This project report covers topics such as investment decisions, consolidated financial statements, group companies, parent companies, subsidiary companies, and acquisition analysis. It also includes journal entries and calculations for deferred tax assets, retained earnings, and dividends.
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Company Accounting Marking criteria sheet Student nameStudent ID Part B Marking Criteria SheetMarks Available Marks awarded 20 marks Question 110 Question 220 Question 350 Less: Not complying with formatting, word count and marking criteria sheet Part B Assignment Total80 marks Part B Assignment: 20% weighting20 marks Less: Late penalty (5% per day) Part B Assignment: Final mark20 marks Additional comments from marker salla.suchith kumar and12055680 2
Company Accounting Question 1: Memorandum To: Chief financial officer Cc: Executive Committee From: Accountant Date: Subject: Investment decisions in Soletta ltd. The memorandum describes that whether thePalvidia Ltd should invest into the stock ofSoletta ltd and if the investment would be done than how it would affect the performance of Palvidia ltd. The main purpose of consolidated financial statements is to present the benefits of the creditors and owner of the business about the operations and the performance of the business. It is prepared by the parent company which owns more than one subsidiary in order to get the entire result about the performance of the business. A group company is a collection of parent and subsidiary companies which operates as a single economic entity along with a common source of control. Group could be owned by a holding company as well which actually does not have any operations. On the other hand, a parent company is an organization which has a controlling interest in other company. These types of companies conduct their own operations and have a substantial interest in the subsidiaries companies (Netter, Stegemoller & Wintoki, 2011). Further, the subsidiary companies are those companies which are controlled and owned by the other companies. The operations are managed by the subsidy company at itself. A group can hold as many parent companies as possible because of the fact that the group companies are just in the position to maintain the parent and subsidiary companies. They do not have their own operations and thus the number of parent companies could be anything, the only condition is that the parent companies operate as a single economic entity along with a common source of control. salla.suchith kumar and12055680 3
Company Accounting The adjustment for intra group transaction is required in the business to prepare the consolidated financial statement of the business. The transaction has not been done with the external parties and thus the adjustment entries reduce the effect on the final financial statement of the business (Marks & Mirvis, 2011). Realization occurs at the time of involvement of any external entity such as when the inventory has been sold to other business which is not the member of the group. salla.suchith kumar and12055680 4
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Company Accounting Question 2: Acquisition Analysis On the date of 1st July 2019 Share capital$650,000 Ass: General Reserve$20,000 Add: Retained earnings$250,000 Add: Changes into equipment prices$50,000 Less: Accumulated depreciation-$80,000 Less: Liability-$40,000 Total value$850,000 Less: Purchase consideration$1,000,000 Goodwill on acquisition$150,000 General Journal Entries of Paldivia Ltd On the date of 1st July 2019 DateParticularsDebitCredit 1/07/201 9 Sundry Assets$50,000 Business combination valuation reserve$30,000 Accumulated depreciation$ 80,000 1/07/201 9 Business combination valuation reserve$40,000 Accumulated depreciation$ 40,000 1/07/201 9 Deferred tax assets$3,000 Profit and loss a/c$ 3,000 1/07/201 9Goodwill on acqusiition$1,000,000 salla.suchith kumar and12055680 5
Company Accounting Accumulated impairment loss $ 150,000 Business combination valuation reserve $ 850,000 W.N. Calculation of deferred tax assets Total increment in the Assets$50,000 Less: Increment in the liabilities-$40,000 Net Assets$10,000 DTA (Tax rate @ 30%)$3,000 Question 3: a)Retained Earnings$ 163 Income tax expenses$ 70 Cost of sales (6000*1/3)*20/120*70%$ 233 b)Retained Earnings (1/1/14)$ 2,800 Deferred tax assets (Difference *30%$ 1,200 Tractors (Differences)$ 4,000 Accumulated depreciation$ 1,000 Depreciation expenses$ 400 Retained earnings$ 600 (10% *4000 p.a. for 2.5 years) Income tax expenses (Depreciation expenses *30%) $ 120 Retained earnings (Retained earnings *30%)$ 180 Deferred tax assets$ 300 salla.suchith kumar and12055680 6
Company Accounting c)Retained Earnings (1/5/19)$ 140 Income tax expenses$ 60 Cost of sales$ 200 d)Unearned Service revenue$ 3,000 Accrued Service expenses$ 3,000 e)Loan payable a/c$ 50,000 Loan receivable a/c$ 50,000 Interest revenue a/c$ 4,500 Interest expenses a/c$ 4,500 (50000*6%*1.5) Arrears in interest revenue$ 1,500 Arrears in interest expenses$ 1,500 f)Dividend revenue a/c$ 1,500 Interim dividend a/c$ 1,500 g)Dividend payable$ 3,000 Final dividend declared$ 3,000 Dividend revenue a/c$ 3,000 Dividend receivable$ 3,000 salla.suchith kumar and12055680 7
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Company Accounting References: Marks, M. L., & Mirvis, P. H. (2011). Merge ahead: A research agenda to increase merger and acquisition success.Journal of business and psychology,26(2), 161-168. Netter, J., Stegemoller, M., & Wintoki, M. B. (2011). Implications of data screens on merger and acquisition analysis: A large sample study of mergers and acquisitions from 1992 to 2009.The Review of Financial Studies,24(7), 2316-2357. salla.suchith kumar and12055680 8