This Assignment is worth 30% of the total assessment for this unit. This assignment will be marked out of 100 and scaled down to being out of 30. The assignment has 3 questions.
QUESTION 1 (25 marks)
Bill Ltd profit before income tax for the year ended 30 June 2021 is $500,000 including the following expenses
|Depriciation of plant||$35,000|
|Impairment of Goodwill||13,000|
|Depreciation of buildings||5,000|
The statements of financial position of the company at 30 June 2020 and 2021 showed the following information:
|Allowance for doubtful debts||(20,000)||(40,000)|
|Acc Depreciation- Plant||(70,000)||(105,000)|
|Acc Depreciation- Buildings||(25,000)||(30,000)|
|Deferred tax asset||28,000||?|
For year ended 30 June 2020 and previous years33% For year ended 30 June 202125%
QUESTION 2 (25 marks)
Sam Ltd enters into a 5 years lease non-cancellable agreement with West Ltd on 1st July 2020. The lease is for an item of truck that has a fair value of $476912 at the inception of the lease. Sam Ltd’s incremental borrowing rate is 9%
The truck is expected to have an economic life of 6 years, after which it will have an expected residual salvage value of $50,000. There is a purchase option that Sam Ltd will be able to exercise at the end of 5 year for $70,000. The rate of interest implicit in the lease is quoted as being 8%.
There are to be 5 annual payments of $120,000 being made at the end of each year along with an up- front payment of $30,000. The annual lease payment includes $20,000 representing payment to the lessor for the insurance and maintenance of the truck.
Berry Ltd acquired 70% of the shares of James Ltd on 1st July 2016 for $540,000. The James Ltd equity consisted of the following items at acquisition date
|Asset revalution reserve||20,000|
All identifiable assets and liabilities of James Ltd are recorded at fair value at this date except for
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