Discuss the accounting treatments for the expenditure

Assignment Help Financial Accounting
Reference no: EM13505233

Question 1

Accounting for share capital

The constitution of Hill Ltd indicated that the company could issue up to 5,000,000 ordinary shares and 1,000,000 preference shares. Prospectuses had been published offering 1,000,000 preference shares at $1.50 payable in full on application by 31 March 2013, and 2,000,000 ordinary shares at $1.20 with 50% due on application by 31 March 2013, 25% due on allotment, and 25% due on a call to be made by the directors at a later date.

By 31 March 2013, the company had received amounts due on 800,000 of the preference shares and on applications for 2,400,000 ordinary shares. The directors met on 10 April 2013 and resolved to issue the preference and ordinary shares.

The ordinary shares were allotted to applicants on a pro rata basis and the amounts received in excess of that due were to be credited against amounts due on allotment. The amount due on the allotment of the ordinary shares was payable by 15 May 2013 and this was received on all shares.

The directors made the call on the ordinary shares on 31 August 2013, with amounts payable by 30 September 2013. By this date, amounts due on 1,997,000 shares had been received. On 5 October 2013, as provided by the company's constitution, the directors forfeited the shares on which calls were unpaid.

On 25 October 2013, the forfeited shares were reissued as fully paid for a consideration of $1 per share. Costs of reissue amounted to $700. The constitution provided for any surplus on resale, after satisfaction of unpaid calls and costs, to be returned to shareholders whose shares were forfeited.

Required:

Provide the journal entries to account for the above entries. Show all relevant dates, narrations and workings. 

Question 2

Accounting for income tax

Bright Ltd commences operations on 1 July 2012 and presents its first Statement of Profit or Loss and Other Comprehensive Income, and first Statement of Financial Position on 30 June 2013. The statements are prepared before considering taxation. The following information is available:

2146_Discuss the accounting treatments for the expenditure.png

Other information:

• All administration and salaries expenses incurred have been paid as at year end.
• None of the long service leave expense has actually been paid. It is not deductible until it is actually paid.
• Warranty expenses were accrued and, at year end, actual payments of $10,000 had been made (leaving an accrued balance of $20,000). Deductions are available only when the amounts are paid and not as they are accrued.
• Insurance was initially prepaid to the amount of $30,000. At year end, the unused component of the prepaid insurance amounted to $10,000. Actual amounts paid are allowed as a tax deduction.
• Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.
• The plant is depreciated over five years for accounting purposes, but over four years for taxation purposes.
• The tax rate is 30%.

Required:

a) Determine the balance of any current and deferred tax assets and liabilities as at 30 June 2013, in accordance with AASB 112. Show all necessary workings.

b) Prepare the journal entries to record the current tax liability and movements in deferred tax assets and liabilities.

Question 3

Intangible assets

Scooters Ltd was incorporated five years ago on 1 July 2008. In the five years since then, the company has been developing a design for a new four-wheel motorised scooter for elderly persons. The company has patents pending for the design and production of the scooter.

By 30 June 2011, the company's work on the scooter design was sufficiently advanced for it to consider that the design was technically feasible and would results in a far superior product to any other motorised scooter available at that time. The company concluded at that time that it possessed sufficient resources to complete the development of the scooter's design.

The company has incurred the following expenditure in developing its scooter design over the past five years:

2111_Discuss the accounting treatments for the expenditure1.png

Required:

Discuss the accounting treatments for the expenditure incurred by Scooter Ltd in the last five years in accordance with AASB138. Provide relevant paragraph numbers from the standard to support your answer.

Question 4

Property, plant and equipment

Gardiner Ltd acquired a machine on 1 July 2011 at a cost of $300,000. At the date of acquisition, Gardiner's directors determine to depreciate the machine on a straight-line basis over a period of six years. The machine has an estimated residual value of nil. The company elects to adopt the revaluation model subsequent to acquisition.

The directors of Gardiner estimated the fair values for the machine to be $265,000 and $190,000 on 30 June 2012 and 30 June 2013 respectively. There are no changes in the originally estimated useful life and residual value for the machine.

Assume a tax rate of 30%.

Required:

Prepare journal entries to account for the above transactions for the years ended 2012 and 2013.

Reference no: EM13505233

Questions Cloud

Evaluate the ph of a 0.20 m cholorbenzoic acid solution : A 0.2 M sodium chlorobenzoate (NaC7H4ClO2) solutions has a pH of 8.65. Calculate the pH of a 0.20 M cholorbenzoic acid (HC7H4ClO2) solution.
Find the magnitude of the charge density on each plate : A parallel-plate capacitor with area 0.100 m2 and plate separation of 4.00 mm is connected to a 21.00 V battery. Find the magnitude of the charge density on each plate
What are potential red flags with respect to the jost audit : What are the potential red flags with respect to the Jost audit? If you were Yancy Corliss, would you go ahead and recommend to Sharon Rules that the firm should submit a bid for the Jost audit? Why or why not?
What is its speed when it takes off : An airplane travels a distance 270 m down the runway before taking off. If it starts from rest, moves with a constant acceleration, what is its speed when it takes off
Discuss the accounting treatments for the expenditure : Discuss the accounting treatments for the expenditure incurred by Scooter Ltd in the last five years in accordance with AASB138. Provide relevant paragraph numbers from the standard to support your answer.
Determine the resultant of these two forces : Two forces are applied to a car in an effort to move it, as shown in the following figure, where F1 = 415 N and F2 = 354 N. What is the resultant of these two forces
Obtain the direction of the electric field : What is the magnitude of the electric field at a point 0.45cm away from a point charge of +2.0pC? What is the direction of the electric field
Find out the solubility of zn(oh)2 in a solution : The Ksp for Zn(OH)2 is 5.0 x 10-17. Determine the solubility of Zn(OH)2 in a solution with pH of 11.50.
Explain expect agbr to have the lowest solubility : In which one of the following aqueous solutions would you expect AgBr to have the lowest solubility

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd