[SOLVED] Corporate Accounting Systems

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ACCT3007 Corporate Accounting Systems
Assessment Value: 20%
Topic: Acquisition of a subsidiary and consolidation analysis
Length: 1000 words maximum (comprising consolidation analysis and journalventries in Part A equivalent to 750 words and a written component of 250 words in Part B)
The practical project involves two parts:
• Part A is the preparation of a selection of consolidation elimination journals for an economic entity comprising a parent and a subsidiary.
• Part B is an explanation and discussion of business combination.
Part A
Wishart Ltd acquired all issued share capital of Wishart Hills Ltd on 1 July 2020 for a cash payment of $698,000. The share capital and reserves of Wishart Hills Ltd at the date of
acquisition were:
Share capital $300,000
Retained earnings $200,000
Revaluation surplus $48,000
All assets of Wishart Hills Ltd were fairly valued at the date of acquisition, except for an equipment that had a fair value $20,000 greater than its carrying amount. The cost of the equipment was $75,000 and it had accumulated depreciation of $25,000. At the date of
acquisition, it was expected that the equipment had a remaining useful life of eight years.
There were no transactions and dividend declared between Wishart Ltd and Wishart Hills Ltd from 1 July 2020 to 30 June 2022. No dividend declared by Wishart Ltd and Wishart Hills
Ltd for year ended 30 June 2022.
On 1 January 2023 Wishart Hills Ltd sold an item of plant to Wishart Ltd for $55,000 when its carrying value in Wishart Hills’s books was $40,000 (original cost $90,000 and original estimated life of nine years). There were no other transactions between Wishart Ltd and
Wishart Hills Ltd for year ended 30 June 2023. No dividend declared by Wishart Ltd and
Wishart Hills Ltd for year ended 30 June 2023.
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On 30 June 2025 Wishart Ltd sold a property to Wishart Hills Ltd for $400,000 when its carrying value, and original cost, in Wishart’s books was $420,000 and estimated remaining useful life was twenty years. During financial year 2025, Wishart Ltd provided management consultation to Wishart Hills Ltd and this was the first time that Wishart Ltd provided such
service to Wishart Hills Ltd. At the end of 2025, Wishart Hills Ltd paid $5,000 for these services and there is no payable for these services at year end. There were no other
transactions between Wishart Ltd and Wishart Hills Ltd from 1 July 2023 to 30 June 2025.
No dividend declared by Wishart Ltd and Wishart Hills Ltd for year ended 30 June 2024 and
2025.
Wishart Ltd incurred the following transactions with Wishart Hills Ltd for year ended 30
June 2026:
• Wishart Ltd made sales of inventory to Wishart Hills Ltd of $200,000, while Wishart
Hills Ltd sold $250,000 of inventory to Wishart Ltd.
• Closing inventories on 30 June 2026 included the following amounts: Wishart Ltd
$90,000 (bought from Wishart Hills Ltd) and Wishart Hills Ltd $150,000 (bought from
Wishart Ltd). Intragroup sales of inventory policy applied.
• The opening inventory in Wishart Ltd included stock acquired from Wishart Hills Ltd,
which had originally cost Wishart Hills Ltd $140,000. The opening inventory of Wishart
Hills Ltd included stock acquired from Wishart Ltd, which had originally cost Wishart
Ltd $160,000. Intragroup sales of inventory policy applied.
• Wishart Ltd declared and paid dividend $75,000. Wishart Hills Ltd declared and paid
dividend $50,000 on 30 June 2026.
• Wishart Hills Ltd has a number of long-term loans, including an interest free five-year
loan for $50,000 from Wishart Ltd. This interest free five-year loan was effective from 1
July 2025.
You were appointed as a financial accountant at Wishart Ltd and requested to prepare the
followings:
I. acquisition analysis and adjustment/elimination journal entries for consolidation at
acquisition, 1 July 2020;
II. adjustment/elimination journal entries for consolidation as at 30 June 2025, and
III. adjustment/elimination journal entries for consolidation as at 30 June 2026.
After meeting with your supervisor you gathered the following information which you might
need to complete your work:
• Wishart Ltd has the following accounting policies for the economic entity:
➢ All property, plant and equipment are depreciated using the straight-line method
with no residual value. For part-years, depreciation is to be calculated on the
number of months the non-current asset is held in the relevant year.
➢ Revaluation adjustments on acquisition are to be made on consolidation only, not
in the books of any subsidiary;
➢ Intragroup sales of inventory to be at a mark-up of 50% on cost.
➢ All calculated amounts are to be rounded to the nearest whole dollar. Companies
in the group do not show cents in any journals, worksheets, or financial
statements.
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• Management team of Wishart Ltd believes that goodwill acquired from business
combination is impaired by $5,000 in the current financial year (1 July 2025 – 30 June
2026). There is no previous impairment of goodwill.
