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FAC2246(1)/2018/2/A: Financial Accounting- LYCEUM- Taxation of Corporate Profits- Accounting Assignment Help
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Internal Code: 1HCGC
The disposal of the assets of division C incurred a loss of R30,000. LP incurred an expense of R75,000 for restructuring the remaining divisions after the closure of division C. LP regards R75,000 as material in the context of its financial statements.
Required:
Explain how the closure of division C and restructuring of the other divisions will be reported in LP’s Statement of comprehensive income for the year ended 31 December 2012, according to IFRS 5 Non-current assets held for sale and discontinued operations.
QUESTION 2
You are the partner in charge of the audit of LMN. The following matter has been brought to your attention in the audit working papers. During the year LMN spent R500,000 on applied research, trying to find an application for a new process it had developed. LMN’s management has capitalised this expenditure. LMN management is refusing to change its accounting treatment as it does not want to reduce the year’s profit. The draft financial statements show revenue of R40 million and net profit of R4.5 million.
Required:
(i) Explain what is meant by “materiality” AND whether the matter highlighted above is material.
(ii) Identify the type of audit report that would be appropriate to the above statements, assuming that LMN’s management continue to refuse to change the financial statements.
QUESTION 3
(a) HB paid R2.50 per share to acquire 100% of PN’s equity shares on 1 September 2009. At that date PN’s statement of financial position showed the following balances with equity:
PN’s net asset values were the same as their book values, except for land which was valued at R70,000 more than its book value. HB directors estimate that any goodwill arising on the acquisition will have a useful life of 10 years.
Required:
(i) Calculate goodwill arising on the acquisition of PN.
(ii) Explain how HB should record the goodwill in its group financial statements for the year ended 31 August 2010, in accordance with IFRS 3 Business Combinations.
Accounting Assignment Help:
Task: QUESTION 1: LP is an entity that up until 30 June 2012 operated 3 divisions; division A, B and C. LP closed division C on 30 June 2012. Division C had the following results for the period 1 January 2012 to 30 June 2012:
The disposal of the assets of division C incurred a loss of R30,000. LP incurred an expense of R75,000 for restructuring the remaining divisions after the closure of division C. LP regards R75,000 as material in the context of its financial statements.
Required:
Explain how the closure of division C and restructuring of the other divisions will be reported in LP’s Statement of comprehensive income for the year ended 31 December 2012, according to IFRS 5 Non-current assets held for sale and discontinued operations.
QUESTION 2
You are the partner in charge of the audit of LMN. The following matter has been brought to your attention in the audit working papers. During the year LMN spent R500,000 on applied research, trying to find an application for a new process it had developed. LMN’s management has capitalised this expenditure. LMN management is refusing to change its accounting treatment as it does not want to reduce the year’s profit. The draft financial statements show revenue of R40 million and net profit of R4.5 million.
Required:
(i) Explain what is meant by “materiality” AND whether the matter highlighted above is material.
(ii) Identify the type of audit report that would be appropriate to the above statements, assuming that LMN’s management continue to refuse to change the financial statements.
QUESTION 3
(a) HB paid R2.50 per share to acquire 100% of PN’s equity shares on 1 September 2009. At that date PN’s statement of financial position showed the following balances with equity:
PN’s net asset values were the same as their book values, except for land which was valued at R70,000 more than its book value. HB directors estimate that any goodwill arising on the acquisition will have a useful life of 10 years.
Required:
(i) Calculate goodwill arising on the acquisition of PN.
(ii) Explain how HB should record the goodwill in its group financial statements for the year ended 31 August 2010, in accordance with IFRS 3 Business Combinations.