Comprehensive Financial Accounting Assignment Solution

This document presents a detailed solution to a financial accounting assignment. The assignment covers a range of topics, including recommendations for improving financial reporting, journal entries for share capital transactions, and the preparation of current and deferred tax worksheets. The solution includes comprehensive journal entries, calculations, and explanations for each question, demonstrating a strong understanding of accounting principles. The assignment also involves the analysis of financial statements and the application of relevant accounting standards. The solution includes examples of how to record transactions, prepare financial statements, and calculate tax liabilities. This document is a valuable resource for students seeking to understand and master financial accounting concepts.

Running head: FINANCIAL ACCOUNTING
Financial accounting
Name of the University
Name of the student
Authors note

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FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Question 2........................................................................................................................................6
Answer to Question 3:.....................................................................................................................8
Requirement i:.............................................................................................................................8
Requirement ii:..........................................................................................................................11
Requirement iii:.........................................................................................................................12
Answer to Question 4:...................................................................................................................15
Answer to Question 5:...................................................................................................................19
Reference & Bibliography:............................................................................................................22

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FINANCIAL ACCOUNTING
Answer to Question 1:
To,
Chairperson
International Standard Accounting Board
30 Cannon Street, London- EC4M 6XH, United Kingdom
Date: 15th September, 2017
Subject: Recommendation and guidance for the improvement of the effectiveness of the
communication as well as the information in the fiscal report
Sir,
I intend to make some plans as an investor, concerning the proposition of the IASB,
regarding the effectiveness of the information that has been collected in the fiscal report.
Undertaking the investments in the two different organisations, that are listed on the ASX which
comprise the Westpac and also ANZ have been considered by me. In relation to this, the review
and the comparison of the annual report of both the companies at present times have been
performed by me. The preparation of the fiscal report is often considered to be a difficult task by
the individuals who prepare it. It is also felt that, the information have not been appropriately
depicted. There has been somewhat betterment in the nature of the financial reporting even
though there exist opportunities for making further improvement. During the proper study of the
report I have been able to discover that certain areas can be improved for better presentation as
well as for the disclosure of the significant information. The creation of the good link of

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FINANCIAL ACCOUNTING
information in the report is much beyond the explanation of the linkage nature and the highlight
of the connection of place of related disclosure.
Sometimes it happens that the investors do not understand the important information
which is contained in the annual report. This occurs due to the poor presentation of the fiscal
data. It is essential for me, to ascertain the need for making the suitable communication of the
information after the annual report of the ANZ bank as well as Westpac. Thus it can be said that
sometimes there are certain differences which exist in the information presentation of both the
organisations. It has been shared that the preparation of the fiscal report as well as the disclosure
of information, there is a requirement of standardisation. I have also familiarised myself with the
set of seven rules which are stated in the section 2 of the discussion paper, that involves the clear
as well as comparable format which are free from the unnecessary duplication and also organised
for highlighting the important matter. It can be said that after the proper analysis of the annual
report of both the companies which complies with very few of the principles and also lacks the
majority of the parts (Tokar, 2015).
Since the banks are financial institutions, they are required to make the clear disclosure of
the risks of liquidity as well as the credit risks. The reputed as well as renowned banks, should
disclose the information properly. It should be done in a way that the a clear picture is given of
the financial health at a glance which is obtained by the adoption of the principles of
effectiveness that are lacking. While Westpac performs segmental analysis with consistently
defining segments there is no segmental analysis done by the ANZ banks. The strengthening of
the banking industry regulation requires the Basel incorporation. It is nothing but an inclusive set
of reformative measures. It has been studied by me that there are separate disclosures of
requirements of Basel in the fiscal report. Little information connected to the credit as well as the

