Detailed Solution: Advanced Financial Accounting Assignment (ACC204)

This document presents a comprehensive solution to an Advanced Financial Accounting (ACC204) assignment. The assignment covers several key areas of financial accounting, including the revaluation of assets, accounting for debentures, and construction accounting. The solution includes detailed journal entries, calculations, and explanations for each question. The first question addresses asset revaluation, providing journal entries to record changes in the fair value of land and buildings. The second question focuses on debentures, calculating the fair value, and preparing relevant journal entries for issuance and interest payments. The third question delves into construction accounting, calculating gross profit and preparing journal entries for revenue recognition. The fourth question mirrors the first, reinforcing understanding of asset revaluation. The document includes a bibliography with relevant sources, showcasing the student's research and understanding of the subject matter. This assignment provides a thorough examination of accounting principles and practices, offering valuable insights for students studying financial accounting.

0Running head: ADVANCE FINANCIAL ACCOUNTING
Advance Financial Accounting
Name of the Student:-
Name of the University:-
Author’s Note:-

1ADVANCE FINANCIAL ACCOUNTING
Table of Contents
Answer to Question.1:-....................................................................................................................2
Answer to Question.2:-....................................................................................................................2
Answer to Question.2.a:-.............................................................................................................2
Answer to Question 2.b:-.............................................................................................................3
Answer to Question.3:-....................................................................................................................5
Answer to Question.3.a:..............................................................................................................5
Answer to Question.3.b:-.............................................................................................................5
Answer to Question.3.c:-.............................................................................................................6
Answer to Question.4:-....................................................................................................................7
Bibliography:-..................................................................................................................................8

2ADVANCE FINANCIAL ACCOUNTING
Answer to Question.1:-
Dr. Cr.
Date Amount Amount
($) ($)
Land (NSW) A/c. Dr. 50,000
To, Revaluation Surplus A/c. 50,000
Buildings (NSW) A/c. Dr. 10000
Accumulated Depreciation A/c. Dr. 20000
To, Revaluation Surplus A/c. 30000
Loss on Revaluation A/c. Dr. 30000
To, Land (Qld.) A/c. 30000
Loss on Revaluation A/c. Dr. 10000
Accumulated Depreciation A/c. Dr. 45000
To, Buildings (Qld.) A/c. 55000
Revaluation Surplus A/c. Dr. 80000
To, Loss on Revaluation A/c. 40000
To, Income Statement A/c. 40000
(Being the excess surplus in Revaluation A/c. transferred to Income
Statement)
(Being the book value of Building (NSW) revalued as per its Current Fair
Value after adjusting with the related accumulated depreciation)
In the Books of Anderson Pty.Ltd.
Journal Entry
Particulars
(Being the book value of Land(NSW) revalued as per its Current Fair
Value)
(Being the book value of Building (NSW) revalued as per its Current Fair
Value after adjusting with the related accumulated depreciation)
(Being the book value of Land (Qld) revalued as per its Current Fair
Value)
Answer to Question.2:-
Answer to Question.2.a:-
Ascertainment of Fair-Value of Debentures:-

3ADVANCE FINANCIAL ACCOUNTING
Formula = C x [{1-1/(1+y)n}/y] + [V/(1+y)n]
Where, C = Coupon Payment
y = Semi-Annual Yield Rate
n = No. of Coupon Payments
V = Book Value of Debentures
Particulars Amount
Book Value of Debentures ($) 100000
Coupon Rate p.a. 6%
Semi Annual Coupon Rate 0.03
Coupon Payment ($) 3000
Yield Rate 4%
Semi Annual Yield Rate 0.02
Total Period (in Years) 6
No. of Coupon Payments 12
Fair Value of Debentures 110575.3412
Answer to Question 2.b:-
Dr. Cr.
Date Amount Amount
($) ($)
1st July,2015 Cash A/c. Dr. 110575
To, Debenture A/c. 100000
To, Security Premium A/c. 10575
Particulars
i) In the Books of Kruger Ltd.
Journal Entry
(Being debentures issued at premium with a coupon rate of 6%
p.a.)

