Assessment Task – Tutorial Questions Assignment

Unit Code: HI5020

Unit Name: Corporate Accounting

Assignment: Tutorial Questions

Due: week 13, Wednesday 11.59 pm

Weighting: 50 percent, 50 Marks

Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit

Unit Learning Outcomes Assessed: 1-5

Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. The
tutorial questions are available in the Tutorial Folder, for each week, on Blackboard. The Interactive Tutorials are
designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task
is to answer a selection of tutorial questions for weeks 1 to 11 inclusive and submit these answers in a single document.

The questions to be answered are;

Question 1 Week 1 (7 marks)

In accounting for the acquisition of assets, the assets acquired are to be recorded at the
‘cost of acquisition’. How would you determine the ‘costs of acquisition’ of an asset?

Question 2 Week 4 (7 marks)

How are changes in accounting policies accounted for and disclosed?

Question 3 Week 5 (7 marks)

Following information relate to Hawke Ltd for the financial year ended 2020
Hawke Ltd
Statement of Financial position
As at 30 June 2020
2020 2019
Assets
Cash at bank 84200 100000
Accounts receivable 208000 172000

HI5020 Corporate Accounting Tutorial Assignment T3 2020 Page 1 of 7

 Inventory 200000 208000
Prepaid insurance 12000 20000
Interest receivable 400 600
Investments 80000 40000
Plant and equipment 800000 720000
Less: Accumulated depreciation -200000 -180000
Total assets 1184600 1080600
Liabilities
Accounts payable 152000 128000
Provision for employee benefits 24000 16000
Other expenses payable 8000 12000
Equity
Share capital 800000 800000
Retained earnings 200600 124600
Total liabilities and equity 1184600 1080600

Hawke Ltd
Statement of Financial performance
For the period ended 30 June 2020

2020
Income
Sales revenue $1,920,000
Interest revenue on investments $4,000 $1,924,000
Less: Expenses
Cost of sales $1,344,000
Employee expenses $260,000
Insurance expense $32,000
Loss on sale of equipment $8,000
Depreciation expense – plant and equipment $80,000
Other expenses $44,000 $1,768,000
Profit for the year $156,000

Additional information
The loss on sale of equipment relates to an item that originally cost $80 000 and had a carrying amount of $20000 when
sold.

Required: Calculate the following:

HI5020 Corporate Accounting Tutorial Assignment T3 2020 Page 2 of 7
 (a) Cash collected from customers (1 mark)
(b) Cash paid to suppliers (2 marks)
(c) Cash paid to employees for wages and salary (1 mark)
(d) Cash spent on plant and equipment (1 mark)
(e) Proceeds from sale of equipment (1 mark)
(f) Cash paid for insurance (1 mark)

Question 4 Week 6 (7 marks)

On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star
for the two years to 2019 are as follows:

2019 2018

Profit before tax $4 500 000 $3 600 000

Warranty expense — 1500 000

Depreciation expense – machinery 60 000 60 000

Gain on sale of machinery for accounting — —

Warranty paid 750 000 —

Tax depreciation – machinery 90 000 90 000

Gain on sale of machinery for tax — —

Provision for warranty – carrying amount 750 000 1500 000

Provision for warranty – tax base — —

Machinery – carrying amount 180 000 240 000

Machinery – tax base 120 000 210 000

The company tax rate is 30%.

Required

(a) Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019 (4 marks)

(b) Prepare the required tax journal entries for each year. (3 marks)

HI5020 Corporate Accounting Tutorial Assignment T3 2020 Page 3 of 7

Question 5 Week 12 (11 marks)

On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an
initial investment cost of Swiss francs (SFr) 60,000. RoadTime's December 31, 20X1, Trial balance in SFr is as follows:

Debit (SFr) Credit (SFr)

Cash 7000
Accounts Receivable 20000
Receivable from Popular Creek 5000
Inventory 25000
Plant and Equipment 100000
Accumulated Depreciation 10000
Accounts Payable 12000
Bonds Payable 50000
Common Stock 60000
Sales 150000
Cost of goods sold 70000
Depreciation Expense 10000
Operating Expense 30000
Dividend paid 15000
Total SFr282,000 SFr 282,000

