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HA2032 Corporate Takeover Decision Making and Effects on Consolidation Accounting Assessment Answer

Assessment Details and Submission Guidelines
TrimesterT1 2019
Unit CodeHA2032
Unit TitleCorporate and Financial Accounting
Assessment TypeIndividual Assignment
Assessment TitleCorporate Takeover Decision Making and the Effects on Consolidation Accounting
Purpose of the assessment (with ULO Mapping)
Students are required to perform independent research of the key topics by reviewing the applicable accounting standards and other guidance documents available on the websites of the professional accounting bodies.
Learning Outcomes:
  1. Explain the legislative requirements in company formation and how to account for equity, capital and distributions;
  2. Explain the methods of raising company funds, that is, using share capital or debt, and how to account for each;
  3. Demonstrate the ability to prepare consolidated financial statements and how the data is collected, adjusted and interpreted.
Weight20% of the total assessments
Total Marks20
Word limit2,500 words
Submission Guidelines
  • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page.
  • The assignment must be in MS Word format, single spacing, 12-pt Arial font and 2cm margins on all four sides of your page with appropriate section headings and page numbers.
  • Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.


Purpose:

HA2032 Assignment Specifications

This assignment aims to reinforce and extend students’ knowledge and understanding of key topics in this course (HA2032) including: business combinations, the corporate group, acquisition methods, intra-group transactions and non-controlling interests through independent research and detailed use of the relevant accounting standards.

Assignment Questions Part A (5 marks)

You are a non-executive director attending a regular board meeting for JKY Ltd. At the top of the agenda is the proposed takeover of a smaller company called FAB Ltd, which is an ASX listed entity operating in the same industry. JKY Ltd is considering which acquisition strategy should be used. One director is arguing that the direct “purchase / acquisition method” is the best option, whilst another director is proposing a longer term strategy, which involves acquiring the shares of FAB Ltd by first acquiring “significant influence” over FAB Ltd. Given your experience as a qualified CPA, the Chairman has asked you for your opinion in writing based on your extensive knowledge of accounting for business combinations.

With reference to AASB 3: Business Combinations, AASB 128 Investments in Associates and Joint Ventures and AASB 10 Consolidated Financial Statements, prepare a detailed response to the Chairman and the board, which outlines the key differences in methodology between Consolidation Accounting and Equity Accounting. Provide worked examples within your response which fully explain the two options.

Part B (5 marks)

At the same board meeting the CFO reported that a partially owned subsidiary provided professional services and sold inventory to the parent company JKY Ltd at a profit. The CFO is seeking clarification from the board in relation to whether profit should be deducted from the subsidiary’s reported profit for the sale of inventory and for providing the professional services to the parent entity. Secondly, how will this affect the non-controlling Interest (NCI) calculation in the subsidiary’s annual profit?

With reference to AASB 127 Consolidated and Separate Financial Statements and AASB 10 Consolidated Financial Statements and the issues raised in Part B, discuss the key principles and provide examples which explain how intra-group transactions should be treated.

Part C (7.5 marks)

You are now finalising the consolidated financial statements in the annual report for JKY Ltd as at 30 June 20X8. AASB 127 requires that the NCI is reported as a separate item of owner’s equity. As part of the preparation, you must also consider the allocation of other comprehensive profit to the NCI. The Financial Accountant responsible for the subsidiary has already informed you that the assets of the subsidiary were recorded at historic cost at the control date.

What changes may be required to ensure that the consolidated financial statements are correctly stated? How would any required changes affect the disclosure requirements in the annual report? With reference to AASB 127 Consolidated and Separate Financial Statements and AASB 101 Presentation of Financial Statements, discuss the effects of the NCI disclosure requirement as a separate item in the consolidation process.

