Revision Material Solution ACCT3009 SEM2 2023
Question 1:
Answer the following questions with respect to the definitions and application of AASB 10/IFRS
10 Consolidated Financial Statements.
i.
A factor in determining control is the influence available through a friendly party.
There is no guarantee that the bank will always vote with Chip Ltd – the relationship
may change over time. However many of the factors in determining control may
change over time. What is important is whether currently the voting of the bank is
aligned with Chip Ltd and that seems to be the case, meaning Chip Ltd would be the
parent of Dale Ltd.
ii.
If McDuck Ltd does not intend to enter into the conversion of the debt then the
existence of the convertible debt is not substantive and will not affect the
determination of control. Scrooge Ltd would then be the parent of Beagle Boy Ltd.
iii.
Sylvester Ltd is the parent of Tweety Pie Ltd as Sylvester Ltd. (1 mark). As it seems to
have the current ability to control Tweety Pie Ltd (1 mark) as it has the majority interest,
the other shareholders are dispersed and some are not interested in the management
of the entity (1 mark).
Question 2:
Discuss:
 the concept of control
 the need to apply judgement
 these situations are often referred to “strawmen” – other parties that act as agents or in
conjunction with others. In the example in this question, Alvin Ltd has the expectation
that the voting of the investment bank will most likely be aligned with its own, ensuring
that it cannot be outvoted.
If control is the basis for consolidation, a factor to consider is the influence available through
a friendly party. Note that there is no guarantee that the investment bank will always vote with
Alvin Ltd – the relationship may change over time. However, many of the other factors
considered in relation to an investor and control, such as the attendance at the AGM and the
size of blocks of shareholdings may also change over time. What it matters is whether currently
the voting of the investment bank is aligned with Alvin Ltd and that seems to be the case,
meaning that Alvin Ltd is the parent of Theodore Ltd.
Revision Material Solution ACCT3009 SEM2 2023
Question 3:
Consolidations 1
1. Acquisition analysis at 1 July 2019:
Total equity
$6000
Add FV increase of inventory
$1400 (2000 x (1 – 30%) (BCVR inventory)
FV of acquisition
$7400
Consideration paid
$5000
Gain on bargain purchase
$2400
2. Adjusting journal entries:
Account
Dr
Inventory
2000
Cr
BCVR
1400
Deferred tax liability
600
Inventory to FV
Pre-acquisition
Share Capital
5000
Retained earnings
1000
BCVR
1400
Gain on Bargain purchase
2400
Shares in Mouse
5000
Pre-acquisition entries
Mickey Ltd
Account
Share capital
Retained earnings
General Reserves
BCVR
Gain on bargain
purchase
Total equity
Deferred tax liability
6000
2100
9000
Mouse Ltd
5000
1000
Adjustments
Dr
Cr
5000
1000
1400
1400
2400
17100
6000
600
Group
6000
2100
9000
0
2400
19500
600
Revision Material Solution ACCT3009 SEM2 2023
Inventory
Net Assets
Investment in Mouse
Ltd
Total assets
2000
12100
5000
17100
Question 4:
2000
18100
6000
6000
5000
9400
9400
0
19500
Consolidations 1
1. Acquisition analysis at 1 July 2022:
Net fair value of identifiable assets
and liabilities acquired
Consideration transferred
Goodwill
=
+
+
=
=
=
=
$100 000 + $100 000 (equity)
$10 000 x (1 – 30%) (BCVR – inventories)
$40 000 x (1 – 30%) (BCVR – patent)
$235 000
$250 000
$250 000 – $235 000
$15 000
2. Consolidation worksheet entries at 1 July 2022:
Inventories Dr
Business combination valuation reserve
Deferred tax liability
10 000
Cr
Cr
7 000
3 000
Patent
Business combination valuation reserve
Deferred tax liability
Dr
Cr
Cr
40 000
Goodwill
Business combination valuation reserve
Dr
Cr
15 000
Dr
Dr
Dr
Cr
100 000
100 000
50 000
28 000
12 000
15 000
Pre-acquisition entry at 1 July 2022:
Retained earnings (1/7/22)
Share capital
Business combination valuation reserve
Shares in Kidman Ltd
Nicole Ltd
Account
Share capital
Retained earnings
BCVR
Total equity
Kidman Ltd
250 000
150 000
100 000
100 000
400 000
200 000
Adjustments
Dr
Cr
100 000
100 000
50 000
50 000
250 000
Group
250 000
150 000
0
400 000
Revision Material Solution ACCT3009 SEM2 2023
Deferred Tax Liability
Investment in Kidman
Ltd
Goodwill
Inventory
Patent
Net Assets
Total assets
250 000
3000, 12000,
15 000
250 000
0
15 000
10 000
40 000
350 000
400 000
