the acc exercise has include topic 1-4

Week 2 exercise sample
Week 3 exercise sample
week 4 sample exercise
Week 5 sample exercise
Solution
Question 1
BlueWhale Ltd with its diverse business operations has identified that its retail division is a
single cash-generating unit (CGU). As at 30 June 2020, the carrying amounts of the CGU’s assets
are detailed below:
Building
Accm. Depreciation – building
Vehicle
Accm. Depreciation – vehicle
Brand name
Inventory
Goodwill
180
(80)
100
(40)
40
50
10
An independent valuer estimates the recoverable amount of the building to be $90. At 30 June
2020, based on expert prediction on market conditions and the CGU’s past performance, the
management concludes that the fair value of the CGU is around $200. Costs directly associated
with the CGU disposal is estimated at $10. The present value of net cash inflows expected to
be generated from the CGU is estimated to be $200.
For the fiscal year ending 30 June 2021, the depreciation charges on building and vehicle were
$9 and $7, respectively. If building and vehicle had not been impaired the depreciation
charges would have been $11 and $10, respectively.
At 30 June 2021, the recoverable amount of the CGU was calculated to be $13 greater than the
carrying amount of the assets of the CGU. As a result, the company recognised a reversal of the
previous year’s impairment loss.
Required:
(a)
Provide the journal entries for the company according to AASB 136 Impairment of
Assets as at 30 June 2020. Workings are not required.
(b)
Provide the journal entries for the company at 30 June 2021 regarding the reversal of
previous impairment loss. If necessary, round to 2 decimal place.
(
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Your answers:
Provide your answers from here. Workings are not required.
(a)
Journal entry
DR
/CR
Amount
Amount
Journal entry
DR
/CR
Amount
Amount
(b)
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Question 2
Yellow Ltd’s income statement for the year ended 30 June 2020 includes the income and
expense items shown below:
Profit before tax
Government grant (exempt from tax)
Fines and penalties expense
Bad debts expense
Depreciation expense – Plant
Rent expense
Annual leave expense
$
42,000
6,500
2,100
6,200
24,000
8,500
9,400
The statement of financial position of Yellow Ltd as at 30 June 2020 and 2019
included the following assets and liabilities:
2020
2019
Assets
Receivables
$
156,000
147,500
Allowance for doubtful debts
(6,800)
(5,200)
Prepaid rent
3,400
5,600
Plant
240,000
240,000
Accumulated depreciation-plant
(134,400) (110,400)
Deferred tax asset
?
4,470
Liabilities
Provision for annual leave
14,100
9,700
Deferred tax liability
?
6,500
The tax deduction for plant depreciation was $28,800. Accumulated depreciation for
plant at 30 June 2020 for taxation purposes was $161,280. The corporate tax rate is 30%.
Required:
Prepare the complete current tax worksheet for the year ended 30 June 2020 and the journal
entries to record current tax. Workings (or narrations) are not required.
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Your answers:
Provide your answers from here. Workings are not required.
Current Tax Worksheet
Accounting profit before income tax
Add:
Deduct:
Taxable profit (loss)
Journal entry:
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Question 3
Net assets information from the statement of financial position of Xenox Ltd as at 30 June 2019 and
30 June 2018 are as follows:
XENOX Ltd
Statement of financial position
2019
Assets
Cash
Inventory
Accounts receivable
Allowance for doubtful debts
Plant
Accumulated depreciation – Plant
Machinery
Accumulated depreciation – Machinery
Goodwill (net)
Deferred tax asset
Liabilities
Payables
Provision for long service leave
Provision for warranty
Deferred tax liability
$
42,000
132,000
97,000
(40,000)
300,000
(120,000)
600,000
(180,000)
20,000
?
47,000
103,000
57,000
?
2018
$
27,000
117,000
76,000
(32,000)
300,000
(90,000)
600,000
(120,000)
15,000
49,000
32,000
90,000
47,000
30,000
Additional information:
– The carrying amount of Plant at 30 June 2019 for tax purposes was 150,000.
– Accumulated depreciation on Machinery at 30 June 2019 for tax purposes was 300,000.
– Goodwill is not deductible for tax purposes.
– The corporate tax rate is 30%.
Required:
Complete the deferred tax worksheet (below) and provide the journal entry to record the
adjustment to the deferred tax asset and the deferred tax liability accounts for the year ended
30 June 2019. Do not offset the deferred tax accounts.
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Your answers:
Provide your answers from here. Workings are not required.
Deferred Tax Worksheet
Carrying
Amount
Tax Base
Taxable
Temporary
Differences
Deductible
Temporary
Differences
Assets
Liabilities
Total temporary differences
Excluded differences
Net temporary differences
Deferred tax liability
Deferred tax asset
Beginning balances
Adjustments
Increase (decrease) for the year
Journal entry:
Account
Dr
Cr
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Question 4
In the 2020 fiscal year, Company A recorded $10 of bad-debt expense (as well as the same amount
of allowance for bad debt) for its account receivable. There was no bad-debt written-off in the same
year. The corporate tax rate is 30%.
Required: Assuming all else equal, discuss the effect of the recognition of $10 bad-debt expense on
the following two tax-related accounts:
• Current tax liability
• Deferred tax asset (or deferred tax liability)
Your answers:
Provide your answers from here.
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