The Assignment Structure should include the following details:

  1. Holmes Institute Assignment Cover Sheet – Student Name, Student No., Session No. is required.
  2. Executive Summary – 100 words (max.) – A brief and concise paragraph which states the main points and summarises the main conclusions. No in-text citation or direct quoting is required.
  3. Table of Contents Page – 50- 100 words – Note - this will be excluded from the total word count.
  4. Introduction - 100 words (max.) – A concise paragraph which introduces the main themes of each section in Parts A – C, coherently and logically.
  5. Part A Response - 500 – 600 words – This section should address both Consolidation and Equity Accounting equally with examples to explain the key concepts and differences.
  6. Part B Response - 500 – 600 words – This section should focus on Intra-group transactions and discuss how profit is allocated.
  7. Part C Response - 850 – 900 words – This section should focus on the disclosure requirements of the NCI and explore the issues which arise from the consolidation process.
  8. Conclusion – 100 words (max.) – This should be a brief and concise paragraph which reiterates the main points from each section in a coherent and logical manner.
  9. Reference List – As required – Note - this will be excluded from the total word count. This should include the relevant Accounting Standards as well as relevant selected articles from Academic journals. Students should use “Proquest” or “Google Scholar” as a starting point with their research. Students can also refer to the CPA website  www.cpaaustralia.com.au  for more relevant information and additional content.

Answer

Corporate and Financial Accounting

Executive Summary

Through this report, we would e evaluating and analyzing the key corporate regulations in connection to the determining along with the disclosing financial statement existing within the firm. This would also be an important part as it would be able to redefine and also be able to evaluate with the accounting standard that can connect with the respective managers which would be able to evaluate with the accounting techniques. With this report, we would further be evaluating how there can be different aspects and also understanding the key interventions are subjective to the identification and the interpretation to the given techniques that could help to evaluate the owner’s equity with the given four different organizations and connecting to estimate with the position of debt and equity. 

Introduction

With this report, we would be understanding the overall identification and in-depth analysis that can help to examine with the corporate regulations along with the key actions that can connect to disclosing in terms of the financial statements that can be determined. It is also important to evaluate how there can be an accounting standard along with the interpretation to the setting which would help to reveal  and understand the key determination in relation to the equity valuation along with drawing on the owner that has been idealized and it can be formulated with the ideas of the financial position to the given time period (Brown, 2018). To determine how the ideas are gathered along with the parallel sustaining and interpretation to the analysis and the actions it would be focused on the regeneration to the key perspectives with the applied given debt and equity existing in the firm, It would help to maintain  and build with the specification connected to the business through which they can also be operating. 

Corporate regulations

To interpret and also to evaluate how there can be regulations that can be connected to the accounting structure existing with the given firm have it would help to identify with the given policies that would help to regulate the business (Kiprotich, 2018). This would be the prime method that can help to intervene and also connect to also maintain efficiency with the given business conditions and to also be able to make it a viable operational efficiency existing with the given firm. this would be attributed to the comprehending and correlating with the judgment which would help to examine with the intensifying and inbuilt the perception that can help to relate to the direct techniques that can be entitled to determine how there can be directions which would help to maintain and made. As per this directions it would also help to accustom and be able to regulate with the empowerment techniques that can also define with the differential situation that would be connected to the corporate governance along with examining at the appropriate regulations, It can  also be able to facilitate and connected to the disclosing and attributed to the financial statements. From the given analysis of the statements, it would also be related to the judgment prevailing that would be dependent on the principles which would be attributed to the sustaining the actions in connection to the predominant characteristics. To understand how there can be a corporate direction it would also be detailed and oriented with the completion to the general money related bookkeeping process along with the progressive approach to exhibit with the given the data wilfully. It would also be connected and interpret to the commencement of the existing money that can help to evaluate to the announcing with the beneficial and a correlation to the association with the given execution along with the organization that would help to examine with the uncovered association to the investors and to be attributed to the partners which would help to create to the usage of the assets that would help to examine with the various administrations. To even evaluate with the appraisal, it would also be connected to the money related bookkeeping that would help too examine how there can be attributed to being produced and also include the exercises that can be channeled with the firm and understand how the individual articulation would be able to relate and connect to the benefit, wage, misfortune, and also to interpret with the given resource along with the risk position. It would be connected to the assembled relation to the revelation and connected to the qualities which can be examined with the estimating every one in terms of the elements, and it would be connected to the significance with the given viability that can attribute to the criticalness depending on the assessment along with the closeness that would examine the agreement with the given minor departure connected to the individual components. 