15 000
10 000
40 000
150 000
400 000
Question 5:
200 000
200 000
350 000
315 000
Consolidations 2
Donald LTD – Duck LTD
30 June 2018
(a)
(b)
(c)
Sales revenue
Cost of sales
Inventories
Dr
Cr
Cr
5000
Accounts payable
Accounts receivable
Dr
Cr
5000
Deferred tax asset
Income tax expense
Dr
Cr
900
Proceeds on sale of motor vehicle
Dr
Carrying amount of motor vehicle sold Cr
Motor vehicles
Cr
15 000
2000
3000
5000
900
12 000
3 000
Deferred tax asset
Income tax expense
Dr
Cr
900
Accumulated depreciation – motor vehicle
Depreciation expense
Dr
Cr
300
Income tax expense
Deferred tax asset
Dr
Cr
90
Gain on sale of land
Land
Dr
Cr
20 000
Deferred tax asset
Income tax expense
Dr
Cr
6 000
900
300
90
20 000
6 000
Revision Material Solution ACCT3009 SEM2 2023
Question 6:
Consolidations 2
(a)
Dividend revenue
Dividend declared
Dividend payable
Dividend receivable
Dr
Cr
50 000
Dr
Cr
50 000
Dr
Cr
30 000
Dr
Cr
75 000
75 000
50 000
50 000
(b)
Rent revenues
Rent expenses
30 000
(c)
Sales revenue
Cost of sales
(d)
Proceeds on sale of warehouse
Carrying amount of warehouse sold
Warehouse
Dr
Cr
Cr
150 000
Gain on sale of warehouse
Warehouse
Dr
Cr
27 000
Deferred tax asset
Income tax expense
Dr
Cr
8 100
Accumulated depreciation - warehouse
Depreciation expense
Dr
Cr
1 350
Income tax expense
Deferred tax asset
Dr
Cr
405
123 000
27 000
OR
Question 7:
Date
30 June
2020
27 000
8 100
1 350
405
Insolvency
Account
Liquidation receipts & payments
Cash
(Transfer cash)
Liquidation
Other assets
Dr
Cr
4000
4000
36000
36000
Revision Material Solution ACCT3009 SEM2 2023
(Transfer of carrying amounts)
Liquidation receipts & payments
Secured Creditor
Liquidation account
Land
(Realisation of assets)
Liquidation receipts & payments
Liquidation
(Realisation of assets)
Liquidation account
Accrued liabilities
(Record expenses of liquidation)
Accrued liabilities
Creditors
Liquidators receipts & payments
(Record payment of payables & discount)
Reserves
Share capital
Liquidation account
Retained losses
Shareholders distribution account
(Close off shareholders account)
Shareholder distribution account
Liquidators receipts & payments
(Distribution of final funds to shareholders)
Shareholder distribution account
Liquidator account
(Close out liquidation profit)
10000
35000
15000
60000
20000
20000
3500
3500
3500
20000
23500
5000
50000
5000
10000
50000
10500
10500
39500
39500
Liquidators Receipts & Payments
Cash
Liquidation
Land
Land
Accrued liabilities
4000 Creditors
20000
10000 Shareholders distribution
23500
34000
34000
Liquidation
15000 Liquidators receipts & payments
20000
3500
10500
Revision Material Solution ACCT3009 SEM2 2023
Other assets
Retained losses
36000 Shareholders distribution
39500
5000
59500
Liquidation
Liquidation receipts & payments
59500
Shareholders Distribution
39500 Shareholder capital
50000
10500
50000
Question 8:
Insolvency
1. Order of priority of payment of debts:
1.
Liquidator’s remuneration & expenses
2.
Mortgage on land (secured by a non-circulating security interest)
3.
Debentures (secured by a circulating security interest))
4.
Salary & wages payable (12 000 + 2 000)
5.
Annual leave payable
6.
Ordinary unsecured:
Mortgage loan – balance
$6 600
Director’s salary – balance
3 600
Accounts payable
86 400
Income tax payable
4 000
Telephone bill payable
1 800
50000
$3 600
163 400
300 000
14 000
8 800
102 400
Revision Material Solution ACCT3009 SEM2 2023
Question 9:
30.4.23
30.6.23
Foreign Currency
Accounts receivable
Cash at bank
Sales
(400 000 / .73 = 547 945 *.7 =
383 561)
Dr
Dr
Cr
383 561
164 384
Dr
Cr
28 204
Foreign exchange loss
Accounts receivables
(280 000 / .72 =411 764 – 388
889)
Dr
Cr
22 875
Cash at bank
Accounts receivable
Dr
Cr
111 111
Accounts receivable
Foreign exchange gain
547 945
28 204
(280 000 / .68 =411 764 – 383 561)
31.7.23
22 875
31.7.23
111 111
(400 000* 20% = 80 000 / .72)
30.8.23
Foreign exchange
Accounts receivable
loss Dr
14 621
Cr
14 621
(200 000 / .76 =263 158 – 277
779)
30.8.23
Cash at bank
Accounts receivable
Dr
Cr
263 158
263 158
Revision Material Solution ACCT3009 SEM2 2023
Question 10:
Foreign Currency
(a) $204 080, with a gain of $4 080
30/4/2022
Dr Accounts receivable 200 000
Cr Sales
200 000
31/7/2022
Dr Cash
Cr Accounts receivable
31/7/2022
Dr Accounts receivable
Cr Foreign exchange gain
204 080
204 080
4 080
4 080
Under IAS 21 this gain would be shown as $2020 in 2021/22 and $2060 in
2022/23.