Accounting for equity, revaluation of assets and impairment of assets

Question 2 [20 marks] Topic 4: Accounting for equity   On 1 July 2016, Ansett Ltd was incorporated and offered 5,000,000 ordinary shares to the public at an issue price of $2.00 per share, with $1.50 payable on application, and $0.30 due within one month of allotment and $0.20 payable on a call to be made at a later date.   By 31 July 2016, applications had been received for 5,500,000 shares. On 12 August 2016, 5,000,000 shares were allotted, and excess application money refunded to unsuccessful applicants. All allotment money was received by 12 September 2016.   On 20 March 2017, the call was made with money due by 30 April 2017. By 30 April 2017, all call money was…

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Parent Ltd acquired 80% of the issued shares of Subsidiary Ltd

Question 1 [40 marks]    Topics 1 to 3 – Consolidation: Principles, accounting requirements, intra-group transactions and non-controlling interests   Parent Ltd acquired 80% of the issued shares of Subsidiary Ltd on 1 July 2014. At the acquisition date, the equity of Subsidiary Ltd consisted of Share Capital of $200,000; Retained Earnings of $ 74,000 and General Reserve of $6,000.   Parent Ltd uses the full goodwill method. The fair value of non-controlling interest at 1 July 2014 was $63,000.   All the identifiable net assets of Subsidiary Ltd were recorded at fair value at the date of acquisition, except for the following assets:     Carrying amount Fair value   $ $ Plant (cost $150,000) 100,000 110,000 Land 60,000 76,000…

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Jackson Ltd manufactures two products  FRED and MARTHA

T217 ACC200 INTRODUCTION TO MANAGEMENTACCOUNTING  ASSIGNMENT 20% Due : Week 10 Jackson Ltd manufactures two products  FRED and MARTHA  .The firm uses a single plantwide overhead rate based on direct labour hours .Product costing data is as follows: FRED                         MARTHA Production Quantity                                                                1000 units               5000 units Direct material                                                                           $40                          $60 Direct labour                                                                               30(2 hours)             45 ( 3 hours) Manufacturing overhead                                                          96( 2 hours)          144 ( 3 hours) Total cost per unit                                                                    $166                        $249 Manufacturing overhead is currently  calculated by using a conventional volume based approach using a predetermined overhead rate based on the number of direct labour hours used to produce the product.The manufacturing overhead budget consists of the following overhead costs: Machine related  costs                                                   $450,000 Setup and inspection                                                         180,000 Engineering                  …

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Variances – The following data are the actual results for Marvelous Marshmallow Company for October

The following data are the actual results for Marvelous Marshmallow Company for October.   Actual output ……………………………………………………………………………………………………………….. 9,000 cases Actual variable overhead …………………………………………………………………………………………………. $405,000 Actual fixed overhead ……………………………………………………………………………………………………… $122,000 Actual machine time ………………………………………………………………………………………………………. 40,500 machine hours   Standard cost and budget information for Marvelous Marshmallow Company follows: Standard variable-overhead rate ………………………………………………………………………… $9.00 per machine hour Standard quantity of machine hours ……………………………………………………………………. 4 hours per case of marshmallows Budgeted fixed overhead ………………………………………………………………………………….. $120,000 per month Budgeted output …………………………………………………………………………………………….. 10,000 cases per month   Required: Use any of the methods explained in the chapter to compute the following variances. Indicate whether each variance is favorable or unfavorable, where appropriate. Variable-overhead spending variance. Variable-overhead efficiency variance. Fixed-overhead budget variance. Fixed-overhead volume variance.   Build…

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Jazza Ltd produces clocks at its Shenzhen factory. Each clock is put together in the Assembly Department

QUESTION 1 (14 marks) Jazza Ltd produces clocks at its Shenzhen factory. Each clock is put together in the Assembly Department and then tested in the Testing Department. In the Assembly Department, the process-costing system at Jazza Ltd has a single direct cost category (direct materials) and a single indirect cost category (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the Assembly Department finishes work on each clock, it is immediately transferred to Testing. Jazza Ltd uses the weighted-average method of process costing. Data for the Assembly Department for August 2017 are: Physical Units Direct Materials Conversion costs Work in process, 1 August 6,000 $2,950,000 $925,500 Started during…

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Excel – In Australia, permanent employees get given 20 days holiday pay

