ACCT20073 Term 2 2018
Assessment task 2: Part B Assignment
Wednesday of Week 8 [11:45pm [AEST] 5 September 2018]
This assessment item relates to learning outcomes 1 and 2.
Some questions of this assignment may have a word count limit. You should make every effort and attempt to stay within the prescribed limit.
To ensure you understand the questions, instructions and expectations, it is highly recommended to seek help and guidance from the Academic Learning Centre (ALC). The ALC can help you with your writing skills and check your narrative answers for grammatical correctness and that your arguments and explanations are clear and logical. The ALC will also help you to ensure that you have actually answered the questions.
Please be mindful that assignments are marked in soft copy. To assist with making the marking process efficient, effective and not time-consuming, you must comply with the following formatting requirements:
· Font: Times New Roman, 12 point, 1.5 line spacing
· Document type: Your answer for all questions must be in Word format. This will allow the marker to use track-changes to indicate where you received marks. Please do not submit a pdf document as this will not be marked. Also, please do not submit an excel file for your figures and calculations or copy and paste a table from an excel spreadsheet for any calculations into your Word document.Use the“insert table” function within Word and type all figures into the table. Show all calculations below the table. Ensure the marker will be able to use the track-changes function in Word to indicate in your table where you received or lost marks for your figures.
· Page: Portrait orientation
· Footer: Your full name(s) and student ID(s), page number and number of pages (e.g. Cat Bird s0123456, page 1 of 3)
· You do not need to include a title page or a table of contents.
· Use the question numbers to indicate which question you are answering.
· You do not need to include the question as part of your answers to questions 2 and 3.
· Question 1 requires you to write a Memorandum. An example of a Memorandum, which you can use as a template, is provided on the Moodle site.
· Marking criteria sheet: Ensure you type in your name and student ID. Ensure the marking criteria sheet is the first page of your submitted assignment.
· File saving convention: Include your student name in the name of the file when you save the document, and ensure that you include the appropriate .doc or .docx at the end. For example, save your file as: Cat Bird.docx
Please note that you will lose up to 5 marks if you do not comply with the above requirements and the word limit for question 1.
Work submitted by a student that is the work of another person with no referencing or acknowledgement, is considered to be plagiarism. Turnitin will compare the similarities of your assignment when you submit it on Moodle. If the turnitin score is high, your assignment will be investigated for possible plagiarism. Such investigation may take a considerable amount of time and hence your assignment will not be returned within the expected timeframe. Furthermore, if there is evidence of plagiarism, a Plagiarism Incident Report (PIR) will be lodged. You will then receive notification from the University with details of the necessary course of action.
You can check the turnitin score of your assignment when submitting it. Please note: if you choose to redo and resubmit your assignment in the hope of reducing the turnitin score, it will take 24 hours before turnitin will give you another score. Also, be aware that the turnitin scores keep on changing as and when more students submit their assignments. Consequently, as similarities between assignments increase, the turnitin score of your assignment that the UC will get in Moodle may be different as to the score you received initially. It is therefore possible that your assignment may be investigated for plagiarism even though you may believe that your turnitin score is low. To avoid any concern, anxiety and stress about the turnitin score, do your own work.
You must submit your assignment electronically through the secure upload facility in the Moodle system. Please ensure that the marking criteria sheet (page 5 of this document) is the first page of your assignment and that you completed the required information.
Be mindful that there is a 5% penalty per day for late submission. You will be penalised immediately with a full day’s penalty if you submit your assignment after the due time, even though you may only be a few hours late. The penalty is not proportioned to the number of hours you submit your assignment late.
Assignment Question: Part B 20 Marks
You are a newly appointed accountant at Palvidia Ltd, who is considering purchasing the majority of the shares in Soletta Ltd. Senior management of Palvidia arranged a meeting with the executive team to discuss the effect of this decision. They asked Jane Penfold, the Chief Financial Officer, to explain a few issues about their decision to purchase shares in Soletta Ltd in preparation for their meeting with the executive team.
Draft a memorandum for Jane Penfold to sign for her presentation to the executive team that explains the following issues:
(a) What is the purpose of preparing consolidated financial statements? (2 marks)
(b) What is a group, a parent and a subsidiary? (3 marks)
(c) How many parents can a group have? Justify your answer. (2 marks)
(d) Why is it necessary to make adjustments for intragroup transactions? (2 marks)
(e) When are profits realised in relation to inventories transfers within the group? (1 mark)
Word limit: maximum 300 words
On 1 July 2019, Paldivia Ltd acquired all the issued shares of Soletta Ltd for a cash consideration of $1 000 000. At that date, the financial statements of Soletta Ltd showed the following information.
All the assets and liabilities of Soletta Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Also, Palvidia Ltd identified at acquisition date a contingent liability related to a lawsuit where Soletta Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability.
(a) Prepare the acquisition analysis at 1 July 2019. (6 marks)
(b) Prepare the consolidation worksheet entries for Paldivia Ltd’s group at 1 July 2019, assuming that Soletta Ltd has not revalued the equipment in its own accounts. (14 marks)
Patagonia Ltd owns all the share capital of Salto Ltd. The income tax rate is 30%.The following transactions took place during the periods ended 30 June 2018 to 30 June 2020.
(a) In February 2018, Patagonia Ltd sold inventories to Salto Ltd for $6 000, at a mark-up of 20% on cost. One-quarter of this inventories were unsold by Salto Ltd at 30 June 2018 to external parties and none at 30 June 2019.
(b) On 1 January 2018, Salto Ltd sold a new tractor to Patagonia Ltd for $20 000. This had cost Salto Ltd $16 000 on that day. Both entities charged depreciation at the rate of 10% p.a. on the diminishing balance. The tractor was still on hand with Patagonia Ltd at 30 June 2020.
(c) On 1 May 2019, Salto Ltd sold inventories costing $200 to Patagonia Ltd for $400 on credit. On 30 June 2019, only half of these goods had been sold by Patagonia Ltd, and Patagonia Ltd had paid $300 to Salto Ltd. All remaining inventories were sold to external entities by 30 June 2020 and Patagonia Ltd paid the outstanding amount to Salto Ltd on 5 May 2020.
(d) Patagonia Ltd provided management services to Salto Ltd during the period ended 30 June 2020. The total charge for those services was $3 000 that was unpaid at 30 June 2020.
(e) Patagonia Ltd borrows $50 000 from Salto Ltd on 1 July 2018 with an interest rate of 6% p.a. The loan is for 5 years. The interest is to be paid biannually in arrears, starting on 31 December 2018.
(f) In December 2019, Salto Ltd paid a $1 500 interim dividend.
(g) During March 2020, Salto Ltd declared a $3 000 dividend. The dividend was paid in August 2020.
In relation to the above intragroup transactions:
Prepare adjusting journal entries for the consolidation worksheet at 30 June 2019 and 30 June 2020. (50 marks)
Marking criteria sheet
Part B Marking Criteria Sheet
Less: Not complying with formatting, word count and marking criteria sheet
Part B Assignment Total
Part B Assignment: 20% weighting
Less: Late penalty (5% per day)
Part B Assignment: Final mark
Additional comments from marker
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