Financial Accounting 8th Edition Craig Deegan - Solutions

Discover a comprehensive guide to mastering Financial Accounting with the 8th Edition by Craig Deegan. Offering an extensive array of solved problems and questions and answers, this resource is perfect for students seeking clarity. Access the solutions manual and instructor manual for clear, step-by-step answers, helping you excel in your studies. Our online solutions PDF provides free downloads of chapter solutions and test banks, ensuring you have the answers key to succeed. Enhance your learning experience with our textbook solutions and empower your accounting journey today.

On 1 July 2018 Toxic Ltd enters into a joint arrangement with Sludge Ltd. Both parties commit themselves to a contractual arrangement in which Toxic Ltd contributes plant and machinery with a fair value of $20 million; Sludge Ltd contributes cash of $10 million and land with a fair value of $10
On 1 July 2018 Oiley Ltd enters into a joint arrangement with Goldey Ltd. Both parties commit themselves to a contractual arrangement in which Oiley Ltd contributes plant and machinery, and Goldey Ltd contributes cash of$8 million.The machinery contributed by Oiley Ltd has a carrying amount of $6
On 1 July 2017 Peet Ltd purchased 40 per cent of the ordinary shares of Keet Ltd for $3 250000.The remaining 60 per cent of the ordinary shares of Keet Ltd are owned by two shareholders, Radio Ltd, which owns 40 per cent of the shares, and Birdman Unit Trust, which owns 20 per cent of the
ABC Ltd (ABC) sells wooden furniture. It has a 40 per cent interest in DEF Ltd (DEF), which sells timber. Financial information for each company for the year ending 30 June 2018 is as follows:Abbreviated statements of profit or loss and other comprehensive income and reconciliations of opening and
On 1 July 2018 Larry Ltd acquires 25 per cent of the ordinary issued capital of Blaire Ltd for $187500.Upon acquisition of this financial interest in Blaire Ltd, Larry Ltd appoints two directors to the eight-seat board of directors of Blaire Ltd.All the identifiable net assets of Blaire Ltd are
Zimmer Ltd holds a 25 per cent interest in Finn Ltd. During the year ending 30 June 2019, Zimmer Ltd acquires$500 000 of inventory from Finn Ltd. This inventory cost Finn Ltd $300 000 to produce. All of the inventory is still on hand with Zimmer Ltd at year end. It is expected to be fully sold in
On 1 July 2018 Stokes Ltd acquires 25 per cent of the issued capital of Cotter Ltd for a cash consideration of$120000.At the date of acquisition, the shareholders’ equity of Cotter Ltd is:Share capital $150 000 Retained earnings $100 000 Total shareholders’ equity $250 000 Additional
On 1 July 2018 Ma Ltd acquires a 25 per cent interest in Pa Ltd for a cash consideration of $375000.On the date of the acquisition, the assets of Pa Ltd are reported at fair value. The share capital and reserves of Pa Ltd at the date of acquisition are:Share capital $1 000 000 Retained earnings
Simon Ltd has acquired a mining lease in Torquay that the managing director Simon believes contains valuable oil reserves. However, Simon is a surfer and has no knowledge of oil exploration and development. As a result, Simon Ltd enters a joint arrangement with Anderson Ltd pursuant to which
Assume that an investor has two associates, which are both 20 per cent owned. During the year, one associate sells some inventory to the other associate at a profit of $50000.At the end of the year, this inventory is still on hand with the associate that has bought the inventory.In determining the
Do you think it is appropriate for a joint operator to ‘mix’ its proportional share of net assets in with its other assets for the purpose of presentation in the statement of financial position? Explain your answer. LO 32.7
How should the joint venturers’ share of assets in the joint venture be disclosed? LO 32.7
How should the joint operators’ share of assets in the joint operation be disclosed? LO 32.7
Does the required accounting treatment for an interest in a joint operation differ from the requirements for an interest in a joint venture and, if so, how do these requirements differ? LO 32.7
What is the difference between a joint venture and a joint operation? LO 32.6
What is a joint arrangement and what are the two main classifications of joint arrangements? LO 32.6
How are post-acquisition movements in the reserves of an associate to be treated when equity accounting is applied? LO 32.3
