Student Number: (enter on the line below)
Student Name: (enter on the line below)
HI6025
ACCOUNTING THEORY AND CURRENT ISSUES
final assessment
Trimester 3, 2022
TIME ALLOWED: 24 hours
Assessment Weight: 50 total marks
Instructions:
All questions must be answered by using the answer boxes provided in this paper.
Completed answers must be submitted to Blackboard by the published due date and time.
Please ensure you follow the submission instructions at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.
ABC Ltd has the following land and buildings in its financial statements as of 30 June 2022:
| Residential land, at cost |
2,305,483 |
| Factory land, at valuation 2020 |
2,074,935 |
| Buildings, at valuation 2020 |
1,844,386 |
| Accumulated depreciation |
-230,548 |
On 30 June 2022, the balance of the revaluation surplus is $922 193, of which $691 645 relates to the factory land and $230 548 to the buildings. On this same date, independent valuations of the land and buildings are obtained. In relation to the above assets, the assessed fair values on 30 June 2022 are:
| Residential land, previously recorded at cost |
2,536,031 |
| Factory land, previously revalued in 2020 |
1,613,838 |
| Buildings, previously revalued in 2020 |
2,074,935 |
Required:
Provide the journal entries to account for the revaluation on 30 June 2022. ABC Ltd classifies residential and factory land as different classes of assets.
ANSWER: ** box will enlarge as you enter your answer
Question 2 (11 marks)
XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration:
| Cash | 98,723 |
| Plant and equipment | fair value $352,581;
carrying amount in the books of XYZ Ltd $239,630 |
| Land | fair value $423,097; |
There are also legal fees of $267,962 involved in acquiring Red-X Ltd.
On 1 July 2021, Red-X Ltd’s statement of financial position shows total assets of $423,097 and liabilities of $423,097. The fair value of the assets is $1,128,260.
Required:
Has any goodwill been acquired, and if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards.
ANSWER:
Question 3 (10 marks)
Discuss the consequences of a firm issuing bonus shares to shareholders on the earnings per share.
ANSWER:
Question 4 (8 marks)
Explain what social responsibility reporting is and how it relates to accountability.
ANSWER:
Question 5 (5 marks)
Explain the differences between a bad debt and a doubtful debt.
ANSWER:
Question 6 (5 marks)
Explain the five steps to be followed when recognising revenue from a contract with customers.
ANSWER:
END OF FINAL ASSESSMENT
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