You will need to use Excel or Word to answer this question and then upload your...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You will need to use Excel or Word to answer this question and then upload your file. Please ensure that you leave yourself enough time to upload your file responses. It is recommended that you upload your file as you complete a file response question PART A - Accounting for investments in associates and joint ventures Colombia Ltd has a 40% interest in an associate, Bogota Ltd, in which it invested $780,000 on 1 July 2020. The equity of Bogota Ltd at the acquisition date was: Share capital Retained earnings $1,400,000 520,000 All the identifiable assets and liabilities of Bogota Ltd were recorded at amounts equal to their fair values, except for: Carrying amount Fair value Remaining useful life Plant (cost $770,000) $462,000 $465,000 6 years Profits, income tax expense and dividends for the years ended 30 June 2021, 2022 and 2023 were as follows: Profit before tax 2021 2022 $31,000 Income tax expense $9,000 Dividends paid $12,000 ($7,000) $7,000 2023 $47,000 $12,000 Bogota Ltd does not prepare consolidated financial statements. The following independent transactions have occurred between the two entities: Bogota Ltd does not prepare consolidated financial statements. The following independent transactions have occurred between the two entities: •In May 2021, Bogota Ltd sold inventory to Colombia Ltd for $15,000. This inventory had previously cost Bogota Ltd $12,000 and remains unsold by Colombia Ltd at the end of the period. This inventory was all sold in July 2021. • On 1 July 2021, Colombia Ltd sold machinery to Bogota Ltd, at a gain of $4,000. The remaining useful life of the asset is 4 years. In February 2022, Colombia Ltd sold inventory to Bogota Ltd at a before-tax profit of $6,000. Half of this was sold by Bogota Ltd before 30 June 2022. • In June 2023 Colombia Ltd had invoiced Bogota Ltd $17,000 for consulting work completed in May. Bogota Ltd had paid the invoice in full by the end of June 2023. Required: Prepare the acquisition analysis and journal entries of Colombia Ltd's investment in its associate Bogota Ltd for the years ended 30 June 2020 and 30 June 2021. Show all workings. (9 marks) PART B - Foreign currency transactions Ajax Ltd, an Australian company, purchased inventory from Jiff Ltd, US company. The following information is relevant to a recent acquisition of inventory for US$300,000 pursuant to a contract with terms including FOB shipping*. Date 08-06-2023 Event Inventory shipped Inventory delivered Exchange rate AUD$1 = USD 0.70 AUD$1 = USD 0.75 30-06-2023 AUD$1 = USD 0.69 20-08-2023 Cash payment of US$300,000 to Jiff Ltd AUD$1 = USD 0.66 24-06-2023 End of reporting period *FOB shipping is when ownership passes to the purchaser upon goods being loaded onto the shipping vessel Required: In accordance with AASB 121, prepare all of the entries of Ajax Ltd that relate to the foreign currency purchase of inventory. Show all workings and round to the nearest dollar. (6 marks) You will need to use Excel or Word to answer this question and then upload your file. Please ensure that you leave yourself enough time to upload your file responses. It is recommended that you upload your file as you complete a file response question PART A - Accounting for investments in associates and joint ventures Colombia Ltd has a 40% interest in an associate, Bogota Ltd, in which it invested $780,000 on 1 July 2020. The equity of Bogota Ltd at the acquisition date was: Share capital Retained earnings $1,400,000 520,000 All the identifiable assets and liabilities of Bogota Ltd were recorded at amounts equal to their fair values, except for: Carrying amount Fair value Remaining useful life Plant (cost $770,000) $462,000 $465,000 6 years Profits, income tax expense and dividends for the years ended 30 June 2021, 2022 and 2023 were as follows: Profit before tax 2021 2022 $31,000 Income tax expense $9,000 Dividends paid $12,000 ($7,000) $7,000 2023 $47,000 $12,000 Bogota Ltd does not prepare consolidated financial statements. The following independent transactions have occurred between the two entities: Bogota Ltd does not prepare consolidated financial statements. The following independent transactions have occurred between the two entities: •In May 2021, Bogota Ltd sold inventory to Colombia Ltd for $15,000. This inventory had previously cost Bogota Ltd $12,000 and remains unsold by Colombia Ltd at the end of the period. This inventory was all sold in July 2021. • On 1 July 2021, Colombia Ltd sold machinery to Bogota Ltd, at a gain of $4,000. The remaining useful life of the asset is 4 years. In February 2022, Colombia Ltd sold inventory to Bogota Ltd at a before-tax profit of $6,000. Half of this was sold by Bogota Ltd before 30 June 2022. • In June 2023 Colombia Ltd had invoiced Bogota Ltd $17,000 for consulting work completed in May. Bogota Ltd had paid the invoice in full by the end of June 2023. Required: Prepare the acquisition analysis and journal entries of Colombia Ltd's investment in its associate Bogota Ltd for the years ended 30 June 2020 and 30 June 2021. Show all workings. (9 marks) PART B - Foreign currency transactions Ajax Ltd, an Australian company, purchased inventory from Jiff Ltd, US company. The following information is relevant to a recent acquisition of inventory for US$300,000 pursuant to a contract with terms including FOB shipping*. Date 08-06-2023 Event Inventory shipped Inventory delivered Exchange rate AUD$1 = USD 0.70 AUD$1 = USD 0.75 30-06-2023 AUD$1 = USD 0.69 20-08-2023 Cash payment of US$300,000 to Jiff Ltd AUD$1 = USD 0.66 24-06-2023 End of reporting period *FOB shipping is when ownership passes to the purchaser upon goods being loaded onto the shipping vessel Required: In accordance with AASB 121, prepare all of the entries of Ajax Ltd that relate to the foreign currency purchase of inventory. Show all workings and round to the nearest dollar. (6 marks)
Expert Answer:
Answer rating: 100% (QA)
PART A Accounting for investments in associates and joint ventures Acquisition analysis Cost of 40 interest in Bogota Ltd 780000Equity of Bogota Ltd a... View the full answer
Related Book For
Fundamentals of Financial Accounting
ISBN: 978-0078025914
5th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby
Posted Date:
Students also viewed these finance questions
-
In Problems 4358, (a) Find the vertex and the axis of symmetry of each quadratic function, and determine whether the graph is concave up or concave down. (b) Find the y-intercept and the...
