Corporate Accounting and Reporting Author's Note: Course ID: CORPORATE ACCOUNTING AND REPORTING
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Running head: CORPORATE ACCOUNTING AND REPORTING Corporate Accounting and Reporting Name of the Student: Name of the University: Author’s Note: Course ID:
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4CORPORATE ACCOUNTING AND REPORTING Worksheet entries: Rationale of intra-group transactions: The adjustments are required to be made to the intra-group transactions, since these are internal to the business organisation and they do not represent the impact of transactions with externalparties(BeuselinckandDeloof2014).Inthiscase,thefollowingintra-group transactions are made: Retained earnings: This transaction is for the previous period, in which Possum Limited tax before profit of $750 or profit after tax of $525 on sale of inventory, which is within the group. As the sale is made by not considering the outside entities, it is necessary to eliminate profit on consolidation.
5CORPORATE ACCOUNTING AND REPORTING Any gain on selling inventory sold to the outside parties does not need any consolidated adjustment since the gains on sale are recognised by the group. Inventory: At 30thJune 2017, Leadbeaters Limited has inventory in hand still from the intra-group transactions in the previous period and they are recorded at cost including an unrecognised profit of $750. The inventory cost to the group is $750 lower in comparison to the amount recorded by the organisation, which has resulted in minimisation of inventory by $750. Deferred tax asset or income tax expense: When there is any variation in the carrying value of inventory, it leads to a temporary difference between the tax base related to the asset and its carrying amount. Due to the minimisation in the carrying value, it results in the creation of a deferred tax asset (Haier, Molchanov and Schmutz 2016).
6CORPORATE ACCOUNTING AND REPORTING Consolidated financial statements:
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8CORPORATE ACCOUNTING AND REPORTING References: Beuselinck, C. and Deloof, M., 2014. Earnings management in business groups: Tax incentives or expropriation concealment?.The International Journal of Accounting,49(1), pp.27-52. Haier, A., Molchanov, I. and Schmutz, M., 2016. Intragroup transfers, intragroup diversification and their risk assessment.Annals of finance,12(3-4), pp.363-392.