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FINANCIAL ACCOUNTING
liquidity risks was mentioned in the notes of the economic statements. Regarding the situation of
Westpac, there have been suitable disclosures of the requirements as well as the information
regarding Basel and the risk information of the banking industry. Westpac has proper
information about Tiers, however the annual reports of the ANZ bank do not have any such
information. The divisional performance of the Westpac has been properly presented in the
annual report in comparison to the bank. The specific areas which require consideration are not
disclosed.
It is good for the economic institutions to utilize graphical representations for the
presentation of the fiscal data in their annual reports. This are also useful for helping investors in
the performance analysis. Utilisation of the graphs would be the best despite the use of any form
of the narrative disclosure. This is because; use of any sort of narrative disclosure causes the
information to get redundant. After the analysis of annual report, consideration of all the facts
related to the disclosure, requires considerable improvement. The most of the IASB required to
put to the most to work can make it comparable as well as specific with respect to entities.
Organisations should incorporate the information regarding the forward looking
information as well as the quantitative targets for the measurement of the performance against a
set of strategic objectives. Thus to ensure the communication target if the organisations
sometimes consider the combinations of investors. Core product range is also helpful as also the
development of the particular segment. In addition to this the fiscal information presented and
other relevant information can also make the necessary comparison between the different times
of reporting that should not compromise on the quality of the decision making (Baxter, 2014).
The effectiveness of the communication of the information can be improved by use of the
proper formatting which is based on the perception of several stakeholders. Numerous reports

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have been published by the financial institutions based on the use of the graphs as well as the
financial support.
I can recommend the effective use of formatting, for the effective communication of
information. The investors would not face any problems in the effective communication of
information if they can analyse as well as make the proper comparison of the data. This is related
to the financial performance of the different time periods.
Finally I would like to recommend that, as an investor some principles of aiming the
proper communication should be incorporated by the organisations. Only after the proper
analysis of the economic report of both the companies, some of the most effective principle
which should be incorporated as the entity specificity as well as the utilisation of the proper
formatting.
Question 2
In the books of Harriette Ltd.
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
31/03/2017 Cash trust A/c. Dr. $8,200,000
To. Preference Share
Application A/c.
$1,600,000

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FINANCIAL ACCOUNTING
To. Ordinary Share
Application A/c.
$6,600,000
(Being application money received for 2,000,000
ordinary shares and 1,000,000 preference shares)
15/4/2017 Preference Share
Application A/c.
Dr. $1,600,000
To. Preference Share
Capital A/c.
$1,600,000
(Being application money received for pf. Shares
transferred to Pf. Share capital)
Ordinary Share
Application A/c.
Dr. $6,600,000
To. Ordinary Share Capital
A/c.
$6,000,000
To. Ordinary Share
Allotment A/c.
$600,000
(Being application money received for ordinary
share capital transferred to ordinary share capital
and excess amount adjusted with due allotment)
Ordinary Share Dr. $3,000,000

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FINANCIAL ACCOUNTING
Allotment A/c.
To. Ordinary Share Capital
A/c.
$3,000,000
(Being allotment money due on alloted shares)
15/5/2017 Cash trust A/c. Dr. $2,400,000
To. Ordinary Share
Allotment A/c.
$2,400,000
(Being due allotment money received)
1/8/2017 Ordinary Share Call
A/c.
Dr. $1,000,000
To. Ordinary Share Capital
A/c.
$1,000,000
(Being call money due on alloted shares)
1/9/2017 Cash trust A/c. Dr. $975,000
Calls-in-Arrear A/c. Dr. $25,000
To. Ordinary Share Call
A/c.
$1,000,000
(Being due call money received except for
50000 shares)

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FINANCIAL ACCOUNTING
15/9/2017 Ordinary Share
Capital A/c.
Dr. $250,000
To. Calls-in-Arrear A/c. $25,000
To. Ordinary Share
Forfeiture A/c.
$225,000
(Being the 50000 shares, for which call money is
due, forfeited accordingly)
Cash trust A/c. Dr. $210,000
Ordinary Share
Forfeiture A/c.
Dr. $40,000
To. Ordinary Share Capital
A/c.
$250,000
(Being the forfeited shares reissued for $4.20 per
shares)
Cost of Forfeiture &
Reissue A/c.
Dr. $7,500
To. Cash trust A/c. $7,500
(Being cost of forfeiture and reissue of shares
paid)
Ordinary Share Dr. $185,000

