Anne Chovi is the sole proprietor of Scooba Dive

QUESTION 1: Balance Day Adiustments Anne Chovi is the sole proprietor of Scooba Dive Inc located in a popular beachside location referred to as The Cove. Anne has been successfully operating her environmentally friendly Scuba Diving gear business for the last ten years. The business primarily stocks goggles and facemasks, wetsuits, scuba tanks and other assorted diving gear. Anne also runs diving courses to promote the beauty of the reef and the continued need to look after the marine environment. Anne is so busy with the management of the business and running the diving courses that she was unable to attend to the bookkeeping, so she hired Jones & Co Accounting Specialists Pty Ltd to take over the accounting function. You…

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Old Ltd acquired 100% of the share capital

Question 1: Topic 3 and 4 – Consolidated financial statements, method, acquisition, business combination valuation and intra-group transactions On 1 July 2017, Old Ltd acquired 100% of the share capital of School Ltd (cum div.) for $920,000. School Ltd’s balance sheet on acquisition date included: Dividend payable $20,000 Retained earnings 180,000 Share capital 600,000 General reserve 40,000   At acquisition date, all of School Ltd’s net assets were recorded at fair value except for: Carrying amount Fair value Inventory $32,000 $40,000 Land 62,000 75,000 Contingent liability – 8,000 Buildings (Cost $100,000) 69,000 78,000   Additional Information: The dividend payable at acquisition date was subsequently paid in August 2017. The revalued inventory was sold during the year ended 30 June 2018. The…

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Smashed and Parts Palace

The Subsidiary, Smashed On 31 December 2016, Parts Palace Limited acquired 60% of the shares in Smashed Limited. On that date, the equity of Smashed Limited comprised:   $ 000 Share capital 700 Retained earnings 400 Equity $1,100   At acquisition, the book value of the assets and liabilities of Smashed Limited were considered to be at fair value, except for some non-depreciable assets (included under ‘Other non-current assets’ and considered to be part of net identifiable assets) that had a book value of zero and where Parts Palace assessed their fair value to be $170,000. There has been no change to assessed value of these assets since acquisition. Goodwill impairment At the most recent balance date (31 December 2019), the…

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Parker products manufactures a variety of household products

Question 1: Parker products manufactures a variety of household products.  The company is considering introducing a new detergent.  The company’s CFO has collected the following information about the proposed product. The product has a proposed life of 4 years. You will have to purchase a new machine to produce the detergent. The machine will have an upfront cost of $2 million. The machine would be depreciated on a straight line basis. The company anticipates that the machine will last 4 years and after the 4th year, its salvage value will be equal to $0. The detergent is expected to generate sales revenue of $1 million in the 1st year, $2 million in the 2nd year, $2 million in the 3rd year…

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HI5020 Corporate Accounting – Tea Tree Bay Ltd acquires

Question 1 Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration:   Cash $20,000 Land In the books of Tea Tree Bay Ltd the land is recorded  at its cost of $100,000. It has a fair value of $140,000. Equipment: In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of $50,000. The equipment has an accumulated depreciation balance of $20,000. The fair value of the equipment is $23,000 Assumption of liability Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loan of $30,000 as part of the Gizmo Machine acquisition. Other associated costs Tea Tree Bay Ltd also spend $5,000 as the installation cost.…

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ACST2001 Financial Modelling – Spreadsheet Project Task 2

On 15 September 2020 you plan to buy a 6% p.a. Treasury bond maturing on 15 September 2026. a. How much would you pay to earn 7% p.a. on your transaction? Ignore taxation considerations. b. How much would you pay to earn a net return of 7% p.a. on your transaction, allowing for tax on interest only of 30%? In this instance, assume tax on interest is paid immediately. c. How much would you pay to earn a net return of 7% p.a. on your transaction, allowing for tax on interest and capital gains of 30%? In answering this question, you should assume that the tax on interest and capital gains is deferred by twelve months. d. Allowing for tax on…

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HI5002 Finance for Business – If you invest $7000 now, and your investment pays

