX200 company. Your statements for Thyme Publishing Ltd should have the same professional appearance.
  5. An acquisition analysis for each of the controlled entities of Thyme Publishing Ltd.
  6. Translation of foreign subsidiary’s accounts: Translate the accounts of the foreign subsidiary, Cloud Press (NZ) Ltd, into Australian dollars before applying consolidation principles. Show NZD, relevant exchange rate, AUD for each account and Verify the translation difference.
  7. Consolidation journals: In order of the additional information provided above. All consolidation eliminations and adjusting journal entries (including non‐controlling interest calculations and journal entries) required for the preparation and presentation of consolidated financial statements of Thyme Publishers Ltd and its controlled entities for the year ended 30 June 2019. Please write out account names in FULL at ALL times – NO ABREVIATIONS. USE narratives & calculations for each journal entry. Include an explanation if you chose to exclude or omit anything.
  8. Professionally presented financial statements. This includes a consolidated Statement of Comprehensive Income; consolidated Statement of Changes in Equity; a consolidated Statement of Financial Position; consolidated Statement of Cash Flows and any applicable notes for Thyme Publishing Ltd and its controlled entities for the year ended 30 June 2019.

These financial statements are required to be set out in accordance with AASB 101 Presentation of Financial Statements. To apply AASB 101, you should follow the formats you learnt about in the pre‐requisite unit BFA201 (or equivalent unit) plus any other requirements you have learnt in this unit for Consolidated Financial Statements (e.g. non‐controlling interests). Please also refer to the illustrative examples for Australian public companies provided on MyLO & your ASX200 company.

  1. SUBMIT A SEPARATE EXCEL FILE showing your completed consolidation worksheet incorporating the adjustments, eliminating and non‐controlling entries. All adjusting items in the worksheet must have a reference to the corresponding journal entry.

It is recommended that you also use an excel spreadsheet to set out all above requirements (5‐8) then copy these to each page into your word document.

For completion of the financial statements, please note the following:

The financial statements will be an abridged version from three perspectives:

  1. Comparison figures are provided for the Statement of Financial Position, but for other statements you will need to use xxx’s where data are not available.
  2. Note 1: You do not need to list all accounting policies as part of Note 1 – just reference those applicable to the consolidation process and this assignment.
  3. ‘Earnings per share’ – has not been covered in this unit. Therefore, you do not need to include the ‘Earnings per share’ information at the end of SPLOCI.
    • Do not include a ‘Director’s report’ this is part a financial “report” NOT the full set of financial statements.
    • Do not include references to specific accounting standards on the face of the statements. Where relevant this information should only be in the notes.
  • To assist with completion of the Statement of Changes in Equity, assume there were no other movements in Share capital during the financial year other than what is provided in additional information above.
  • Use ONLY the Australian content guidelines as per KPMG illustrative disclosures.
  • Markers will be instructed to give ZERO where there has been little/no attempt to apply professional standards to the construction of statements eg. Cutting and pasting the worksheet list of accounts as presented in the worksheet will attract a default mark of zero.

The assignment is due on Monday 30 September 2019 at 5.00pm and is worth 20% of your overall grade. Week 10 has been set aside as an independent study week to allow you time to dedicate to this assignment.

Please note the following:

  • An electronic copy of your assignment needs to be submitted to the relevant BFA301 MyLO assignment dropbox by the due date and time. The file name is to include your name and ID.
  • Please also submit a hard copy of the assignment (collated in the order noted above). As campus assignment boxes have been removed, please HAND TO YOUR TUTOR. The due date and time for hard copies is your normal Week 11 tutorial. Monday tutorials may submit to the Unit Coordinator on Tuesday. Please just drop your assignment into the 9am or 10am Tuesday tutorial before the start of class. Penalties will apply for late submission of both online and hard copies. Hard copy submissions MUST be exactly the same as the assignment submitted online by due date.
  • Hard copies will not be returned. Marked up assignments will be available online together with feedback and graded rubrics once marks are released.
  • This is an individual assignment. Under no circumstances should you share your workings or any part of your assignment with other students. This constitutes academic misconduct and action will be taken. All similarity reports on Turnitin will be thoroughly checked for matching with other assignments.
  • WORD LIMIT: NO word limit EXCEPT: Executive Summary (150 words); ASX200 report (250words)
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