The setting of Accounting Standard

Through the given identification along with the understanding of the standards, it would be applied to the respective business entity. It would be examined as to how there can be an efficient movement in connection to the maintaining of the related to the financial accounts with the given assistance in terms of the identifying with the given techniques that can be operated to the related business progressions. This is evident during the financial statements with the given firm. t would be examined through the financial reporting along with the key standards required to the assessment in connection to the basic requirements examined in the firm. This would be significant to understand with the given actual accounting standards which would be interpreted how there can be concerning activities with the personifying along with holding the instances with the given deliverables existing to the directions possessing and also including with the application required to be applied (Kaplan, 2018). To understand how there can be standard thoughts to examine with the bookkeeping structures to be kept up. There is also a fine balance of the principles, required to the general procedure that is dependent on the evaluating and interpreted to the monetary forecast procured with the given firm. Connected to the repayment of issuing along with the examining of the diverse estimation related to the bookkeeping heads with the given accounting report and depending on the salary explanation that can go within the given announcement of the whole income. This would be connected to the various evaluation from that would relate to the mandates and also understand how it would be connected to the execution building with the given systems which would help to address with the stretch part of the benefit along with ensuring a further risk. It would also be examining how theory can be speaking and interpreting the assessment procedures that would be difficult to manage along with the significant impact considering with the organization and it would outline the coordinating and also interpreting with the component establishing with the nations and also be able to forecast with the keeping of bookkeeping. From this, it would be interpreted how there can be observations related to the judgment rethinking and it would be connected to the comparably be liberated that can also allow reviewing the recognizable proof with the connected successful judgment along with the principles per the sheets. 

Owners Equity

To interpret the equity value that would be connected to the respective firm that can connect and denote with the aspects of compromising with aligning to the better attitudes that would help to examine with the firm. It also includes the significance of the potential move that would also be successive values that can also include the enlarge with the business operations. It would also be evaluating how the equity value that would be dependent on the determined along with the performance examining the firm along with the cumulated along with the indication that can indicate the performance which would help to examine with the inhibit proper end result. This actions can also be included to be part of including the organization, and it would change to the equity valuation of the firm (Lempert 2016).  It would help to also include the powers to enhance with the owner’s equity that can examine to the firm that can also interpret to the maintaining along with taking steps to mitigate with the risk that has also been extensively been appointed to directives includes the resemblance that would be purely focused on the focus that can also examine how there can be potential judgment that can connect to the working principle existing in the given firm that would be evaluated. It would also include the assessments and also be examined with the controlling with the evidence along with the process of the strengthening along with the equity position that would help to empower. It is also a  process that would help to build to the different techniques in determining with the evaluation which can help to make and also formulate with the given perspectives that can control entire objectives indicated to the evaluation techniques (Kiprotich, 2016). There can also be examining with the company  that would be able to assess through the process of such instances that can connect to the owner equity that has been dealt along with the adjustments comprehending that would be connected to the overall security in connection to the financial prediction with the organization that can help to attain the proper stability. There would be also a related consequence along with examining with the directives that would be connected to the four individual companies that can also examine and be able to operate within the Australian stock exchange which would also be evaluated to the propensity of the intervention judging that can examine with the equity valuation. Form the onsite evaluation to the chosen company of the identified company called as an FHL Ltd, Woolworth Holdings Ltd and with the inclusion of the Metcash Ltd, there would also be related activities of Australian Post. It would also be examined through the procedure of the attributable figure that would help to the given judgment along with the examining the respective holders that would be connected to the equity along with the interpretation to the parent organization that would be connected to the valuation of equity with the interpreted figure of 110569 dollars in million (Miller, 2016). It would also be included to the recovered approach to the adjustments that can connect to the values that can connect to the overall sharing capital along with the inducements that would deliver per the 23270 dollars given to the million. This would also be examined to the overall that can examine to the retained values along with also interpreting the earnings that would also be valued and also be included to the 84515 dollar in million along with the possibility of the foreign currency that would also be connected to the adjusted valuation  such as the -295 dollar in million. It is also examined how there would be a cash flow along with the process of the reserves along with examining to the hedge capital that would be connected and is examined as a zero value. It would also be examined to the total valuation that can be interpreted to be justified with the 107490 dollars in million along with the different interest which would be interpreted to be as part the non-controllable and it would be valued at a 3079 dollar in million within the given period of 2014.  This would also be examined as to how there can be connected numbers to the attributable figure that would be evaluated to the judgment in connection to the respective holders along with examining to the equity that can have a parent organization process that would consider the valuation of equity at an estimated amount of the 109916 dollars in million. it would also be recovered and examined to be as per the adjustments comprising along with the values with the given overall sharing capital along with the connected inducements which would belong to the adherence of the 23608 dollars in the million (Rose, 2018). Consecutively it would also be connected to bring out an overall retained values along with the potential earnings that would be valued in terms of the 83276 dollars to the million along with the overall foreign currency that can connect and also be valuation per the -234 dollar in million. This is also examined from the given cash flow with the potential reserves and the given hedge capital that would be related to the zero value. Hence form the given total valuation it would be governed with the 107490 dollars in million along with the different interest connected to the non-controllable in nature that would also be the valuation of 786 dollars in million.  It would also connect and result to the judgement that would be applied to the company named as Woolworth Holdings Ltd that would be purely to the assessment in terms of the respective holders connecting to the equity with the parent organization that would be maintained along with holding the valuation of equity given with the 11132 dollar in million. It also has to be recovered along with the key adjustments connected to the values with the overall sharing capital along with the inducements that can relate to the 5064.9 dollars in million.  It would be retained values along with the earnings range to 5830.1 dollars in million foreign currency valuation of -155.9 dollar in million. Here the cash flow with the reserves would be hedge capital is zero. The total valuation is at  107436 dollars in million valuations to the 540 dollars in million connected to the adjustments during 2015. Ensured with the respective holders of equity includes the parent organization related to the valuation of equity connected to the 8781.9 dollars in million examined in  Woolworth Holdings Ltd during 2016. Conquered from the overall sharing capital along with the inducement to the 9876.1 dollars in million. Having an adjustable 5719.00 dollar in million and having overall shares to the valuation of -104.00 dollar in million. Per the cash flow reserved to the hedge capital connected to the 113.8 dollars in million. Includes the total valuation with the 9876.1 dollars in million that is connected to the different interest has a non-controllable in nature along with the key valuation of 350.1 dollars in million in  2017 (Sumit, 2017).

