HBC 221/N Accounting

Semester 2, 2011

Assignment B
THIS ASSIGNMENT IS TO BE UNDERTAKEN IN GROUPS OF Two (2) or Three (3)
The Assignment for Semester 2, 2011 carries 10% of the total marks in this subject, and its importance is signified by the fact that students cannot pass HBC221/N Financial Accounting without having successfully attempted the assignment.
Students who have not submitted this assignment will have a DEFERRED result posted at the end of the semester and this mark will only be amended upon completion of the assignment.

The Questions to be attempted are attached

Assignment Weighting = 10%

DUE DATE: Friday 21st October 2011

1 Mark will be deducted every day the Assignment is late
NOTE:
o o o o THIS IS A GROUP ASSIGNMENT (Group size is 2-3 students) This Assignment accounts for 10% of the marks in this Unit. The Assignment should be submitted as a hard copy. No soft copies are required to be submitted. Students are advised to comply with AASB standards and the requirements in the Australian Corporations Legislation when determining the structure and presentation requirements for the financial reports in preparing the financial statements for this assignment.

HBC221/N

Semester 2, 2011

Question 1
QUESTION: Helena Ltd and Selma Ltd

(5 marks)

On 1st July 20X7, Helena Ltd acquired 85% of the share capital (ex div) of Selma Ltd for $750,000. At this date, the Selma Ltds general ledger included the following balances: Share Capital (400,000 shares) $400,000 General Reserve $120,000 Retained profits $185,000 Dividends payable $80,000 (The dividend payable on the date of acquisition was paid in August 20X7) All of the identifiable net assets of Selma Ltd were recorded at fair value except for the following: Fair Value Carrying Amount Patent $50,000 $120,000 (Intangibles) On the 1st March 20X8, Selma Ltd paid a further cash dividend of $40,000 that was appropriated from pre-acquisition profits. This amount was recognised as revenue, but the Financial Controller of Helena Ltd felt that the dividend had impaired the value of the companys investment in Selma Ltd and subsequently recorded an impairment of the Investment in Selma Account for the amount received as a dividends.

Additional Information for the current financial year ended 30th June 20X9
a. Both companies recognise and accrue dividends before receipt of cash. On June 30, 20X9, Selma Ltd declared a dividend of $120,000 (from postacquisition profits). This is to be paid in August 20X9. In April 20X8, Helena Ltd sold stock to Selma Ltd for $80,000. Helenas gross profit margin on this transaction was 50% of the selling price. As at June 30, 20X8, 40% of this stock had been sold to external parties and the remainder was sold back to Helena Ltd for $75,000 in the 20X8 / 20X9 financial year During the current year, intercompany sales of inventory from Selma Ltd to Helena Ltd amounted to $450,000. This inventory had previously cost Selma Ltd $600,000 to produce, and 50% remains on hand in the accounts of Helena Ltd on 30 June 20X9. On 30 January 20X8, Helena Ltd purchased debentures issued by Selma Ltd on the open market. These debentures where purchased at nominal value for $100,000. Interest on the debentures is 8% per annum and is paid once a year in December. Interest has been accrued for 30 June 20X9. On 1 January 20X8, Selma Ltd sold plant to Helena Ltd for $250,000. The plant had originally cost Selma Ltd $150,500 and the accumulated depreciation at the date of the sale was $37,500. The plant is assessed as having a remaining useful life of five years.

b.

c.

d.

e.

Assignment 2

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Semester 2, 2011

f.

During the year Selma Ltd charged Helena Ltd $66,250 in management fees. Of this amount, $15,000 worth of services is yet to be paid by Helena Ltd. After an impairment test on goodwill, management ascertains that goodwill acquired was impaired by $15,000 in the current year. Previous impairments of goodwill amount to $12,250 The company income tax rate is 30%.

g.

h.