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FINANCIAL ACCOUNTING
Forfeiture A/c.
To. Cost of Forfeiture &
Reissue A/c.
$7,500
To. Capital Reserve A/c. $177,500
(Being the balance of share forfeiture a/c. after
adjusting with cost of forfeiture and reissue
transferred to capital reserve)

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FINANCIAL ACCOUNTING
Answer to Question 3:
Requirement i:
Worksheet for Current Tax Liability/(Refundable):
Particulars Amount Amount
Accounting profit before tax $66,000
Add:
Doubtful Debt Expense $5,000
Annual Leave $23,000
Warranty Expense $12,000
Depreciation Expense for accounting
purpose
$60,000
Insurance $40,000 $140,000
$206,000
Less:
Government Grant $20,000
Bad debt expense $1,000
Annual Leave Paid $3,000
Insurance Paid $50,000
Warranty Expense Paid $2,000
Depreciation Expense for Tax Purpose $50,000 $126,000

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FINANCIAL ACCOUNTING
Taxable income $80,000
Tax on taxable income @30% $24,000
Less: 30% Tax paid on Sales Revenue $205,800
Income Tax Refundable ($181,800
)
Deferred Tax Worksheet:
Particulars Carrying
Amount
Tax Base Taxable
Temp’y
Diffs
Deductible
Temp’y
Diffs
$ $ $ $
Assets
Cash $10,000 $10,000
Trade Receivables $125,000 $125,000
Allowance for Doubtful
Debts
($4,000) $0 $4,000
Inventories $60,000 $60,000
Prepaid Insurance $10,000 $10,000

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FINANCIAL ACCOUNTING
Goodwill $20,000 $20,000
Equipment $300,000 $300,000
Accumulated Depreciation ($60,000) ($50,000) $10,000
Liabilities
Trade Payables $35,000 $35,000
Provision for Warranties $10,000 $10,000
Provision for Annual Leave $20,000 $20,000
Loan Payable $90,000 $90,000
Total Temporary differences $10,000 $44,000
Deferred tax liability (30%) $3,000
Deferred tax asset (30%) $13,200
Requirement ii:
Dr. Cr.
Date Particulars Amount Amount
30/06/201
7
Income Tax Expense A/c. Dr. $24,000
Income Tax Refundable
A/c.
Dr. $181,800
To, Advance Tax Paid A/c. $205,800
(Being Income tax expenses adjusted with advance tax

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FINANCIAL ACCOUNTING
paid and income tax refundable recorded)
$13,200
Deferred Tax Assets A/c. Dr. $3,000
To, Deferred Tax Liability
A/c.
$10,200
To, Income Tax Expense
A/c.
(Being deferred tax assets and deferred tax liabilities
recorded)
Profit & loss A/c. $21,000
To, Income Tax Expense
A/c.
$21,000
(Being income tax expense transferred to P/L A/c.)
Requirement iii:
Worksheet for Current Tax Liability/(Refundable):
Particulars Amount Amount
Accounting profit before tax ($44,000)
Add:
Doubtful Debt Expense $5,000

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FINANCIAL ACCOUNTING
Annual Leave $23,000
Warranty Expense $12,000
Depreciation Expense for accounting
purpose
$60,000
Insurance $40,000 $140,000
$96,000
Less:
Government Grant $20,000
Bad debt expense $1,000
Annual Leave Paid $3,000
Insurance Paid $50,000
Warranty Expense Paid $2,000
Depreciation Expense for Tax Purpose $50,000 $126,000
Taxable income ($30,000)
Tax on taxable income @30% $0
Less: 30% Tax paid on Sales Revenue $172,800
Income Tax Refundable ($172,800
)