Additional Information
1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $4,000 payable to
RoadTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased
November 1.
3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's
depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:

January 1 1SFr=$.73
March 1 1SFr=$.74
November 1 1SFr=$.77
December 31 1SFr=$.80
20X1 Average 1SFr=$.75

6. The Swiss franc is the functional currency.

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 Required

(a) Prepare a schedule translating the December 31, 20X1, trial balance from Swiss francs to dollars. (8 marks)
(b) Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its
foreign subsidiary? (3 marks)

Question 6 Week 8 (11 marks)

(a) Zealandia ltd is the parent company holding 90 percent interest in the Oceania ltd. For each of the following
independent cases, provide adjusting entries necessary to eliminate the effect of intragroup transaction at 30
June 2020:
(i) During the period Oceania Ltd sold inventory to Zealandia Ltd at a price of $240000. The cost of the inventory to
Oceania ltd was $168000. Ninety percent (90%) of the inventory has been sold by Zealandia Ltd to outside third
parties by the end of the period. (2 marks)
(ii) During the period, Oceania borrowed $1500000 from Zealandia Ltd which is still unpaid by the end of the period.
During the period Oceania Ltd has paid $30000 interest to Zealandia Ltd for the borrowing. (2 marks)
(iii) At the end of the year, Oceania Ltd declared and paid a dividend amounting to $180000. Zealandia Ltd has
declared and paid a dividend of $150000. (2 marks)
(iv) One year ago, at 1 July 2019, Oceania Ltd sold equipment to Zealandia Ltd for a price of $810000. At the time of
the sale, the carrying value of the equipment in the Oceania Ltd.’s account was $450000 and the accumulated
depreciation was $450000. Zealandia is depreciating the equipment over a further 5 years period. The expected
salvage value is zero. Assume a corporate tax rate of 30 percent. (2 marks)
(v) During the period Zealandia has paid a consultancy fee to Oceania Ltd of $75000. Zealandia has provided a
management service to Oceania Ltd for $80000 which ahs not been paid as yet by Oceania Ltd. (2 marks)

(b) When are profits realised in relation to inventory transfers within the group? (1 mark)

Submission Directions:

The assignment will be submitted via Blackboard. Each student will be permitted only ONE submission to Blackboard.
You need to ensure that the document submitted is the correct one.

HI5020 Corporate Accounting Tutorial Assignment T3 2020 Page 5 of 7

Academic Integrity
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to
maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply
with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any
questions about Academic Integrity issues related to your assessment tasks, please consult your lecturer or tutor for
relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Skills
link on Blackboard.

Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks,
failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment.

Table 1: Six categories of Academic Integrity breaches

Plagiarism Reproducing the work of someone else without attribution. When a student
submits their own work on multiple occasions this is known as self-plagiarism.

Collusion Working with one or more other individuals to complete an assignment, in a way
that is not authorised.

Copying Reproducing and submitting the work of another student, with or without their
knowledge. If a student fails to take reasonable precautions to prevent their own
original work from being copied, this may also be considered an offence.

Impersonation Falsely presenting oneself, or engaging someone else to present as oneself, in an

in-person examination.

Contract cheating Contracting a third party to complete an assessment task, generally in exchange
for money or other manner of payment.

Data fabrication and Manipulating or inventing data with the intent of supporting false conclusions,
falsification including manipulating images.

Source: INQAAHE, 2020

If any words or ideas used the assignment submission do not represent your original words or ideas, you must cite all
relevant sources and make clear the extent to which such sources were used.

In addition, written assignments that are similar or identical to those of another student is also a violation of the Holmes
Institute’s Academic Conduct and Integrity policy. The consequence for a violation of this policy can incur a range of
penalties varying from a 50% penalty through suspension of enrolment. The penalty would be dependent on the extent
of academic misconduct and your history of academic misconduct issues.
All assessments will be automatically submitted to SelfAssign to assess their originality.
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Further Information:
For further information and additional learning resources please refer to your Discussion Board

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