The accountant of Park Ltd needs to prepare consolidated financial statements for Park Ltd at the end of financial year. Following information was available on 30 June 2020:

Park Ltd acquired 100 per cent interest in Sun Ltd for $850,000 on 1 July 2015. All assets and liabilities were fairly valued on the acquisition date. At the date of acquisition, the equity of Sun Ltd included:

Share capital                                 $320,000

Reserve                                        $160,000

Retained earnings                         $280,000

The balance of the investment account was $850,000 as shown in the Statement of Financial Position of Park Ltd on 30 June 2020.

1. The directors of Park Ltd believed that goodwill acquired was impaired by 20 per cent for the year ended 30 June 2020.
2. On 17 February 2020, Sun Ltd paid $60,000 in management fees to Park Ltd.
3. On 3 March 2020, Park Ltd sold inventory to Sun Ltd at a value of $48,000.
4. The above inventory had a cost of $29,000 for Park Ltd to produce. All inventories remained unsold in Sun Ltd on 30 June 2020. Park Ltd and Sun Ltd adopt the perpetual inventory system for inventory accounting. The income tax rate is 30%.

Required: (Narrations are required in this question)     

1. Describe the measurement of goodwill acquired in this question according to AASB 3.
2. Prepare relevant consolidation journal entries on 30 June 2020.

PRACTICAL QUESTION   

Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:

Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.

Required

Determine the percentage of completion for 2019, 2020 and 2021.              

Calculate revenue and gross profit for 2019, 2020 and 2021.                          

Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.                                                                                                              

PRACTICAL QUESTION                                                                                         

Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:

Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.

Required

Determine the percentage of completion for 2019, 2020 and 2021.               

Calculate revenue and gross profit for 2019, 2020 and 2021.                           

Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.                                                                                                              

PRACTICAL QUESTION                                                                                         

Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:

Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.

Required

Determine the percentage of completion for 2019, 2020 and 2021.               

Calculate revenue and gross profit for 2019, 2020 and 2021.                           

Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.                                                                                                              

P5–5A Buono Adventures, which uses the perpetual inventory system, has the following account balances (in alphabetical order) on July 31, 2020:

Accounts Payable.......................................................................$ 21,600Accounts Receivable..................................................................23,200Accumulated Amortization—Equipment..............................64,600Cash..............................................................................................8,400Cost of Goods Sold.....................................................................687,000E. Buono, Capital........................................................................402,000E. Buono, Withdrawals..............................................................92,000Equipment..............................180,000Interest Earned..........................................................................4,000Inventory....................................................................................143,000Operating Expenses..................................................................355,000Sales Discounts..........................................................................10,300Sales Returns and Allowances................................................32,900Sales Revenue............................................................................1,045,200Supplies......................................................................................14,600Unearned Sales Revenue..........................................................9,000

NOTE: For simplicity, all operating expenses have been summarized in the account Operating Expenses.

Additional data at July 31, 2020:

A physical count of items showed $3,000 of supplies on hand. (Hint: Use the account Operating Expenses in the adjusting journal entry.)

An inventory count showed inventory on hand at July 31, 2020, of $140,000.

The equipment has an estimated useful life of eight years and is expected to have no scrap or residual value at the end of its life. (Hint: Use the account Operating Expenses in the adjusting journal entry.)

Unearned sales revenue of $5,600 was earned by July 31, 2020.

Required

Record all adjustments and closing entries that would be required on July 31, 2020.

Prepare the multi-step income statement and statement of owner’s equity for the year ended July 31, 2020, and the classified balance sheet in report format as at July 31, 2020.

The following information was obtained from the accounting records and financial statements of Fairbanks Inc.

Additional information:

• On February 1, 2020, Fairbanks issued common shares for machinery and equipment. The common shares had a current market value of $20,000.
• On March 1, 2020, Fairbanks sold equipment that cost $200,000, with a book value of $90,000, for $95,000.
• On August 15, 2020, Fairbanks sold land with an original cost of $200,000 for $189,000.
• On September 27, 2020, Fairbanks issued a stock dividend to shareholders valued at $10,000.
• On December 31, 2020, Fairbanks declared and paid cash dividends of $3,000.

Required:

1. Prepare the cash flow statement, using the indirect method, for Fairbanks for the year ended December 31, 2020.

Required: Complete the following worksheet for Appliance Repair for the year ended 30 June 2020.

Additional information to complete the worksheet:

1. The equipment of $67,500 was purchased on 1 March 2020. The straight-line depreciation method is used with a useful life of 3 years and a scrap value of $2,700. No depreciation is ever recorded.
2. The $75,000 bank loan was borrowed on 1 May 2020. It is an interest only loan. The interest rate is 0.8% per month. No interest is ever paid or recorded.
3. The supplies on hand at 30 June 2020 were $650.
4. The prepaid insurance balance represents the annual premium paid on 1 April 2020.
5. $2,500 of unearned revenue has been earned by 30 June 2020.

Appliance Repair

Worksheet

For the year ended 30 June 2020

Alexa Inc. purchased equipment in 2018 for $70,000 with no residual value. On December 31, 2020, accumulated depreciation using the straight-line method for financial reporting was $21,000. For tax purposes, Alexa uses MACRS depreciation resulting in $49,840 in accumulated depreciation for tax purposes on December 31, 2020. Taxable income was $140,000 for 2020 and the company's tax rate is 25%.

a. Determine the GAAP basis of equipment (net) on December 30, 2020.

b. Determine the tax basis of equipment on December 30, 2020.

c. Assuming a deferred tax liability balance of $6,860 on December 31, 2019, record income tax expense for 2020.

Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order.

Dynamic Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on June 30, 20Y7, the end of the fiscal year, the balances of selected accounts from the ledger of Dynamic Weight Loss are as follows:

Prepare a classified balance sheet that includes the correct balance for Cash. Land must be entered as the first fixed asset. Be sure to complete the statement heading. Refer to the Instructions and the list of Labels and Amount Descriptions for the exact wording of text entries. Negative amounts should be indicated by a minus sign. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary.

Jackson Company applies overhead to products using a pre
determined rate of $12.10 per direct labor hour.

During 2019, Jackson Company began work on three jobs.
Information relating to these three jobs appears below:

                           Job #359   Job #360   Job #361
direct materials .......    $98,000    $75,000    $91,000
direct labor cost ......    $95,200    $79,900    $69,700
direct labor hours .....      5,600      4,700      4,100

By the end of 2019, job #359 and job #361 had been completed.
Job #360 was not completed by the end of 2019. Additionally,
by the end of 2019, job #361 had been sold while job #359 was
not sold. Jackson Company had total actual overhead cost of
$169,000 during 2019.

a.) Calculate the amount of finished goods inventory reported in
Jackson Company's December 31, 2019 balance sheet.

b.) Calculate the cost of goods sold reported by Jackson Company
for 2019 after the overhead variance has been closed.