Accounting for Income Tax - Revaluation and Impairments - Business Combinations and Consolidation - Accounting Assessment Answer

Accounting Assessment Answer

1. What is the income tax expense included in the Income Statement for the year ended 30 June 2018?
2. How/where does the Company recognise income tax expense?                                        
3. Identify two items to which the temporary differences in your company’s report can be attributed.
4. What is the amount of income tax paid during the year ended 30 June 2018?                                          
5. Show any deferred tax asset or deferred tax liability (or both) disclosed in the statement of financial position as at 30 June 2018, including the amount of these balances.                                       
6. Explain why the current tax liability at the end of the reporting period may not equal the income tax expense for the period. Make reference to the amounts used in your Company’s annual report.                         

• At 30 June 2018, what portion of the total assets is made up of intangible assets? (express your answer as a percentage, to 2 decimal places).
• What is the amount of the impairment loss/ expenses included in the financial reports (ignore any reversals)? Which assets do the recognised impairment amounts relate to, and why does the company recognise these impairment losses/ expenses?                                                                          
• Identify whether your company has revalued any tangible or intangible assets, by including a brief description of the item and the amount of the revaluation.  If no assets have been re-valued, state that this has not occurred.                                                                                                                              

1. During the 2018 financial year, which accounting standard is used for recognising leases on assets leased by the company? What is the total amount of lease commitments as lessee at 30 June 2018 (ignore leasehold improvements)?
2. Explain whether the adoption of AASB 16 Leases is likely to have a material effect on the reports of the company, or whether it has had a material effect if already adopted, with reference to your company’s leasing commitments. Include discussions relating to accounting for leases from both lessor and lessee perspectives. Provide references to your companies report, as well as two relevant journal articles, and discuss the implementation of AASB 16, the major reporting changes and the likely effect of these changes.                                                                                    

1. Please refer to the allocated ASX company’s annual report and answer the following:
2. Identify the key subsidiaries of the company. What is the amount of total non-controlling interests at 30 June 2018?

1. • What is the amount of total comprehensive income for the year ended 30 June 2018?  Describe the components of this company’s comprehensive income, and show the amount of this comprehensive income that is attributable to (i) shareholders of the parent entity; and (ii) non-controlling interest                                                    

1. • What is the amount of goodwill at 30 June 2018?                                        
   • Read this company’s “related party disclosure” and identify the intra-group transactions.                                                                                     
   • Explain whether your Company has complied with the requirements of paragraphs 54 (q) and 54 (r) of AASB 101, and paragraph 2

• Read this company’s ‘Principles of consolidation’ accounting policy carefully and explain how it complies with the requirements of AASB 10.                                                    
• Provide consolidation journal entries based on information as follows Parent Ltd (Parent) owns 70% of the issued shares of Subsidiary Ltd (Subsidiary). During the period ended 30 June 2016, the following transactions took place.

1. 1. In August 2015, Parent sold to external entities $2,000 worth of inventories that had been sold to it by Subsidiary in April 2015 at a profit before tax to Subsidiary of $400.
   2. In March 2016, Parent sold $10,000 worth of inventories to Subsidiary, recording a profit before tax of $1,000. At 30 June 2016, 20% of these inventories remained unsold by Subsidiary.
   3. In April 2016, Subsidiary sold $12,000 worth of inventories to Parent Ltd at a mark-up of 20%. At 30 June 2016, $1,200 of these inventories remained unsold by Parent Ltd.
   4. At 1 July 2014, Parent purchased equipment from Subsidiary for $100,000. At that date, this equipment had a carrying amount of $80,000 in the accounts of Subsidiary.
   5. At 30 June 2016, Parent recorded depreciation of $10,000 in relation to equipment sold to it by Subsidiary on 1 July 2014. Parent uses a 10% p.a. straight-line depreciation method for plant.

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