Background   The assignment of a payroll calculator demonstrates Excels ability to automate and present financial calculation information clearly.  The ability to build and professionally present a workbook is an important skill.  Please note: that where the assignment states that you must use an expression, we mean a function.   Please Note:   In Australia, permanent employees get given 20 days holiday pay (they get paid at their normal rate while on holiday) and ten days sick pay (they get paid at their normal rate while sick) in each year that they are employed.  This means that they get paid even though they are away from work.  Superannuation is calculated as a percentage of the Gross pay and taxed at 15%. …

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Marshell Ltd produces a subassembly used in the production of forklifts

Marshell Ltd produces a subassembly used in the production of forklifts. The assembly is sold to engine manufacturers and forklift maintenance facilities. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (2018). The master budget will be based on the following information: The finished goods inventory was 64 000 units at 31 December 2017, each costing $332.12. The desired ending inventory for each month is 80% of the next month’s sales. The data on materials used are as follows: Direct material Per-unit usage Unit cost ($) Metal 20 kg 16 Components 12 components 10   Inventory policy dictates that sufficient materials be on hand at the end of the…

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AMCOR Limited has a corporate bond outstanding

Question 1: AMCOR Limited has a corporate bond outstanding with a 7% coupon, semi-annual interest, 15 years to maturity and a face value of $1,000. Similar bonds currently yield 13%. By prior agreement, the company will skip the coupon payments in years 6, 7, and 8, (6 payments in total; the payments at time 6 through to 8.5). These payments will be repaid, without interest, at maturity. What is the corporate bond’s value? Question 2: Storico Co. just paid a dividend of $3.85 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth,…

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Capital Budgeting – NPV, PI, Payback, Scenario and Sensitivity

Part A (40 Marks) The management team of Online Jeans Sales have just received a new proposal from one of the firm’s marketing managers. The proposal outlines a new investment to create a Custom Finish Laboratory. Through the lab, online customers will be able to select an option to personalise their jeans in a range of finishes. This proposal was made following the completion of market research costing $100,000. The capital cost to establish the Custom Finish Lab will be $1,650,000. This cost will depreciated on the straight-line basis to zero over the 8 year productive life of the lab. It is estimated $100,000 will be recovered at the completion of the project as the salvage value of the lab. In…

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The following unadjusted trial balance is available

The following unadjusted trial balance is available for Si’s Knitting Service Ltd.:   Si’s Knitting Service Ltd                                                       Unadjusted Trial Balance                                                                30th June, 2015   Cash   54,680   Accounts Receivable   193,000   Prepaid Insurance   36,000   Buildings   80,000   Accumulated Depreciation – Buildings   43,200   Machinery   480,000   Accumulated Depreciation – Machinery   225,000   Land   400,000   Accounts Payable   65,760   Notes Payable   100,000   Interest Payable   9,000   Customer deposits   12,000   Bank Loan   110,000   Ordinary Shares   460,000   Retained Earnings   80,940   Revenue   576,340   Cost of goods sold 245,000   Utilities expense   14,660   Maintenance expense   48,300  …

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The Playdough company currently produces 760,000  playdough canisters

T217 ACC202 MANAGEMENT ACCOUNTING ASSIGNMENT    20% Due Week 10 The Playdough company currently produces 760,000  playdough canisters per year  at its local plant  as it sells the product in canisters.The details of the costs in producing the canisters are : Direct materials                                                                                      $ 300,000 Direct labour  12000 hrs at $15 per hr                                                  180,000 Variable overhead  $10 per direct labour hr                                        120,000 Fixed overhead $45 per direct labour hr                                              540,000 Total cost                                                                                             $ 1,140,000 The Playdough company has received an offer from the Cannister company  to supply the cannisters at $1 per canister .The only fixed overhead that would be avoided  would be $80,000 of supervisors salaries and $28,000 machinery depreciation .The remaining fixed overhead would continue  to be incurred. The Playdough…

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Project Selection and Portfolio Risk

Question 1: (marks 6) 
Your company has 4 projects A, B, C and D. The returns generating by these projects are as follows: .          Project(s) Interest (return) earnings A 11.56% per annum compounding annually B 12% per annum compounding monthly C 5% per semi-annual compounding monthly D 3.26% per quarter compounding annually 
Each of the project has 10 years of life. The initial investment for each of the project is also same $100,000 each. (i)  Your company management has asked you to select only one out of the four projects available, which one would you select? Show your calculation and justification of selection. (ii)  Consider an alternative situation. Your company management has setup a minimum acceptance criteria for any new project…

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