Corporate Accounting

This document provides study material and solved assignments for Corporate Accounting. It includes journal entries, deferred tax calculations, consolidation worksheet entries, and more.

Corporate Accounting

Table of Contents
QUESTION 1...................................................................................................................................1
QUESTION 2...................................................................................................................................2
a) Deferred tax calculations........................................................................................................2
b) Income Tax Journal for the year ended 30 June 2019............................................................2
c) Deferred Tax worksheet and deferred tax journals for 30 June 19.........................................3
d) Treatment of deferred tax and tax losses................................................................................4
QUESTION 3...................................................................................................................................5
a) Acquisition analysis and BCVR entries July 2018................................................................5
B) Consolidation worksheet entries 30 June 2019......................................................................5
C) Consolidation worksheet 30 June 2019..................................................................................6
REFERENCES................................................................................................................................8

QUESTION 1
Journal Entries
Date Particulars Debit Credit
2018
15/07/18 Final Call 400000
To Equity share capital 400000
31/08/18 Bank 380800
To Final Call 380800
10/09/18 Share capital 19200
To Share Forfeiture 19200
31/10/18 Bank 297500
To Equity share options 35000
To Equity share capital (35000*1.5) 262500
2019
31/01/19 Bank 200000
To share application 200000
05/02/19 Share Application 200000
To Equity share capital 200000
Underwriting Commission 6700
To Underwriters 6700
05/02/19 Underwriters 6700
To Bank 6700
1

Redemption of Preference Shares
18/02/19 Preference Share Capital 180000
Premium on Redemption 10800
To Preference Shareholder 190800
26/02/19 Preference shareholder 190800
To Bank 190800
General Reserve 10800
To premium on redemption 10800
15/04/19 Bank 65000
To Equity share options 26000
To Equity share capital (26000*1.5) 39000
QUESTION 2
a) Deferred tax calculations
Deferred tax worksheet
2018
Particulars Books TAX Diff Tax Rate
Tax
Amount
Computer 300000 300000 0 30.00% 0
Depreciation 50000 100000 50000 30.00% 15000
0 30.00% 0
Accounts Receivable 100000 100000 0 30.00% 0
Deferred Tax Liability 15000
Deferred tax journals
2

Deferred Tax Asset 15000
To Deferred tax liability 15000
b) Income Tax Journal for the year ended 30 June 2019
TAXABLE INCOME FOR YEAR ENDED JUNE 2019
Accounting profit before income
tax 650000
Add;
Doubtful debt expense 25000
warranty expense 90000
Depreciation 60000 175000
Deduct
Depreciation 100000
Bad debts 15000
warranty expense 70000 185000
Taxable Income 640000
Current tax liability @ 30% 192000
Journal
Income Tax Expense 192000
To Current tax liability 192000
c) Deferred Tax worksheet and deferred tax journals for 30 June 19
Assets carrying
amount
Taxable
Amount
Deductible
Amount
Tax Base Taxable
Temporary
D
ed
3

Difference
uc
ti
bl
e
Te
m
po
ra
ry
di
ffe
re
nc
e
Computer 300000 0 0 300000
Accumulated
Depreciation 60000 100000
40
00
0
Accounts Receivable 100000 20000 120000
20
00
0
Liabilities
Provision for warranty
costs 50000 50000
50
00
0
Provision for employee
benefit 30000 30000
30
00
0
4

Net Temporary
differences
Deferred Tax liability
12
00
00
Deferred Tax Asset
12
00
0
Beginning balance
12
00
0
Adjustments
Journals
Deferred Tax Asset 24000
Income Tax Expense 192000
To Deferred tax
liability 216000
d) Treatment of deferred tax and tax losses
Current tax for current and prior period to extent it is unpaid is is recognised as liability for
amount that is already paid related to prior and current periods exceeding the amount due for
periods , excess amount is recognised as an asset. Tax assets is used for carrying forward unused
tax losses & unused credit of tax to extent it is probable future taxable profits will be available
against losses of tax.
5

QUESTION 3
a) Acquisition analysis and BCVR entries July 2018
Acquisition Analysis at July 1, 2018.
Net fair value of the identifiable asset 108000
and liabilities 1400
1050
110450
Consideration Transferred
110000-
10000
100000
Capital reserve 10450
Business combination valuation
entries
Accumulated Depreciation 7500
Business combination valuation
reserve 12500
To Machinery 20000
Depreciation Expense 300
Retained Earnings 300
To Accumulated Depreciation 600
(1/5*1500 p.a. for 2 years)
Business combination valuation 10450
6

reserve
To Capital Reserve 10450
B) Consolidation worksheet entries 30
June 2019
Pre acquisition entries
Retained Earnings 36000
Share Capital 54000
Revaluation surplus
Land 18000
To Capital Reserve 8000
To Shares in Darren ltd. 100000
Dividend payable 10000
To dividend Receivable 10000
30/06/19
Transfer from reserves 2000
To Reserves 2000
Revaluation surplus 7500
To Land 7500
C) Consolidation worksheet 30 June 2019.
Ethan
Ltd
Darren
Ltd Adjustments Group
Dr Cr
Profit before tax 120 000 12 500 132500
7

Income tax expense (56 000) (4 200) 60200
Profit 64 000 8 300 72300
Retained earnings (1/7/18) 80 000 36 000 10000 106000
Transfer from BCVR - -
144 000 44 300 188300
Transfer to general reserve -0 (3 000) 3000 3000
Retained earnings
(30/6/19) 144 000 41 300 185300
Share capital 360 000 54 000 414000
BCVR - -
General reserve 10 000 3 000 3000 10000
514 000 98 300 612300
Asset revaluation surplus
(1/7/18) 13 500 18 000 31500
Gains 5 000 2 000 7000
Asset revaluation surplus
(30/6/19) 18 500 20 000 7500 38500
532 500 118 300 650300
Liabilities 42 500 13 000 55500
575 000 131 300 706300
Land 160 000 20 000 180000
Plant & machinery 360 000 125 600 485600
Accum. depreciation
(110
000) (33 000) 143000
Inventory 55 000 18 700 73700
Shares in Darren 110 000 0 110000
575 000 131 300 706300
8

9

REFERENCES
Online
AASB 112. 2019.[Online]. Available through :
<https://www.legislation.gov.au/Details/F2017C00280>.
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