Question 1. If you invest $7000 now, and your investment pays 12% per annum. Required: a. In term of time value of money, what does the amount of $7000 represent? b. What is the interest rate 12% called? c. How much will you have in three years if the rate is compounded annually (to the nearest dollar)? d. How much will you have in three years if the rate is compounded semiannually, quarterly, monthly and daily (to the nearest dollar)? Question 2. You have been told that you need $25 500 today in order to have $100 000 when you retire 35 years from now. Required: a. What rate of interest was used in the present value computation if assuming interest…

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ACCG8126 – On 1 July 2015 Gasol Ltd acquired 100% of the share capital

On 1 July 2015 Gasol Ltd acquired 100% of the share capital (ex div.) of Payne Ltd for $450,000. At that date, the relevant balances in the records of Payne Ltd were:   $ Share capital 320 000 General reserve 20 000 Retained earnings Dividend payable 80 000 10 000   At the date of acquisition all assets and liabilities of Payne Ltd were recorded in the accounting records at amounts equal to their fair values with the exception of the following assets:                                                             Carrying amount                     Fair value                                                                         $                                            $ Inventory                                           10 000                                 14 000 Equipment                                         47 000                                 62 000   All inventory on hand at acquisition date was sold by 30 June 2016. The cost…

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ACST2001 Financial Modelling – Spreadsheet Project Task 3 – S1 2020

In SPT3 we extend your modelling from SPT1 to income streams. Specifically, we generate the retirement income stream lost by withdrawing a lump sum (now) from your super fund. In addition, given an individual’s desired income stream at retirement, we generate the (lump sum) investment needed now to realise that goal. Your modelling needs knowledge of interest rates applicable from today onwards. For simplicity, assume this rate is the Australian 10-year government bond yield as at the end of 2019 (31.xii.19), plus 100 basis points (i.e., a j2 rate). You can use FactSet to find this value. A user of your spreadsheet will need to input the following. Age (an integer) Gender (‘M’ or ‘F’) Desired superannuation withdrawal amount (in dollars)…

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FIN200 – You are considering the purchase of a house in Sydney

You are considering the purchase of a house in Sydney for $750,000. You have available deposit of $100,000. ANZ bank will lend you money at the rate of 6 per cent per annum compounded monthly over a period of up to 25 years. If you borrow the required funds over 25 years, what are the monthly repayments? After 10 years, how much do you still owe the bank? You are celebrating your 25th birthday today and want to start saving for your anticipated retirement at the age of 65. You want to be able to withdraw $3,000 from your saving account each month for 20 years following your retirement; the first withdrawal will be at the end of the month on…

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BU330 – Using CVP analysis to find breakeven points

Part A: Using CVP analysis to find breakeven points and target profit volumes Mimi Incorporated has a targeted operating income of $518,000 for the upcoming year. The selling price of its single product is $40.50 each, while the variable cost per unit is $12.50. Fixed costs total $182,000. Calculate the following: Contribution margin per unit Breakeven point in units Units to be sold to earn the targeted operating income   Part B: Factoring resource constraints into product mix decisions Rose Incorporated manufactures two types of vases, small and large. The following per-unit data are available.                                                               Small Vase     Large Vase Sale price                                                        $60      $100 Variable costs                                                 $35      $60 Machine hours required for 1 vase                 1          2…

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The following information has been extracted from the financial reports of ABC Ltd.

1. The following information has been extracted from the financial reports of ABC Ltd.   $ Sales 25,000 units @ £20 per unit 500,000 Rent per annum 30,000 Rates per annum 10,000 Insurance per annum 15,000 Overhead costs 10,000 Other variable costs 245,000   Additional information: The annual rent, rates and insurance costs are fixed. It has been estimated that 50% of the overhead costs are variable and 50% are fixed. Required: Show how many units must be sold to break-even using CVP Analysis. How many units must be sold to obtain a profit of $30,000 (Target profit)? Calculate the break-even point (units) if fixed costs (including the fixed cost portion of overhead cost) increased to $70,000. Explain the effects of…

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