-
Is there a difference between an outsourcing service provider and a partner? Explain fully.
-
If you borrow $800 for 6 months at 6% annual simple interest, how much must you repay at the end of the 6 months?
-
1. Working in small groups, complete the Pay Raise Worksheet. 2. After the class reconvenes, group spokespersons present group findings. Pay Raise Worksheet April Knepper is the new supervisor of an...
-
During the month of October 20--, The Pink Petal flower shop engaged in the following transactions: Oct. 1 Sold merchandise on account to Elizabeth Shoemaker, $1,000, plus tax of $50. Sale No. 222. 2...
-
Establishing the Value of Life a. Explain how the value of life can be estimated by comparing wage differentials across different occupations or jobs. b. What might be the problem with a calculation...
-
Tablet Company is looking to set up a wholly owned subsidiary firm, which will sell cheap, rugged computers in developing countries. The debt schedule for the firm is predetermined and shown below...
-
HAPPY SCAPE ADVERTISING Michael Mathers, Director at Happy scape Dianne Johnson, Finance officer at Happy scape Happy scape is a small advertising- printing business located in Cascade Peak. Happy...
-
Alpha Ltd offers an audio-visual equipment hire service. The online sales process is described below. The customer sends an equipment hire request form containing their name, email address, phone...
-
Bob's Warehouse is considering the following projects: Project X Y Z Beta 1.6 0.8 0.9 IRR(actual project return) 19.8% 11% 16% Bob's Warehouse is an all-equity firm. The T-bill rate is 2.5%, and the...
-
I have seen a SELL in GBPUSD. If I am true I will lose my deposit. Because Please tell me if I am right or wrong after seen these screenshots. What is your suggestion? If I stay without doing...
-
Once you have selected a company, use their 2019 or 2020 annual financial statements to determine whether you would invest in this company or not. (Financial statements can be found by searching...
-
makea 100,000-element array of randomintegers named data1 and make two additional copies of the array (data2 and data3) bycalling method copy on the original array. Next, use %timeit as follows to...
-
n For n e NU {0} and p (0, 1), we define F(k) = ()p*(1 p)"-k. k n (1) Compute > F(k) k=1 n (2) Compute kF(k) k=1 n (3) Compute kF(k) k=1
-
When an electric field is applied to a shallow bath of vegetable oil, why do tiny bits of thread floating in the oil align with the field like compasses in a magnetic field?
-
As a result of a slowdown in operations, Mercantile Stores is offering to employees who have been terminated a severance package of $ 100,000 cash; another $ 100,000 to be paid in one year; and an...
-
You plan to retire in 20 years. Use present value tables to calculate whether it is better for you to save $25,000 a year for the last 10 years before retirement or $15,000 for each of the 20 years....
-
All else equal, if VFC incurs a 3 percent fee to factor $10,000 of its Accounts Receivable, its Net Income will a. Increase by $10,000. b. Increase by $9,700. c. Increase by $300. d. Decrease by $300.
-
Which of Yellows statements regarding the factors affecting the selection of a trading strategy is correct? A. Statement 1 B. Statement 2 C. Statement 3 Robert Harding is a portfolio manager at...
-
Given the parameters for the benchmark given by Harding, Yellow should recommend a benchmark that is based on the: A. arrival price. B. time-weighted average price. C. volume-weighted average price....
-
To fill the remaining portion of the ABC order, Yellow is using: A. an arrival price trading strategy. B. a TWAP participation strategy. C. a VWAP participation strategy. Robert Harding is a...
Study smarter with the SolutionInn App