Accountancy Class Test Questions

This examination paper must be returned. Candidates argon non permitted to remove this paper from the examination room. STUDENT NUMBER STUDENTS NAME.. .. .. First name Last name SIGNATURE MACQUARIE UNIVERSITY Semester 2, 2010 IN-CLASS TEST NO 2 whole ACCG308 CORPORATE ACCOUNTING AND REPORTING Time all(prenominal)owed Total number of questions Instructions 45 minutes ONE This is a closed book examination. You are non permitted to access any books, notes or other written materials. Silent calculators, nonprogrammable are allowed.Questions must be answered on the examination paper. Answer all parts of all questions. (Office Use Only Do Not Write Here) Total /25 Question 1 (25 marks) On the 1 July 20X6 Howard Ltd gained control of Carter Ltd by buying 70% of its shares for $70,000. At this date, Carter had share capital $50,000 and retained cyberspace $30,000. Additional information ? Goodwill impairment is $500 in year ended 20X8 and $850 in 20X9. ? ? Dividends are paid out of cur rent period profit. The dividends were paid before year-end. Inventory purchases by Howard from Carter during the current year amounted to $30,000.Their cost to Carter was $20,000. Howard still holds $18,000 of this inventory at year-end. add from Carter attracts 12% fire per annum. The interest was paid before year-end. Included in other assets of Howard is equipment purchased from Carter on the 1 July 20X7 for $41,000. The equipment was four years old when sold, had cost Carter $50,000 to buy, with pass judgment residual value $5,000, and had been depreciated 10% p. a. straight-line. Howard depreciates the equipment (after deducting the same residual) straight-line over the remaining six-year life. ? ? Required Complete the consolidation worksheet on the next page.Note 1. Marks are awarded for each proper individual worksheet entry. 2. For the eliminations column only, entries that are placed in a location where there should not be any entry may attract a penalty mark. 2 Worki ngs voiding 1 Substitution. Deletes 70% of subsidiarys pre-control equity. Capital 50 000 * 0. 7 = 35 000 Retained profits 30 000 * 0. 7 = 21 000 Investment in subsidiary 70 000 Goodwill 14 000 Recognise goodwill impairment (prior and current years) Dr Goodwill impairment expense 850 Dr Retained profits 500 Cr hoard Goodwill impairment 1 350 Deletes intra-group dividend revenue and appropriation. 5 000 * 0. 7 = 10 500 Dr Dividend revenue 10 500 Cr Dividend 10 500 Deletes intra-group sales. Dr Sales Cr Cost of sales Elimination 2 Elimination 3 Elimination 4 30 000 30 000 Elimination 5 Deletes profit on intra-group sale from inventory valuation (Current year). (18 000/30 000) * (30 000-10 000) Dr Cost of sales 6 000 Cr Inventory 6 000 Deletes intra-group loan Dr contribute from Carter Cr Loan to Howard Elimination 6 50 000 50 000 Elimination 7Deletes interest from intra-group loan Dr care revenue 6 000 Cr Interest expense 6 000 Deletes profit on intra-group sale of equipment and r einstates equipment carrying amount at sale date Dr Retained profits 9 000 Dr Equipment 9 000 Cr Accumulated wear and tear 18 000 Add back inflated depreciation (2 years) of equipment arising from intragroup sale of equipment 6 000 4 500 = 1 500 p. a. Dr Accumulated depreciation 3 000 Cr Depreciation expense 1 500 Cr Retained profits 1 500 Elimination 8 Elimination 9 3 NCI calculations Net profit 0. 3 * (18 000 6 000) = 3 600 6 000 = subtract profit on intra-group sale of inventoryRetained profits 0. 3 * (38 000 9 000) = 8 700 9 000 = subtract profit on intra-group sale of equipment Dividend 0. 3 * 15 000 = 4 500 Capital 0. 3 * 50 000 = 15 000 Parent interest = Group interest NCI 4 Combined consolidation worksheet as at 30 June 20X9 Howard Carter Sum Eliminations Dr Cr 30 000 4 6 000 5/4 Group Allocation to NCI Parent Sales COGS Gross profit Other revenues Other expenses 94 000 57 000 ______ 37 000 17 000 22 000 ______ 32 000 26 600 ______ 58 600 27 000 31 600 90 000 121 6 00 50 000 12 000 30 000 ______ 213 600 45 000 70 000 98 600 ______ 213 600 2 000 176 000 36 000 93 000 ______ ______ 46 000 83 000 6 000 23 000 34 000 ______ 18 000 38 000 56 000 ______ 50 000 64 600 146 000 30 000 69 000 77 000 10 500 6 000 850 3 7 2 7 9 1 2 8 9 3 6 500 6 000 1 500 49 350 34 150 Net profit Opening retained profits 3 600 30 550 21 000 500 9 000 Profit available less(prenominal) Dividends Retained profits Capital Owners equity Loan from Carter Other liabilities Accum depreciation Accum goodwill impairment Total equities + liabilities ______ ______ 56 000 114 600 15 000 42 000 41 000 72 600 50 000 140 000 91 000 212 600 25 000 28 000 50 000 37 000 58 000 5 000 1 1 500 35 600 69 750 10 500 31 500 38 250 105 000 143 250 37 000 18 000 73 000 1 350 1 350 254 600 8 700 26 900 12 300 57 450 4 500 27 000 7 800 30 450 15 000 90 000 22 800 120 450 50 000 6 8 9 2 3 000 ______ ______ gross 000 357 600 26 000 50 000 71 000 70 000 50 000 Inventory Investment in Sub Loan to Ho ward Consolidation goodwill Other assets 5 1 6 1 8 6 000 65 000 70 000 50 000 14 000 175 600 ______ ______ 194 850 254 600 Total assets 14 000 68 000 166 600 9 000 ______ ______ ______ 144 000 357 600 194 850 5