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ACCT2002 Corporate Accounting Assignment 1

Subject Code and Name 	ACCT2002: Corporate Accounting 
Assessment 	Assignment 1 
Individual/Group 	Individual 
Laureate International Universities
Part A: Practical calculations (40 marks) 
Part B: Video Presentation (60 marks) 

Learning Outcomes

Prepare consolidated financial statements and related accounting entries for incorporated entities

Context:

This assignment will cover the learning objectives from: Module 1.1Introduction to consolidationand 1.2 Principles of consolidation.

Part A: This assessment is designed to demonstrate your understanding of the initial entries for a group structure at acquisition date, including the preparation of an Acquisition Analysis report.

You will also be required to enter journal entries and complete the consolidation worksheet, including the preparation of a financial statement for the Group’s shareholders.

All answers must be hand written (not typed) in pen and scanned as a pdf document on submission. JPEG files will not be accepted.

Part B: You will be required to prepare a short video (4-6 mins) addressing the specific questions provided in this assignment. This is designed to access your understanding of the concepts you have applied in Part A and also demonstrate your communication skills to your audience.

Instructions:

Part A:

  • Print out the templates for Question 1.
  • All answers must be hand written (not typed) on the templates provided.
  • Answers must be written in pen only. Answers in pencil or typed will not be marked and will attract a zero grade.
  • Round all amounts to the nearest dollar.

Part B:

Prepare a video presentation to answer the questions in Part B. Upload your file on Blackboard by reading the instructions contained in the following link: https://laureateau.blackboard.com/webapps/blackboard/content/listContentEditable.jsp?content_id=_387629_1&c ourse_id=_4044_1

Part A

Question 1 (40 marks)

On 1 July 2019, John Ltd acquired all the issued shares of Wayne Ltd for $250,000. At this date, the financial statements of Wayne Ltd showed the following:

$

Share capital

170,000

Retained earnings

30,500

General Reserve

4,800

Total equity

205,300

At acquisition date, all the net identifiable assets and liabilities in Wayne Ltd were recorded at amounts equal to their fair value except for:

Asset

Carrying amount ($)

Fair Value ($)

Inventories

5,000

8,000

Plant (cost $400,000)

200,000

210,000

The records also showed that the company had recorded existing goodwill of $5,000.

The Plant was calculated to have a further life of 5 years, and was depreciated on a straightline basis. All inventory was sold by 30 June 2020.

Assume 30% tax rate

Required:

  • Prepare the acquisition analysis at 1 July 2019. (6 marks)
  • Prepare the consolidation entries at acquisition date, 1 July 2019. Include narrations for each entry. (15 marks)
  • Prepare the consolidation worksheet as at 1 July 2019. (13 marks)
  • Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2019 in narrative format. (6 marks)

Question 1 (a) (6 marks) Acquisition Analysis answer:

Question 1 (b) (15 marks) General Journal answer:

Date

Details

Debit ($)

Credit ($)

Question 1 (c) (13 marks) Consolidation worksheet answer:

Financial statements

John Ltd

Wayne Ltd

Adjustments

Group

Debit

Credit

Share capital

200,000

170,000

Retained earnings

50,000

30,500

General Reserve

0

4,800

BCVR

0

0

Total Equity

250,000

205,300

Current Assets

Inventory

30,000

5,000

Other assets

0

41,300

Non-current Assets

Plant (at cost)

45000

400,000

Accumulated depreciation

-25,000

-200,000

Goodwill

0

5,000

Investment in Kelly Ltd

250,000

Total Assets

300,000

251,300

Current Liabilities

Deferred Tax liability

50,000

0

 Debentures

 0

 46,000

Net Assets

250,000

205,300

Question 1 (d) (6 marks) Balance sheet answer:

Part B Video Presentation (4-6 mins) (60 marks)

Technical accuracy of your presentation = 40 marks

Presentation skills (Refer marking Rubric on Blackboard) = 20 marks

Prepare a video presentation to address each of the following questions. You will be assessed on your technical understanding of each question and also your presentation skills. Please refer to the marking rubric which details the assessment criteria for the communication and presentation skills.

You may use visual aids to support your presentation, however you must be seen at all times in front of the camera. Marks will not be awarded if you read directly from your notes.

Please introduce yourself and the purpose of your presentation. Speak slowly and clearly to address each of the following:

  1. Explain each of the steps involved in preparing your acquisition analysis in Question 1(a). (10 marks)
  1. Explain the Business Combination entry you have prepared for the Plant information given in Question 1 and below. Explain each account and the amount you have used. (10 marks)

Asset

Carrying amount ($)

Fair Value ($)

Plant (cost $400,000)

200,000

210,000

  1. Discuss each account and amount you have used in your pre-acquisition entry. Explain why you have debited or credited that particular account and amount. What is the reason for each line in your journal entry? (10 marks)
  2. Consolidation worksheet: Explain to your audience how you prepared the Group column in the worksheet. Use the Group’s equity accounts as an example of how these were calculated and what do these balances represent at acquisition date. (5 marks)
  3. Explain the closing balance of Accumulated Depreciation (Plant) for the Group column. How has this closing balance been calculated? Why is it not the same figure as the closing Accumulated Depreciation balance for the Subsidiary? (5 marks)

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