Critically discuss and recommend how your chosen company can enhance the treatments and disclosures for impairment for the year ended 30 June 2020 so that your company could provide clear disclosure about the adverse impacts on the company from the COVID19 pandemic.

Discuss how the treatments and disclosures about impairment suggested by you for the year ended 30 June 2020 meet the fundamental characteristics of financial reporting as per the Conceptual Framework?

On 1 July 2018, Parent Ltd acquired all the shares of Son Ltd, on a cum-div. basis, for $2,057,000. At this date, the equity of Son Ltd consisted of:

Share capital – 500 000 shares $ 1,000,000

Retained earnings 500,000

Son Ltd also reported a dividend payable of $100,000 and a recorded goodwill of $50, 000 at the acquisition date. The dividend payable was subsequently paid in September 2018.

At the acquisition date, all the identifiable assets and liabilities of Son Ltd were recorded at amounts equal to fair value except for the following:

Of the inventory on hand in Son Ltd at 1 July 2018, 60 percent was sold in August 2018 and the remainder was sold in June 2019. It was estimated that the plant has a further 5-year life with zero residual value.

Son Ltd was involved in a court case that could potentially result in the company paying damages to customers. At the acquisition date, Parent Ltd calculated the fair value of this liability to be $50,000, even though Son Ltd had not recorded any provision for damages (liability). On 29 June 2020 Son Ltd reassessed the liability in relation to the court case as the chance of winning the case had improved. The fair value on 29 June 2020 was considered to be $30,000.

The company applies the partial goodwill method. The income tax rate is 30%.

During the period 1 July 2018 to 30 June 2020, the following intragroup transactions have occurred between Parent Ltd and Son Ltd:

(T1) On 1 January 2019, Parent Ltd acquired furniture for $100,000 from Son Ltd. The furniture had originally cost Son Ltd $150,000 and had a carrying amount at the time of sale of $80,000. The sale was made on credit. At 30 June 2019, $60,000 was outstanding. At 30 June 2020, $20,000 was still not paid and outstanding. Both entities apply depreciation on a straight-line basis. At 1 January 2019, the furniture had a further five years of useful life, with zero residual value.

(T2) On 1 March 2019, Son Ltd sold inventory costing $12,000 to Parent Ltd for $16,000. On 1 October 2019, Parent Ltd sold half of these inventory items back to Son Ltd for $6,000. Of the remaining inventory kept by Parent Ltd, half was sold in March 2020 to Dingo Ltd at a profit of $400.

Required:
a) Prepare the acquisition analysis at 1 July 2018.

b) Prepare the consolidation worksheet entries at 30 June 2020. Your answer should include: 1. BCVR entries,

2. Pre-acquisition entries, and
3. Intragroup transaction adjustment entries (T1 to T2).

c) The adjusting consolidation entries at 30 June 2019 for the last intragroup transaction (T2) is provided below.

Explain why the above entries are made for the intragroup transaction (T2) as at 30 June 2019, noting the adjustments to each account separately.

d) Critically analyze the accounting treatment of acquisition related costs in a business combination. For your critical analysis, you could compare with how acquisition related costs are accounted for when a company purchases property plant and equipment. [word limit: 150 words]

The three principal ways in which venture capital companies exit venture-backed companies are: Select one: A. selling to a strategic buyer, buying out the founder, and offering shares to the public. B. selling to a strategic buyer, selling to a financial buyer, and buying out the founder. C. selling to a strategic buyer, selling to a financial buyer, and offering shares to the public. D. None of the above.

On June 30, Year 7, Apple Company, which prepares monthly financial statements, acquired from Bee Company for 500,000 yen a machine with life of 5 yrs and no residual value. To pay Bee Company, Apple Company borrowed 500,000 yen from Soy Bank (in China) on a 12%, 60 day note. Apple Company acquired a 510,000 yen draft to York Bank (in the U.S.) on August 29, Year 7 to pay the maturity value of the note to Soy Bank. Relevant exchange rates for the yen were as follows:

Buying rate Selling Rate

June 30, Yr 7................$0.0081 $0.0084

July 31, Yr 7.................$0.0080 $0.0082

August 29, Yr 7............$0.0082 $0.0085

REQUIRED: Prepare journal entries (including explanations for Apple Company on June 30, July 31 and August 29, Yr 7 including interest accrual and depreciation of the machine. use 30 day months for July and August interest.

Gunna Ltd acquired a printing machine on 1 July 2018 for $100,000. It is expected to have a useful life of 5 years, with the benefits being derived on a straight- line basis. The residual is expected to be $nil. On 1 July 2019 the machine is deemed to have a fair value of $75,000 and a revaluation is undertaken in accordance with Gunnamatta Ltd’s policy of measuring property, plant and equipment at fair value. The asset is sold for $89 000 on 1 July 2020. Required: Provide the journal entries necessary to account for transactions and events at the following date. Narrations are required. (7 marks. Word limit: n/a) a) 30 June 2019 b) 1 July 2019 c) 30 June 2020 d) 1 July 2020

At the beginning of 2020, Cameron Company's retained earnings was $212,000. For 2020, Cameron has calculated its pretax income from continuing operations to be $120,000. During 2020, the following events also occurred:

1. During July, Cameron sold Division M (a component of the company). The book values of Division M’s assets and liabilities are $300,000 and $100,000, respectively, at the time of

sale. The company sold Division M for cash $159,500. During 2020 before its sale, Division M recognized revenues of 100,000 and expenses of 61,000 (excluding income tax expense).

2. Cameron had 21,000 shares of common stock outstanding during all of 2020. It declared and paid a $1 per share cash dividend on this stock.

3. Cameron also paid $7,500 cash dividend to its preferred stockholders.

Required:

Assuming that all the “pretax” items are subject to a 21% income tax rate:

1. Complete the lower portion of Cameron's 2020 income statement, beginning with “Pretax

Income from Continuing Operations.”

2. Prepare an accompanying retained earnings statement.

In the divisional structure, if there were a separate sales organization responsible for providing revenue for each of the divisions, what are advantages and disadvantages of such a structure?

What if the structure was that way from the outset and an acquisition was made of a company with its own sales force. how hard would it be to integrate the acquired company into the new structure?

Lessor leasing company agrees to lease equipment to Lessee corp. on Jan 1, 2019, both Lessor and Lessee follows IFRS. The following information relates to the lease agreement:

1. the lease term is 7 years, no renewal,
2. Lessor acquired the equipment this day Jan 1, 2019 for $560,000 cash, the useful life 10 years
3. at the end of the term the equipment to be returned to the lessor with guaranteed residual value of $40,000
4. the lease agreement require annual rental payments beginning of Jan 1 each yaer
5. Lessor charges 10% on all it is transactions and it is the same rate that Lessee can borrow from there Bank.

Instructions:

Considering this as Financing type (Capital) Lease, answer the following questions:

1. Calculate the amount of the annual rental (lease) payment
2. If Dec 31 is the fiscal year end for Lessee co., prepare the journal entries that Lessee would make in 2019 and 2020, Lessee did not use reversing entries
3. From the information you have calculated and recorded, identify all balances related to the lease that would be reported on Lessee Balance sheet on Dec 31,2020