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FINANCIAL ACCOUNTING
Deferred Tax Worksheet:
Particulars Carrying
Amount
Tax Base Taxable
Temp’y
Diffs
Deductible
Temp’y Diffs
$ $ $ $
Assets
Cash $10,000 $10,000
Trade Receivables $125,000 $125,000
Allowance for Doubtful Debts ($4,000) $0 $4,000
Inventories $60,000 $60,000
Prepaid Insurance $10,000 $0 $10,000
Goodwill $20,000 $20,000
Equipment (Net) $300,000 $300,000
Accumulated Depreciation ($60,000) ($50,000) $10,000
Liabilities
Trade Payables $35,000 $35,000
Provision for Warranties $10,000 $0 $10,000
Provision for Annual Leave $20,000 $0 $20,000
Loan Payable $90,000 $90,000
Total Temporary differences $10,000 $44,000
Deferred tax liability (30%) $3,000
Deferred tax asset (30%) $13,200
Workings:
Base
Particulars Accountin
g
Tax
Equipment-at Cost $300,000 $300,00
0
Useful Life (in years) 5 6

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FINANCIAL ACCOUNTING
Depreciation Expenses p.a. $60,000 $50,000
Period of Utilization (in
years)
1 1
Accumulated Depreciation $60,000 $50,000
Equipment (net Value) $240,000 $250,00
0
Particulars Amount
Doubtful Debt Expense $5,000
Less: Prov. For Doubtful
debt
$4,000
Bad Debt Expense $1,000
Annual Leave Expense $23,000
Less: Prov. For Annual
Leave
$20,000
Annual Leave Paid $3,000

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FINANCIAL ACCOUNTING
Warranty Expense $12,000
Less: Prov. For Warranty $10,000
Warranty Expense Paid $2,000
Insurance Expense $40,000
Add: Prepaid Insurance $10,000
Insurance Paid $50,000
Answer to Question 4:
In the books of Snowy Ltd.
Journal Entries
Dr. Cr
Date Particulars Amount Amount
1/7/2015 Plant-A A/c. $150,00
0
Plant-B A/c. $250,00
0
Bank A/c. $400,00

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FINANCIAL ACCOUNTING
0
(Being Plant A and Plant B acquired for cash)
30/6/2016 Depreciation Expense A/c. 65000
Accum. Dep. - Plant A A/c. 15000
Accum. Dep. - Plant B A/c. 50000
(Being depreciation charged on Plant A & Plant B)
Accum. Dep. - Plant A A/c. 15000
Loss on Revaluation A/c. $15,000
Plant A A/c. $30,000
(Being Plant A revalued at fair value and loss on revaluation
recorded)
Accum. Dep. - Plant B A/c. 50000
Gain on Revaluation A/c. $35,000
Plant B A/c. $15,000
(Being Plant B revalued at fair value and gain on revaluation
recorded)
Gain on Revaluation A/c. $35,000
Loss on Revaluation A/c. 15000
Asset Revaluation Reserve $20,000

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FINANCIAL ACCOUNTING
A/c.
(Being the gain and loss of revaluation transferred to asset
revaluation reserve)
Deferred Tax Assets A/c. $10,500
Deferred Tax Liabilities A/c. $4,500
Income Tax Expense A/c. $6,000
(Being deferred tax recorded for the asset revaluation)
30/06/201
7
Depreciation Expense A/c. 72083
Accum. Dep. - Plant A A/c. 13333
Accum. Dep. - Plant B A/c. 58750
(Being depreciation charged on Plant A & Plant B)
Accum. Dep. - Plant A A/c. 13333
Gain on Revaluation A/c. $8,333
Plant A A/c. $5,000
(Being Plant A revalued at fair value and gain on revaluation
recorded)
Accum. Dep. - Plant B A/c. 58750
Loss on Revaluation A/c. $46,250