When an investor acquires an interest in an associate:(a) how is goodwill on acquisition calculated? LO 32.3(b) why is goodwill on acquisition calculated? LO 32.3(c) how is goodwill on acquisition of the associate disclosed? LO 32.3
Would there be situations where the directors of a company would prefer to classify an investee as an associate rather than a subsidiary? If so, when would you expect these circumstances to arise? LO 32.2
Discuss the factors you would consider when deciding whether an investor has significant influence rather than control over an entity. LO 32.4
What is the difference between significant influence and control, and what are the implications of establishing either? LO 32.4
When is it a requirement that equity accounting be applied? LO 32.2
Do you believe that the cost method or the fair value method is more appropriate for valuing equity securities?Explain your answer. LO 32.1
If a dividend is received from pre-acquisition earnings of an investee, how would this dividend be treated if:(a) the cost method is used by the investor? LO 32.1(b) the fair value method is used by the investor? LO 32.1
Explain the cost method and the fair value method of accounting. LO 32.1
If equity investments are held as current assets, how can they be measured? LO 32.1
Use the same information as in Review Question 13, except that the acquisition dates are as follows:• On 30 June 2015 Clovelly Ltd acquired 60 percent of the shares of Bronte Ltd for $1 680 000 (same date as in Review Question 13).• On 30 June 2016 (one year later) Maroubra Ltd acquired a 70
On 30 June 2015, Maroubra Ltd purchased 70 per cent of the shares of Clovelly Ltd for $2 640 000 cash. On the same date, Clovelly Ltd purchased 60 per cent of the shares of Bronte Ltd for $1 680 000 cash. Any non-controlling interest is valued at fair value.The statements of financial position of
On 1 July 2016 Anglesea acquired a 70 per cent interest in Bells Ltd at a cost of $1 000 000, and Bells Ltd acquired an 80 per cent interest in Torquay Ltd at a cost of $750000.Both payments represent the fair value of consideration transferred. All assets are assumed to be recorded at their fair
A Ltd acquires a 60 per cent interest in B Ltd on 1 July 2018 for a cost of $2 million representing the fair value of consideration transferred. The management of A Ltd values any non-controlling interest at acquisition date at the proportionate share of B Ltd’s net identifiable assets at
Consider the corporate structure represented in Figure 31.8.REQUIRED Determine A Ltd’s interest (direct and indirect) and the non-controlling interest in the separate legal entities under the control of A Ltd. LO 31.1 B Ltd 80% A Ltd 60% 70% C Ltd 10% D E 60% Ltd Ltd
When eliminating the pre-acquisition capital and reserves of a subsidiary for the purposes of presenting consolidated financial statements, should both direct and indirect ownership interests be considered? LO 31.1
Maroubra Ltd holds 70 per cent of the ownership equity of Coogee Ltd and Coogee Ltd holds 80 per cent of the ownership equity of Clovelly Ltd. During the financial year the following dividends are paid by the respective companies:Maroubra Ltd $120 000 Coogee Ltd $80 000 Clovelly Ltd $60 000
Consider the example in Figure 31.7 and assume that ownership interest (the percentages shown) is representative of the capacity to control the various entities.REQUIRED Determine which of the entities would constitute the economic entity. B 70% D 70% A 20% 60% 30% LL F C 50% E
A Ltd has a 60 per cent interest in B Ltd and B Ltd has an 80 per cent interest in C Ltd. Both acquisitions were made in 2016. During the financial year ended 30 June 2019, A Ltd paid a dividend of $300 000, B Ltd paid a dividend of $200 000 and C Ltd paid a dividend of $100000.What amount of
If an intermediate parent acquires a subsidiary and, in doing so, purchases goodwill, then how will any impairment of that goodwill be treated when working out the non-controlling interest in profits and retained earnings? LO 31.3
What is the difference in the consolidation accounting used for sequential and non-sequential acquisitions?LO 31.5
Where in the statement of financial position would indirect non-controlling interests be disclosed? LO 31.1
Why do we need to know which part of non-controlling interest is direct, and which part is indirect? LO 31.1
What is a direct equity interest and what is an indirect equity interest? LO 31.1
If an intermediate parent acquires a subsidiary and, in doing so, purchases goodwill, how will any impairment of that goodwill be treated when working out the non-controlling interest in profits and retained earnings?
