AUSTRALIAN Accounting- AASB AUSTRALIA Financial Accounting

Order Description

1. Complete the acquisition analysis on 1 January 2011 for Emerging Ltd’s investment in Crown Ltd as required by AASB3 and AASB10 and determine the amount of goodwill following the (a) fair value/full goodwill method and (b) proportional/partial goodwill method.

2. Prepare the acquisition journal entries as required by AASB10 on 1 January 2011 under each method in (i).Additional information:
a) On 1 July 2010, B Ltd acquired 75% of the contributed equity of C Ltd. At that date the equity of C Ltd comprised:
Contributed equity $150 000
Retained earnings $36 760
Revaluation reserve $29 000
b) At the time acquisition, all assets were considered to be fairly valued.
c) Included in C Ltd’s administrative expenses is an amount of $21 500 paid to B Ltd for providing management and administrative service for the year.
d) During the year, C Ltd made sales to B Ltd amounting to $84 500; C Ltd had always sold goods to B Ltd at a mark-up of 25% on cost.
e) On 30 June 2014, the directors decided that goodwill arising on the acquisition on B Ltd had been impaired by 40%.
f) Inventory at 30 June 2014 was as follows:
B Ltd $42 400
C Ltd $27 800
g) Of the inventory B Ltd had on hand at 30 June 2013, $12 600 was purchased from C Ltd.
h) Of the inventory B Ltd had on hand at 30 June 2014, $15 400 was purchased from C Ltd.
i) On 30 June 2014, a final dividend amounting to $28 000 was provided by B Ltd, while $20,000 was provided by C Ltd, and the decision to pay the dividend communicated to shareholders on that date. B Ltd has recognised its share of the dividend receivable from C Ltd in its financial statements on 30 June 2014.
j) Tax is charged at a rate of 40%.
Required:
1. Complete the acquisition analysis on 1 July 2010 for B Ltd’s investment in C Ltd as required by AASB3 and AASB10 and determine the amount of goodwill or gain on bargain purchase following the proportional/partial goodwill method.
2. Prepare the acquisition journal entries on 1 July 2010.
3. Prepare all consolidated journal entries including non-controlling interest and their posting to consolidated worksheet for the year ended 30 June 2014 for consolidation purpose of B Ltd and C Ltd.

see attached document for tables and numbers relating to the questions above.

Question 3: (20 marks)
Report Writing on ‘Financial Reporting Disclosures in Australian Corporate Sector’ (Word length: maximum 1000 words and at least 3 references)
Collect a published annual report (year-end between 2015-2016 periods) for two Australian parent companies listed in the Australian Stock Exchange (ASX). The company web-sites can be obtained from the web-site of the ASE at https://www.asx.com.au/asx/research/listedCompanies.do?coName=Q or any other online resources. Identify their ‘consolidated financial statements’ reported in the annual reports.
Briefly summarise on goodwill method followed, revaluation of assets, impairment of goodwill, non-controlling interests (NCI) and their sharing of any goodwill if applicable.
Critically evaluate the financial reporting and disclosure followed by each parent company whether consistent with the requirements of the AASB3 and AASB10 for the users of general purpose financial reports. In your essay, identify the strengths and weaknesses of their reporting and disclosure as well as major differences along with your recommendations how to minimise reporting and disclosure gaps between them.
Attach a scanned copy of the ‘consolidated financial statements’ only, no need to attach ‘Notes’. Do not attach the entire annual report.
NOTE: presentation and referencing are important.
Specific and descriptive criteria:
(1) There must be an introduction and conclusion section and references, if any, and a scanned copy of the ‘consolidated financial statement’ attached for both group of companies.
(2) There must be a very brief discussion of the selected listed groups of companies (i.e. parents) and their subsidiaries operating activities.
(3) Adequate discussion on consolidated financial statements components taken care of in the process of preparing in accordance with AASB3 and AASB10. A better understanding of concepts as well as group statements is expected.
(4) There must be an analysis of reporting practices as in point (3) above whether AASB3 and AASB10 are properly followed or not. The strengths and weaknesses of reporting should be identified from the users’ perspective. In evaluating reporting practices, any relevant comment or recommendation should be taken into account.
(5) The reporting practices of both groups of companies as in point (3) above must be compared with a decision which group is in compliance with respective AASBs than the other and why and how more compliance is achievable. In evaluating reporting practices, any relevant comment or recommendation for each group should be taken into account.