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Question no 1 On 15 sep 2012 tweed ltd acquired land on a remote island at a cost 100000. The land was held for future development as a resort when transport to the island was made available .At each reporting date ,Tweed ltd made the following assessments of the net selling price of the land and the value of land to the business if kept for future use: Date net selling price vale in use 31 December 2012 110000 130000 30 June 2013 90000 120000 31 December 2013 80000 90000 30 June 2014 120000 110000 Required (a) At what amount should the land be recorded in the statement of financial position (balance sheet) of Tweed Ltd for each reporting date ? (b) Assume that on 30 september 2014 the government cancelled all the plans to provide transport to the island. There is no prospect of resort of selling the island . The cost of Tweet ltd of developing transport exceeds the present value expected future benefits of operating the resort .How should Tweet Ltd account for this event.? Question no 2 Wastewater limited acquired an item of plant on 1 July 2012 for 3660000.when the item of plant was acquired ,it was initially assessed as having life of 10000 hours .During the reporting period ending 30 June 2013 then plant was operated for 3000 hours . At 1 July 2013 the plant had a remaining useful life of 7000 hours .On 1 July 2013 the plant underwent a major upgrading costing 234600. Management believes that this upgrade will add a further 2000 hours of operating time to the plants life. During the reporting period ended 30 June 2014 the plant was operated for 4000 hours. On 1 July 201 4 The plant underwent a further major upgrade ,the cost which amounted to 344900,and this added the further 3100 hours operating life .During the reporting period ending 30 June 2015 the plant was operated for 3800 hours. Required Prepare all the journal entries that wastewater limited would prepare for the years ending 30 June 2013,30 June 2014 and 30 June 2015 to account for the acquisition expenditure and depreciation on the assets. Question no 3 Petersen Ltd has the following land and building in its financial statements as at 30 June 2014 . $ Residential land ,at cost 1000000 Factory land ,At valuation 2011 900000 Building ,at valuation 2010 800000 Accumulated depreciation (100000) At 30 June 2014, the balance of the revaluation surplus is $400000,of which $300000 relates to the factory land and $100000 to the buildings. On this same date , independent Valuation of then land and building are obtained. In relation to above assets ,the assessed fair value at 30 June 2014 are : $ Residential land ,previously recorded at cost 110000 Factory land ,previously revalued in 2011 700000 Buildings ,previously revalued in 2010 900000 Required Provide the journal entries to account for the revaluation on 30 June 2014. Petersen Ltd classifies the residential land and the factory land as different classes of assets. Question no 4 Nat ltd purchases a 100 per cent interest in Angourie Ltd . The cost of the acquisition is $1400000 plus associated legal cost of $70000. As at the date of acquisition , the statement of financial position of Angourie ltd shows. $ $ $ Assets Current assets Cash 20000 Accounts receivable 80000 Provisions for doubtful debt (10000) 70000 Inventory 100000 Total Current assets 190000 Non current assets Land and building at cost 850000 Accumulated depreciation land and building (150000) 700000 Pland and equipment 510000 Accumulated dep plant and equipment (100000) 410000 Total non current assets 1110000 Total assets 1300000 Liabilities Current liabilities Accounts payable 90000 Band overdraft 20000 Total current liabilitis 110000 Non current liabilities Bank loan 190000 Total liabilities 300000 NET ASSETS =1000000 Additional information (a) The asssets and liabilities of Angourie ltd are fairly stated except land and buildings , which have a fair value of 800000$. (b) Angourie Ltd has a brand name that is not recognised on the statement of financial position ant that has a fair value of $50000. (c) There are no contingent liabilities. Required (a) Determine , for accounting purpose , the amount of goodwill tha has been acquired by Nat Ltd. (b) Why do you think that Nat Ltd would have been prepared to pay for goodwill? (c) Can Nat Ltd revalue the goodwill upwards in as subsequent period ? Question no 5 On 1 July 2014 Kiama Ltd issues $5 million in five years debentures that pay interest each six months at coupon rate 8 per cent . At the time of issuing the securities , the market requires a rate of 10 per cent . The interest expenses is calculated using the effective interest metod. Required (a) Determine the issue price. (b) Provide the journal entries at (1) 1 July 2014 (2) 30 June 2015 (3) 30 June 2016 Question no 6 On 1 July 2015, Flyer Ltd decides to lease an aeroplane from finance Ltd . The term of the lease is 20 years . The implicit interest rate in the lease is 10 per cent .It is expected that the aeroplane will be scrapped at the end of the lease term. The fair value of the aeroplane at the commencement of the lease is 2428400$ . the lease is non cancellable ,returns the aeroplane to finance Ltd at the end of the lease , and requires a lease payment of 300000$on inception of the lease (on 1 July 2015) and the lease payments of 250000$ on 30 June each year(starting 30 June 2016) . There is no residual payment required. Required (a) Provide the entries for the lease in the books of Flyer Ltd as at 1 July 2015. (b) Provide the entries for the lease in the books of Finance Ltd as at 1 July 2015. (c) Provide the journal entries in the books of Flyer Ltd for the final year of the lease (that is ,the entry in 20 years time) (d) Provide the journal entries in the books of Finance Ltd for the final year of the lease (that is ,the entry in 20 years time) Question no 7 Shelley Ltd pays its salaries fortnightly in arrears . The next pay date is Thursday 2 July . The fortnightly salary is $30000 of which $10000 is retained to pay then Australian Taxation Office on behalf of the employees .Payments to the ATO are made every second Monday , with the next payment being made on Monday 6 July. Shelley Ltd reporting period ends on 30 June . Required Provide the journal entries in the books of Shelley Ltd for: (a) 30 June (b) 2 July (c) 6 July Question no 8 Brighton Ltd issue a prospects inviting the public to subscribes for 10 Million ordinary shares each $2 each. The terms of then issue are at $1 is to be paid on application and the remaining $1 within in 1 month of allotment . Application are received for 12 million shares during july 2015 . The directors allot 10 million shares on 5 august 2015. All the applicants receives share an a pro tara basis . the amounts payable on allotment arfe due by 5 september 2015. By 5 september 2015 the holders of two million shares have failed to pay the amounts due on allotment . The directors forfeit the shares on 10 september 2015. The shares are resold on 15 september as fully paid . An amount of 1.80$ per share received . Required Provide tha journal entries necessary to account for the above transactions and events.

Question Set #619

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