4ADVANCE FINANCIAL ACCOUNTING
Dr. Cr.
Date Amount Amount
31st Dec,2015 6% Debenture Interest A/c. Dr. 3000
To, 6% Debenture Holders A/c. 2100
To, Income Tax Payable A/c. 900
31st Dec,2015 6% Debenture Holders A/c. Dr. 2100
To, Cash A/c. 2010
(Being interest due for 6 months on 6% debentures and 30% tax
deducted at source)
(Being semi-annual interest paid to 6% debenture holders)
ii) In the Books of Kruger Ltd.
Journal Entry
Particulars
Dr. Cr.
Date Amount Amount
30th June ,2016 6% Debenture Interest A/c. Dr. 3000
To, 6% Debenture Holders A/c. 2100
To, Income Tax Payable A/c. 900
30th June ,2016 6% Debenture Holders A/c. Dr. 2100
To, Cash A/c. 2010
30th June ,2016 Income Tax Payable A/c. Dr. 1800
To, Cash A/c. 1800
30th June ,2016 Income Statement A/c. Dr. 4020
To, 6% Debenture Interest A/c. 4020
(Being tax deducted on interest paid)
(Being interest on debenture transferred to Income Statement)
(Being semi-annual interest paid to 6% debenture holders)
(Being interest due for 6 months on 6% debentures and 30% tax
deducted at source)
iii) In the Books of Kruger Ltd.
Journal Entry
Particulars

5ADVANCE FINANCIAL ACCOUNTING
Answer to Question.3:-
Answer to Question.3.a:
2015 2016 2017
Cost for the year 10 18 12
Total Estimated Cost of the Contract 40 40 40
Percentage of Completion 25.00% 45.00% 30.00%
Total Contract Value 50 50 50
Revenue Recognized 12.5 22.5 15
Gross Profit 2.5 4.5 3
Calculation for Yearly Gross Profit:-
Answer to Question.3.b:-
Dr. Cr.
Date Amount Amount
($) ($)
2015 Construction in Process A/c. Dr. 2.5
Construction Expenses A/c. Dr. 10
To, Construction Revenue A/c. 12.5
Pretoria Limited A/c. Dr. 12
To, Billings A/c. 12
Cash A/c. Dr. 11
To, Pretoria Limited A/c. 11
In the Books of Sun City Ltd.
Journal Entry
Particulars

6ADVANCE FINANCIAL ACCOUNTING
Answer to Question.3.c:-
Dr. Cr.
Date Amount Amount
($) ($)
2015 Construction in Process A/c. Dr. 2
Construction Expenses A/c. Dr. 10
To, Construction Revenue A/c. 12
Pretoria Limited A/c. Dr. 12
To, Billings A/c. 12
Cash A/c. Dr. 11
To, Pretoria Limited A/c. 11
Particulars
In the Books of Sun City Ltd.
Journal Entry

7ADVANCE FINANCIAL ACCOUNTING
Answer to Question.4:-
Dr. Cr.
Date Amount Amount
($) ($)
Land (NSW) A/c. Dr. 50,000
To, Revaluation Surplus A/c. 50,000
Buildings (NSW) A/c. Dr. 10000
Accumulated Depreciation A/c. Dr. 20000
To, Revaluation Surplus A/c. 30000
Loss on Revaluation A/c. Dr. 30000
To, Land (Qld.) A/c. 30000
Loss on Revaluation A/c. Dr. 10000
Accumulated Depreciation A/c. Dr. 45000
To, Buildings (Qld.) A/c. 55000
Revaluation Surplus A/c. Dr. 80000
To, Loss on Revaluation A/c. 40000
To, Income Statement A/c. 40000
(Being the book value of Building (NSW) revalued as per its Current Fair
Value after adjusting with the related accumulated depreciation)
(Being the excess surplus in Revaluation A/c. transferred to Income
Statement)
In the Books of AD Pty.Ltd.
Journal Entry
Particulars
(Being the book value of Land(NSW) revalued as per its Current Fair
Value)
(Being the book value of Building (NSW) revalued as per its Current Fair
Value after adjusting with the related accumulated depreciation)
(Being the book value of Land (Qld) revalued as per its Current Fair
Value)

8ADVANCE FINANCIAL ACCOUNTING
Bibliography:-
Bettner, M. S. (2018). Using Accounting & Financial Information: Analyzing, Forecasting, and
Decision Making. Business Expert Press
Collis, J. (2015). Financial Accounting. Macmillan International Higher Education.
Haswell, S., & Evans, E. (2018). Enron, fair value accounting, and financial crises: a concise
history. Accounting, Auditing & Accountability Journal, 31(1), 25-50.
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting.
Pearson Higher Education AU
Hoskin, R. E., Fizzell, M. R., & Cherry, D. C. (2014). Financial Accounting: a user perspective.
Wiley Global Education.