The financial statements of Helena Ltd and Selma Ltd at 30 June, 20X9 are given below: Statement of Comprehensive Income
Hades Ltd $ Sales Other Revenue Cost of Goods Sold Gross Profit Less Operating Expenses Selling Expenses Administrative Expenses Other Expenses Total Operating Expenses Profit Before Interest and Tax Net Interest Expense (revenue less expense) Profit Before Income Tax Income Tax Expense Profit After Income Tax Retained Profits as at July 1, 20X8 Amount Available for Appropriation Transfer to General Reserve Interim Dividends Paid Dividends Declared Retained Profits as at June 30, 20X9 810,000 1,140,095 831,750 2,781,845 1,681,175 213,500 1,894,675 493,675 1,401,000 2,925,000 4,326,000 1,485,000 117,000 351,000 2,373,000 190,000 314,382 96,000 600,382 301,038 40,012 341,050 133,250 207,800 442,200 650,000 0 48,000 120,000 482,000 7,860,000 248,020 3,645,000 4,463,020 Selene Ltd $ 1,800,540 1,150 900,270 901,420

Assignment 2

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HBC221/N

Semester 2, 2011

Statement of Financial Position

Current Assets Bank Account Receivables Inventory(June 30, 20X9) Other Current Assets Non-current Assets Investment in Selma Ltd Less Accumulated Impairment on investment Debentures Receivable Deferred Tax Asset Property Plant & Equipment Less Accumulated Depreciation Fleet Vehicles Less Accumulated Depreciation - Vehicles Land Intangibles (includes Goodwill) Total Assets Liabilities & Owners' Equity Current Liabilities Accounts Payable Other Current Liabilities Deferred Tax Liability Non-current Liabilities Other Non-Current Liabilities Debentures (8%) Loans Payable Total Liabilities Share Capital General Reserve Asset Revaluation Reserve Retained Profits June 30, 20X9 Total Shareholders' Equity Total Liabilities & Shareholders' Equity

Helena Ltd $ 778,015 975,000 960,080 144,012 750,000 -34,000 100,000 620,040 2,040,170 -660,000 195,000 -19,500 1,327,983 832,000 8,008,800

Selma Ltd $ 40,012 380,114 400,120 240,072

70,021 640,192 -230,069 75,000 -7,500 370,111 148,000 2,126,073

682,000 341,000 220,500 255,000 900,075 2,398,575 1,560,000 1,350,225 327,000 2,373,000 5,610,225 8,008,800

170,273 124,000 55,000 42,000 240,000 300,090 931,363 400,000 300,210 12,500 482,000 1,194,710 2,126,073

REQUIRED:
Students are required to consolidate Helena Ltd and its subsidiary Selma Ltd, (a) Prepare the consolidation journal entries and the consolidated worksheet (using Excel or similar) to consolidate Helena Ltd and Selma Ltd for the year ended 30th June 20X9. (b) Produce the completed Consolidated Financial Reports (Statement of Comprehensive Income and Statement of Financial Position) for the year ended 30th June 20X9.

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Question 2
INTRODUCTION / BACKGROUND

(5 marks)

The past few years have seen the emergence of the Web as a reporting platform for companies. There are some industrial and natural resources businesses that rely on the Web as a corporate social disclosure platform. Compared with the annual report, there is likely to be much more Web-based information about corporate social and environmental reporting with examples of sustainable business practices and environmental management practices. There is however only limited disclosure about social and environmental capital expenditures and risks. Additionally, there is extensive overlap between print disclosure and Web disclosure, with the use of the Web as a disclosure platform still driven by traditional print-based considerations.

REQUIRED:
Discuss, with the use of 3 (three) examples from Australian companies, whether Australian businesses have taken the opportunity to leverage their corporate social and environmental disclosure strategy through an intensive use of the Web. NOTE: You are required to include a screen capture of the relevant websites of the 3 companies you chose to investigate, and attach them as Appendices to your answer. (Maximum word length: 1500 words)

PRESENTATION AND REFERENCING FORMAT AND ASSESSMENT STANDARDS

It is a requirement that the assignment be properly researched and presented. The assignment should: 1. be submitted as a paper-copy in a folder, 2. be typed [printed], and Question 2 (the essay part) should have 1.5 line spacing, 3. have a front cover / identification sheet, with all relevant details and the names of the students in the group, 4. be your own work [ALL quotations MUST be clearly distinguished from your words by quotation marks ], 5. include a bibliography adequately referencing your sources, apply the use of approved citation techniques and comply with Swinburne University assessment standards relating to plagiarism. For further guidance see the information on the following website: http://www.swinburne.edu.au/ltas/plagiarism/

Assignment 2

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