On consolidation, post-acquisition movements in the reserves and retained earnings of a subsidiary will be included in the consolidated financial statements. However, they will need to be apportioned between the parent entity’s interest and the non-controlling interests. In undertaking this
On consolidation, when we eliminate the investment in the subsidiary against the pre-acquisition capital and reserves of the subsidiary, do we take account of only the direct ownership interests, or both the direct and indirect ownership interests? LO 31.2
Can an entity be considered a controlled entity (that is, a subsidiary) of another entity even if that other entity has no direct ownership interest? LO 31.1
What is an indirect ownership interest? LO 31.1
In an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey& Company (accessed in October 2015), the following three quotes appeared. You are to read each quote and explain in your own words what you believe the quote is saying, and
In this chapter it was stated:Because different teams of managers will have different views about corporate social responsibilities and associated accountability, they will inevitably provide different sets of ‘accounts’.Explain the meaning of the above quote. LO 30.1, 30.2
Assume that you are the chief financial officer of a company that provides printing services. The company supplies the customer with a choice of recycled or non-recycled paper for use in printing jobs. Chemicals used in the production printing process are disposed of in compliance with
Within this chapter, a quote from Brown (2009, p. 318) is provided, which states:Given the essentially contestable nature of sustainability, new accountings should not be aimed at producing incontrovertible accounts. Societal worth should be judged not in terms of the expert production of the
In the March 2001 edition of Australian CPA there was an article by Ian Nash and Adam Awty entitled ‘Just clowning around?’. The following is a quote from the article:Basically, environmental and social reporting is when the accounting profession eases into its Birkenstock sandals and becomes
Lehman (1995, p. 408) provides a very interesting definition of accounting—that it is ‘both the means for defending actions and the means for identifying which actions one must defend’. He also states that accounting information should ‘form part of a public account given by a firm to
On the ‘function’ of accounting, Gray (2013, p. 467) makes the following comment in relation to the role of accounting:A world in which the larger organisations disclosed such things as eco-balances and ecological footprints;in which the interactions in all relationships between organisations
As indicated in this chapter, Gray and Bebbington (1992, p. 6) provide the following opinion in relation to traditional financial accounting:there is something profoundly wrong about a system of measurement, a system that makes things visible and which guides corporate and national decisions, that
There are a number of reasons why the practice of financial accounting tends to ignore the social and environmental impacts caused by organisations. In this regard, explain:(i) how and why the way we define assets and expenses tends to exclude the recognition of social and environmental
How does the decision about ‘what’ and ‘to whom’ to report relate to considerations of ‘why’ report? LO 30.1, 30.2 30.8
Comment on the following statement, which appeared in The Australian (11 December 2000, p. 12): LO 30.1 Minimising tax within the framework of the law is not only normal corporate behaviour, it is responsible.Company directors have a duty to maximise profits and deliver the largest possible returns
On page 12 of the BHP Billiton annual report of 2010 it is stated that ‘Despite our best efforts and best intentions there remains a risk that health, safety, environmental and/or community incidents or accidents may occur that may negatively impact our reputation or licence to operate’.What
In relation to efforts to restrict accountability, Gray, Adams and Owen (2014, p. 325) note:Powerful people the world over appear to know just how transformative a full accountability and transparency would be—and work very hard to prevent it coming to fruition. It seems difficult to avoid this
The following extract comes from an article entitled ‘Big banks defend coal loans’, by Peter Kerr and Neil Chenoweth(Australian Financial Review, 23 November 2010, p. 6).Financial institutions providing $150 million in loans to Verve Energy for the company’s project to, with Inalco,
On page 3 of the BHP Billiton 2010 Sustainability Supplementary Information Report (which is a separate document to the Sustainability Report), the following statement is made under the heading ‘Our Stakeholders’:BHP Billiton defines key stakeholders as those who have an interest in what we do,
Why might it be argued that ‘environmental accounting’ is an oxymoron? LO 30.3, 30.9
Brown and Deegan (1999) provided results which showed that companies operating within industries that are subject to higher levels of media attention because of their environmental implications and impacts are more inclined to produce higher levels of environmental-performance disclosures within
Evaluate the following statement: ‘The annual report issued to the public is a very important document of the organisation from a strategic perspective’. LO 30.8
Deegan and Rankin (1996) found that, within a sample of companies that were prosecuted by the Environmental Protection Authorities of NSW and Victoria, the prosecuted companies provided a significantly greater amount of positive (or self-laudatory) environmental-performance information in the years
In this chapter it was stated:When we then review the IIRC Framework to see the primary purpose of integrated reporting we find(paragraph 1.7, p. 7):The primary purpose of an integrated report is to explain to providers of financial capital how an organization creates value over time.To many