The other Australian Post has holders of equity with the parent organization equity of  2117.9 dollars in million and the overall sharing capital along with the inducements connect to the adheres 1713.0 dollars in million. Evaluated to the retained values along with the earnings representing to the 400.00 dollars in million along with the overall foreign currency related to the 4.9 dollars in million in  2017 (Sadiq, 2019). The administering owner's equity was estated of the Metcash Ltd, 1637.4 dollar in million and reserves to be negative and have negative earnings having retention at -87.7 dollar million. It would be an equity contribution with the value of 1719.3 dollars million in 2017. and compare to 2016 1369.1 dollars in million. This would form non-controllable factors in 8.3 dollars in million owed to the parent is 1360.8 dollar in million. Evaluated at -5.6 dollars in million having a variance of 1626 dollar.   

There would be reviewing methods and it would include the evaluators that can connect to the correct qualities that would also be related to the end goal that can contribute to the inside checking tasks related to the discernment with the assessment along with the noteworthiness that would be dependent on the incentive that would hold different viewpoints (Brown, 2018). To interpret how there can be a mixed reaction it would also be able to hold a legacy produced and also be able to examine to the supported systems which can contribute to the guarantee in terms of the measures depending on the various structure. It would be significant to review and access the current attributes connected to the activities fathoming with the given valuations orchestrating and also interpreting with the diverse budgetary articulations.

Conclusion

This would also be able to hold and relate to the inspector that may not determine and also connect to the issues which have evaluated how there can be monetary detailing along with the desired norms (Brown, 2018). Contributing to the administrators and also connecting to the association that would be dependent on the supporting with the surveying assessmentwould remain intact to the monetary outcomes depending on the key challenges and with the money related and examining the benchmarks of bookkeeping. There would also be related data acquainted and existing to the enrolled proclamations considering the anticipated aspects of the noteworthy pay articulations along with the examining the money related position with the given firm. As an approach to the obliging movements, it would be examined to the exercises along with the supervisors in connection to the assessment of the data that would be significant and assessing to the movements required for the exercises spoken along with the key assessment depending on the procedures with the money related assessment. 

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