Avig Ltd acquired 80% of the issued capital of Non Ltd on 1 July 2015. The following three transactions occurred. 1) On 1 July 2018, Avig Ltd purchased equipment from Non Ltd for $1,500,000. The equipment had originally cost Non Ltd $1,200,000 when acquired on 1 July 2016. Non Ltd had been depreciating the equipment over 12 years using the straight-line method. Avig Ltd expected the remaining useful life of the equipment to be 10 years and also depreciates using the straight-line method. 2) In May 2020, Avig Ltd sold inventory costing $80,000 to Non Ltd for $150,000. One quarter of this inventory remained on hand as at 30 June 2020. 3) Non Ltd paid a final dividend of $500,000 on 30 June 2020. Required Based on the information provided, prepare the intra-group journal entries, including all related tax effects, required upon consolidation as at 30 June 2020. The tax rate is 30%. Note: NCI allocation journals are not required.

Give a current example of systematic risk for the U.S. in 2020. What kind of actions could reduce your exposure to this risk?

(Calculation of depreciation; three methods)

On January 1, 2016, SugarBear Company acquired equipment costing $150,000, which will be depreciated on the assumption that the equipment will be useful for five years and have a residual value of $12,000. The estimated output from this equipment is as follows: 2016—15,000 units; 2017—24,000 units; 2018—30,000 units; 2019—28,000 units; 2020—18,000 units. The company is now considering possible methods of depreciation for this asset.

Required

a.  Calculate what the depreciation expense would be for each year of the asset's life, if the company chooses:

i.The straight-line method

ii.The units-of-production method

iii.The double-diminishing-balance method

b. Briefly discuss the criteria that a company should consider when selecting a depreciation method.

Part C Question 2 Accounting for Non-current Assets                                            

On 1 July 2018 Fraser Ltd acquired an item of equipment with an acquisition cost of $400,000. The equipment can be used for 8 years.

On 30 June 2019, the end of financial year, the fair value of the equipment was $357,000.

The equipment was sold for $330,000 on 1 January 2020.

Non-current asset is depreciated evenly over the useful life and has no residual value. The company uses the revaluation model to record non-current asset. The income tax rate is 30%. Ignore GST.

Required:

Prepare relevant journal entries to record non-current asset in 2018/2019 and 2019/2020 financial years in accordance with AASB 116 and AASB 136. (Narrations are required, tax effect entries are required.)    

Exercise 1-21A (Static) Preparing financial statements—retained earnings emphasis LO 1-5, 1-6, 1-7, 1-8

On January 1, Year 3, the following information was drawn from the accounting records of Carter Company: cash of $800; land of $3,500; notes payable of $600; and common stock of $1,000.

Required
a. Determine the amount of retained earnings as of January 1, Year 3.
b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $1,000 cash dividend to the stockholders. Can the company pay this dividend?
c. As of January 1, Year 3, what percentage of the assets were acquired from creditors?
d. As of January 1, Year 3, what percentage of the assets were acquired from investors?
e. As of January 1, Year 3, what percentage of the assets were acquired from retained earnings?
f. Create an accounting equation using percentages instead of dollar amounts on the right side of the equation.
g. During Year 3, Carter Company earned cash revenue of $1,800, paid cash expenses of $1,200, and paid a cash dividend of $500. Record these events using the accounting equation.
g-1. Prepare an income statement dated December 31, Year 3.
g-2. Prepare a statement of changes in stockholders’ equity dated December 31, Year 3.
g-3. Prepare a balance sheet dated December 31, Year 3.
g-4. Prepare a statement of cash flows dated December 31, Year 3.
j. What is the balance in the Revenue account on January 1, Year 4?

Each of the following is an advantage of an exit via IPO except:

a. an increase in the venture's public awareness

b. a relatively rapid path toward founder exit

c. a large financial windfall for founders and investors

d. a large influx of cash for company growth

Felix, a U.S. technology company has recently developed a revolutionary wireless phone. The product offers exciting new features along with all of the features of current products, but at a fraction of the manufacturing costs. As the international business manager of Felix, you have been asked to choose the best mode of entry into the European market. Your have the following options: o Export your product from the United States. o Enter into an alliance with a large European company. o Manufacture the product in the United States and set up a wholly owned subsidiary in Europe. o License a European firm to manufacture and market the phone in Europe. In preparation for your choice, list the pros and cons of each method of entry. Which choice do you present to your CEO? Support your decision.

How is Corona (CoVid 19) affecting the U.S.'s current growth rate? What is the U.S.'s actual rate of growth? What was it in January 2020? According to the rule of 70, how fast would our economy have doubled if it stayed at the January rate? At the current rate?

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance:

Debit CreditAccounts payable   $55,100Accounts receivable$44,700   Additional paid-in capital    50,000Buildings (net) (4-year remaining life) 163,000   Cash and short-term investments 83,750   Common stock    250,000Equipment (net) (5-year remaining life) 207,500   Inventory 122,000   Land 85,500   Long-term liabilities (mature 12/31/23)    162,500Retained earnings, 1/1/20    202,150Supplies 13,300   Totals$719,750 $719,750

During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000.

Assume that Chapman Company acquired Abernethy’s common stock for $605,600 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment. The contract price is $3,200,000, and construction is expected to take 18 months. Drewry is billed and pays $1,600,000 of the contract price on January 2, 2019, and will pay the balance at completion.

TI estimates that the cost of construction will be $2,300,000.

Drewry includes two performance bonuses in the contact:

The bonuses are payable when a U.S. patent is approved and when international distribution is approved.

On the date the contract is signed, TI estimates that there is an 80% chance it will receive U.S. patent protection by March 15, 2020, but only a 30% chance that the equipment will be approved for international distribution.

TI received a U.S. patent on the equipment design on November 15, 2019, and immediately billed Drewry and received its bonus payment. On December 31, 2019, TI has incurred $1,840,000 of contract costs and is 80% complete. TI won approval for international distribution on January 15, 2020, and completed the equipment project on April 15, 2020, at a cost of $2,300,000.

Required:

General Journal Instructions

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GENERAL JOURNAL

Score: 7/363

Points:

1.33 / 69

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