Credit Investment in Vita Ltd PDF

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Solution 1
a. AASB ii
b. ASIC iii
c. Company i
d. Replaceable Rules v
e. Unlimited Liability
Company iv
Solution
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Debit Share Capital 80,000
Debit Retained earnings 25,000
Debit General Reserve 5,000
Debit Goodwill on Consolidation 10,000
Credit Investment in Vita Ltd 1,20,000
Solution 3
a TRUE
b FALSE
c TRUE
d TRUE
e FALSE
f TRUE
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Solution 1:
Statement of comprehensive income is one of the components of the financial statements.
The two major components of this statement include net income and other comprehensive
income. Other comprehensive income includes items like pension adjustments, unrealised
gains or losses from available from sale securities, gains or losses because of foreign
currency translations etc. These items do not affect the income statement directly. It is usually
followed by the income statement in the financial statement. However, the company also has
an option to combine the income statement and the statement of comprehensive income.
Statement of cash flows is prepared in order to know about the cash inflows and cash
outflows that have occurred during the year. The cash flows of the company are divided into
three main categories. They are cash flows from operating activities, investing activities and
financing activities[ CITATION Alv13 \l 1033 ].
Solution 2:
Statement of changes in equity: the statement of changes in equity represents the balances in
share capital and reserves, along with the additions and deductions made during the year.
This statement helps the shareholders understand the additions and withdrawals from the
shareholders fund[ CITATION Eas10 \l 1033 ].
Statement of financial position: the stamen of financial position lists the sources of funds and
application of the same. This statement lists in details the various sources which have helped
to finance the operations, the investments made and liabilities outstanding during the end of a
reporting cycle.
Solution 3:
- Merchandising: this organisation is involved in the sale of goods. Such organisations
either procure goods from a vendor or produce them and then present it to sell. Example:
Woolworths Ltd.
- Manufacturing: this organisation in involved in procurement of raw materials which are
then processed into final products. Example of such organisation is Toyota, who is
involved in manufacture of automobiles.
- Serviced: These types of organisations are involved in providing services to the
customers by helping them and supplying them with needs. Example of such organisation
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is Price Waterhouse cooper who are involved in providing various financial services
[ CITATION Ela15 \l 1033 ].
- Governmental: the organisations which are owned and managed by the government are
government organisations, such as the municipalities.
- Non-Profit: the organisations which provide services and goods for a social cause and not
with the motive of earning profits, such as world trade organisations.
Solution 4:
Wages Expense Statement of Profit and Loss
Cost of Goods sold Statement of Profit and Loss
Sales revenue Statement of Profit and Loss
Merchandise
inventory Statement of financial position
Net Income Statement of Profit and Loss
Retained earnings Statement of financial position
Contributed capital Statement of financial position
Rent expense Statement of Profit and Loss
Cash Statement of financial position
Solution 5:
Financial statements are used by many people for knowing about the financial performance
and financial position of the company. The users of the financial statements are those that
have interest in the workings of the company. Such people include investors and other
stakeholders such creditors, banks, customers, competitors, employees, Investment analysts,
governments and other lenders [ CITATION Pen12 \l 1033 ].
Solution 6:
Goodwill is an intangible asset that is closely associated with the acquisition of one company
by the other. Goodwill arises when the purchase consideration of the company exceeds the
fair value of all assets and liabilities. Few examples of goodwill are the value that the brand
name of the company holds, a strong customer base, cordial customer and employee relation
etc [ CITATION Sic15 \l 1033 ].
Intangible assets are those assets that are not physical in nature. Few examples of intangible
assets are patent, trademark, copyright, brand recognition and other intellectual property.
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