FNSACC514 Module 1.2 Assignment

This is a homework assignment for the unit FNSACC514: Prepare financial reports for corporate entities, part of the FNS5017 Diploma of Accounting at Monarch Institute. The assignment consists of multiple assessment activities requiring students to answer short answer and worked answer questions based on the textbook "Prepare Financial Reports for Corporate Entities" by Gavin Dumbrell & Damien Kelly. Questions cover various chapters, including differences between small and large companies, journal entries for share issues and debentures, business acquisitions, reserves, income tax accounting, cash flow statements, statement of financial position preparation, goodwill impairment, and consolidation. Students are expected to demonstrate knowledge and application of accounting principles and procedures. The assignment includes a declaration of authenticity and provides detailed marking and feedback information, including what constitutes "competent" and "not-yet-competent" submissions and the process for resubmission.

FNS5017 Diploma of Accounting
Module 1.2 Assignment
Instructions:
 This assignment contains multiple Assessment Activities
 Please complete the Declaration of Authenticity at the bottom of this page
 Save this assignment (e.g. on your desktop)
 To complete the assignment, read the instructions for each question carefully.
 You may be required to refer to your learning materials or other sources to complete
this assessment.
 You are required to type all your responses in the spaces provided
 Once you have completed all parts of the assignment and saved it, login to the
Monarch Institute LMS to submit your assignment for grading
 To submit your assignment click on the file “Submit Diploma of Accounting Module 1.2
Assignment” in the Module 1 section of your course and upload your assignment file.
 Please be sure to click “Continue” after clicking “submit”. This ensures your assessor receives
notification of your submission – very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other person’s work has been used without due
acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the purpose
of detecting plagiarism.
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by the
above student declaration.
FNS50217 Diploma of Accounting - Module 1.2 Assignment 170813 Page 1 of 26

Units Covered: FNSACC514
Important assessment information
Aims of this assessment
This assessment focuses on the preparation of financial reports for corporate entities.
Marking and feedback
This assignment contains multiple Assessment Activities each containing specific instructions.
This particular assessment forms part of your overall assessment for the following unit(s) of
competency:
 FNSACC514 Prepare financial reports for corporate entities
Grading for this assessment will be deemed “competent” or “not-yet-competent” in line with specified
educational standards under the Australian Qualifications Framework.
What does “competent” mean?
These answers contain relevant and accurate information in response to the question/s with limited
serious errors in fact or application. If incorrect information is contained in an answer, it must be
fundamentally outweighed by the accurate information provided. This will be assessed against a
marking guide provided to assessors for their determination.
What does “not-yet-competent” mean?
This occurs when an assessment does not meet the marking guide standards provided to assessors.
These answers either do not address the question specifically, or are wrong from a legislative
perspective, or are incorrectly applied. Answers that omit to provide a response to any significant issue
(where multiple issues must be addressed in a question) may also be deemed not-yet-competent.
Answers that have faulty reasoning, a poor standard of expression or include plagiarism may also be
deemed not-yet-competent. Please note, additional information regarding Monarch’s plagiarism policy
is contained in the Student Information Guide which can be found here:
http://www.monarch.edu.au/student-info/
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Units Covered: FNSACC514
What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be given
one more opportunity to re-submit the assessment after consultation with your Trainer/ Assessor. You
will know your assessment is deemed ‘not-yet-competent’ if your grade book in the Monarch LMS says
“NYC” after you have received an email from your assessor advising your assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas
deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting
competency after resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our
Complaints & Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter areas
raised in the question in full as part of the response.
Performance based questions:
A performance based question requires you to clearly demonstrate your ability to complete certain
tasks, that is, to perform these tasks.
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to assist
you 
The following questions are based on the material in the text “Prepare Financial Reports for Corporate
Entities” (3rd or 4th Edition) by Gavin Dumbrell & Damien Kelly.
FNS50217 Diploma of Accounting - Module 1.2 Assignment 170813 Page 3 of 26
Assessment Activities
Short Answer and Worked Answer Questions
FNSACC514 Financial Reports for Corporate Entities

Units Covered: FNSACC514
Activity instructions to candidates
 This is an open book assessment activity.
 You are required to read this assessment and answer all questions that follow.
 Please type your answers in the spaces provided.
 Please ensure you have read “Important assessment information” at the front of this assessment
 Estimated time for completion of this assessment activity: 2-3 hours
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Units Covered: FNSACC514
The following questions are based on the material in Chapter 1:
1. List three (3) differences between a small and a large proprietary company?
FNS50217 Diploma of Accounting - Module 1.2 Assignment 170813 Page 5 of 26
1.
2.
3.