On the website of the Carbon Disclosure Project (CDP) (accessed in January 2016), there is a quote from Lord Adair Turner, Chairman of UK Financial Services Authority, in which he states:The first step towards managing carbon emissions is to measure them because in business what gets measured gets
What is a social audit, and how might a social audit be undertaken? LO 30.12
What implications would a failure to provide balanced, unbiased social and environmental-performance data have for the perceived credibility of the other information provided in an annual report? LO 30.1, 30.8
What does PUMA’s Environmental Profit and Loss attempt to do? Do you think it does it successfully? LO 30.9, 30.10
What is climate change and what are some of the accounting issues associated with climate change? LO 30.12
Many expectations will be held by various stakeholder groups in relation to how an organisation should conduct its operations. Suggest how the expectations of different stakeholders, such as environmentalists, creditors, visitors to a national park, employees and businesses in neighbouring towns,
The following statement was made in the 2003 annual report of Westpac:Westpac’s aim is to manage its business in a way that produces positive outcomes for all stakeholders and maximises economic, social and environmental value simultaneously. In doing so, Westpac accepts that the responsibilities
(a) If a bank’s lending policies lead to foreclosures, then why would such foreclosures be considered to be‘externalities’ of the bank? LO 30.9(b) How might a bank report information about such foreclosures? LO 30.10
The following statement was made in the 1997 environmental report of WMC Ltd:WMC understands that its access to land and its public licence to operate depend to a considerable extent on informing and involving the communities in which it operates. The company recognises the need for local
What is personal social responsibility and what is the role of business educators in instilling the idea of personal social responsibility within students? LO 30.13
As used within this chapter, what does ‘full cost accounting’ involve? LO 30.10
What are some of the motivations that might drive corporate managers to voluntarily disclose social and environmental performance information? LO 30.8
Legitimacy Theory relies upon the theoretical notion of a ‘social contract’. What is a ‘social contract’ and why is it linked to Legitimacy Theory? LO 30.8
In relation to schemes aimed at reducing carbon emissions, briefly explain how a ‘cap-and-trade’ system operates.LO 30.11, 30.12, 30.13
What is the IPCC? LO 30.11
According to Legitimacy Theory, what are the implications for an organisation that fails to comply with the expectations held by society? LO 30.8
What are some of the central premises of Legitimacy Theory? LO 30.8
What is the Carbon Disclosure Project? LO 30.10, 30.11
What would you consider to be the social responsibilities of business? LO 30.1
What is the relationship between ‘accountability’ and ‘accounting’? LO 30.1
What is meant by the term ‘accountability’? LO 30.1
What is social-responsibility reporting? LO 30.2
Could you apply any of the theoretical perspectives discussed in this chapter (for example, Legitimacy Theory) to explain Uniqlo’s actions?
What do the developments discussed in the article imply about Uniqlo’s perspectives on the social responsibilities of business (responsibilities to whom and for what)? LO 30.1
Bazza Ltd, an Australian company, acquires all of the shares of Ching Ltd, a Hong Kong company, on 1 July 2018.Ching Ltd had a $nil balance in retained earnings as at the date of acquisition. The financial statements for Ching Ltd are presented below:Statement of profit or loss and other
On 1 July 2018 Sheila Ltd, an Australian company, acquires all of the issued shares in Felicity plc, a company incorporated in England. Exchange rates for the year ending 30 June 2019 are as follows:Statement of financial position for Chuck Inc. as at 30 June 2019 01 July 2018(US$000)30 June
Explain what rates should be used for the assets, liabilities and equity items of a foreign entity when translating the financial statements from a functional currency to a particular presentation currency. LO 29.4
What is the difference between the presentation currency and the functional currency and how would an organisation determine the appropriate presentation currency? LO 29.2, 29.3
Explain why foreign currency gains or losses in relation to the translation of the accounts of a foreign operation into a particular presentation currency are not treated as part of the period’s profit or loss, but instead are transferred to an equity account referred to as the foreign currency
Why do we need to translate the financial statements of a foreign operation? LO 29.1
You are the finance director of URS Ltd, an Australian manufacturer of colour televisions. Because of local regulations and high labour costs, URS Ltd has determined that it is more cost-effective to purchase some components utilised in the manufacturing of television sets from a Singapore company
ABC Pty Ltd purchases inventory from DEF plc, a listed British company. Relevant events and the spot rates at each date are shown as follows:Date Event Spot rate 15 March 2018 Order £300 000 of inventory A$1.00 = 37p 11 May 2018 Purchase takes place as inventory shipped to ABC Ltd (FOB) A$1.00 =
Explain the treatment adopted in respect of each of the above transactions.
You are the finance director of ME Ltd. The company specialises in importing classic foreign vehicles from overseas countries and then selling these vehicles cheaply on the open market. The company’s financial year ends on 30 June 2018. The company enters into the following transactions during
On 1 July 2018 Crescent Ltd, an Australian company, borrows US$15 million at a rate of 8 per cent from a US corporation, repayable in US dollars. The loan is for a period of five years. The loan is on more favourable terms than Crescent Ltd is able to obtain within Australia. Crescent Ltd trades

Showing 1 - 100 of 1556

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last

Financial Accounting 8th Edition Craig Deegan - Solutions

Step by Step Answers