HA3011 Advance Financial Accounting Final Assessment T2 2021

Student Number: (enter on the line below)
Student Name: (enter on the line below)
HA3011
ADVANCED FINANCIAL ACCOUNTING
TRIMESTER 2, 2021
Assessment Weight: 50 total marks
Instructions:
 All Six (6) questions must be answered by using the answer boxes
provided in this paper.
 Completed answers must be submitted to Blackboard by the published
due date and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit
HA3011 Final Assessment T2 2021

HA3011 Final Assessment T2 2021

Question 1 ( 7 marks)
Fabric Ltd acquired a Machine from Box Ltd for the following consideration:
Cash $110 000, Land in the books of Fabric Ltd the land is recorded at its cost of $950
000. It has a fair value of $1000 000.
Fabric Ltd also agreed to assume the liability of Box Ltd bank loan of $85 000 as part of
the Machine acquisition.
Required:
(a) Calculate the acquisition cost of the Machine and provide the journal entries that
would appear in Fabric ltd.’s books to account for the acquisition of the Machine.
(4 marks)
(b) In your own words, explain when should an impairment loss be recognised (3
marks)
ANSWER: ** Answer box will enlarge as you type
a) Journal Entries
Cash A/c Dr. 110000
Land A/c Dr. 950000
To Machine A/c Dr.
(balancing
figure
)
975000
To Bank Loan 85000
b) Impairment loss happens when assets of business suffers a loss of value or depreciation in
the market value in excess of book value on company's financial statements. The loss is
calculated by subtracting acquisition cost from depreciation. These assets which are terms as
'impaired' are recognized as a loss in final accounts, that is, in income statement.
HA3011 Final Assessment T2 2021