Units Covered: FNSACC514
The following questions are based on the material in Chapter 2:
2. Rufflander Ltd offered for subscription 300,000 $1 ordinary shares payable in full on application.
All 300,000 shares were applied for and allotted.
Required: Prepare general journal entries to record the share issue. (Ignore dates).
Rufflander Ltd. – General Journal Entries
Date Accounts Debit Credit
Receipt of application money
Issue of 300,000 $1 fully paid ordinary
shares
Transfer of application funds to
bank
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Units Covered: FNSACC514
The following questions are based on the material in Chapter 3:
3. Prepare general journal entries to record the issue of 1,000 $100 8% debentures at par, payable in
full on application. (Ignore dates).
Date Account Debit Credit
Receipt of application money for debentures
Issue of Debentures
Transfer of application funds to bank on
issue of debentures
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Units Covered: FNSACC514
The following questions are based on the material in Chapter 4:
4. Elliot forms a company, Smelliot Ltd, to take over his business as a going concern.
The consideration for the sale of the business is 500,000 shares issued at $1.00 each and $300,000 in
cash. The assets and liabilities (in $) of the business were:
Freehold Land and Buildings 400,000
Plant and Equipment 150,000
Motor Vehicles 74,000
Inventory 164,000
Accounts Receivable 125,000
Allowance for Doubtful Debts 15,000
Accounts Payable 115,000
All assets and liabilities are at fair value except accounts receivable that are expected to realise
$100,000.
Required: Prepare the general journal entries in the books of Smelliot Ltd to record the purchase
of the business and discharge of the purchase consideration.
Cash transactions are to be recorded in the general journal.
Smelliot Ltd. – General Journal
Account Debit Credit
Acquisition of business
Payment of Purchase Consideration
The following questions are based on the material in Chapter 5:
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Units Covered: FNSACC514
5 a. Why would a company establish a reserve?
5 b. List three (3) types of reserves which may be established?
FNS50217 Diploma of Accounting - Module 1.2 Assignment 170813 Page 9 of 26
1.
2.
3.

Units Covered: FNSACC514
6. Cool Hats Ltd has paid the following PAYG tax instalments for the year ended 30 June:
September Quarter 11,000
December Quarter 11,000
March Quarter 11,000
June Quarter 11,000
Total 44,000
Taxable income for the year ended 30 June, was $168,000. Company tax rate is 30%.
Required:
Prepare general journal entries to record the company’s income tax instalments and final payment.
Cool Hats Ltd. – General Journals
Date Account Debit Credit
1st Qtr
PAYG Tax Instalment due for quarter
1st Qtr
Payment of PAYG tax instalment for
2nd Qtr
PAYG Tax Instalment due for quarter
2nd Qtr
Payment of PAYG tax instalment for
3rd Qtr
PAYG Tax Instalment due for quarter
3rd Qtr
Payment of PAYG tax instalment for
4th Qtr
PAYG Tax Instalment due for quarter
4th Qtr
Payment of PAYG tax instalment for
4th Qtr
Additional tax payable for year
4th Qtr
Balance transferred
The following questions are based on the material in Chapter 6:
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Units Covered: FNSACC514
7. (a) Describe the difference between the tax payable method and tax effect method of accounting for
income tax.
(b) Provide two (2) examples of items treated differently under the two methods, that is, treated differently
under the accounting treatment and the tax effect method.
Item Accounting
treatment Tax treatment
1.
2.
(c) Which method must be used by reporting entities?
FNS50217 Diploma of Accounting - Module 1.2 Assignment 170813 Page 11 of 26

Units Covered: FNSACC514
8. Prepare the tax effect Journal Entries for the following independent situations and explain why each gives
rise to a Deferred Tax Asset or a Deferred Tax Liability at June 2016.
Tax Rate is 30%.
Enter your answers in the grids provided.
(a)The current period Doubtful Debts expense for a company was $9,000. The balance in the Allowance for
Doubtful Debts account at the beginning of the period was $7,000. During the current period $6,000 of
Bad Debts had been written off against the Allowance for Doubtful Debts.
Account Debit Credit
$
$
Explanation:
(b)A publishing company has received $20,000 of subscriptions in advance of publications. This revenue will
be recognised in the accounting records over the next four years. This amount is treated as assessable
income for income tax purposes.
Account Debit Credit
$
$
Explanation:
(c) Plant and Machinery was acquired for $200,000 on 1 July 2015. Accounting depreciation is 25% p.a. and
tax depreciation is 30% p.a.
Account Debit Credit
$
$
Explanation:
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