• The company tax rate is currently 30% and this rate has not changed for a number of
years.
• Journal narrations are required.
• Number each year consolidation elimination/adjusting journal entries by 1, 2, 3, …, etc;.
Where more than one journal entry is needed for an event to be completely accounted for
add the letters a,b,c,…etc to them as necessary.
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Part B
The consolidated financial statements for year ending 30 June 2026 for the economic entity
have been prepared on the basis of your journals from Part A (III). These statements have
been presented to the Board of Directors.
The Board noted that its subsidiary, Wishart Hills Ltd, generated a tax loss for tax purposes
for financial year ending 2026. Some board members inquire if it is possible to use
subsidiary’s tax loss to offset parent’s taxable income. Is this feasible? What is your solution
and recommendation for the Board? (250 words maximum)
You may make reference to relevant paragraphs of Australian Accounting Standards and/or
AASB Framework and to other sources of material.
Harvard Style referencing is expected. For details on the Harvard referencing system go to:
http://library.westernsydney.edu.au/uws_library/guides/referencing-citation (and click on
‘Harvard’ link).
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Marking Criteria
Part A (15 marks)
CRITERIA FAIL PASS CREDIT DISTINCTION HIGH DISTINCTION FULL MARK
Part A (I)
Correct /complete
acquisition analysis;
correct/complete
consolidation journal
entries at the date of
acquisition
Acquisition analysis has not
prepared, and/or three journals
not correctly recorded and/or
missing and/or included
incorrectly
0 mark
Acquisition analysis has
not prepared and/or two
journals not correctly
recorded and/or missing
and/or included incorrectly
1 mark
Acquisition analysis has
error and/or two journals
not correctly recorded
and/or missing and/or
included incorrectly
1.3 marks
Acquisition analysis is clear
and correct but two journals
not correctly recorded
and/or missing and/or
included incorrectly
1.5 marks
Acquisition analysis is
clear and correct but one
journal not correctly
recorded and/or missing
and/or included incorrectly
1.7 marks
Acquisition analysis is
clear and correct and all
required journals are
correct, with none missing
or included incorrectly
2 marks
Part A (II)
Correct /complete events
and consolidation journal
entries at 30 June 2025
Five or more events not
correctly recorded and/or
missing and/or included
incorrectly
0 mark
Four events not correctly
recorded and/or missing
and/or included incorrectly
1.5 marks
Three events not correctly
recorded and/or missing
and/or included
incorrectly
1.95 marks
Two events not correctly
recorded and/or missing
and/or included incorrectly
2.25 marks
One event not correctly
recorded and/or missing
and/or included incorrectly
2.55 marks
Every required
event/journal is clear and
correct, with none missing
or included incorrectly
3 marks
Part A (III)
Correct /complete events
and consolidation journal
entries at 30 June 2026
Nine or more events not
correctly recorded and/or
missing and/or included
incorrectly
0 mark
Seven or eight events not
correctly recorded and/or
missing and/or included
incorrectly
4 marks
Five or six events not
correctly recorded and/or
missing and/or included
incorrectly
5.2 marks
Three or four events not
correctly recorded and/or
missing and/or included
incorrectly
6 marks
One or two events not
correctly recorded and/or
missing and/or included
incorrectly
6.8 marks
Every required
event/journal is clear and
correct, with none missing
or included incorrectly
8 marks
Part A work presentation,
account names, numbering
journal entries and
narrations
Nine or more journals are not
presented clearly and/or not
complete and/or not numbered
correctly and/or no narration
0 mark
Seven or eight journals not
presented clearly and/or
not complete and/or not
numbered correctly and/or
no narration
1 marks
Five or six journals not
presented clearly and/or
not complete and/or not
numbered correctly and/or
no narration
1.3 marks
Three or four journals not
presented clearly and/or not
complete and/or not
numbered correctly and/or
no narration
1.5 marks
One or two journals not
presented clearly and/or
not complete and/or not
numbered correctly and/or
no narration
1.7 marks
All events/journals are
presented clearly and
numbered correctly.
2 marks
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Part B (5 marks)
CRITERIA FAIL PASS CREDIT DISTINCTION HIGH DISTINCTION FULL MARK
Define problem Superficial problem
statement. Does not
Include consideration of
relevant contextual factors.
0 mark
Problem statement is
superficial. Includes
consideration of major
relevant contextual factors.
0.5 mark
Problem statement is clear.
Includes consideration of
most relevant contextual
factors.
1.25 marks
Clear and insightful
problem statement.
Includes consideration of
most relevant contextual
factors.
1.5 marks
Clear and insightful problem
statement. Includes
consideration of all relevant
contextual factors.
1.75 marks
Clear and insightful problem
statement. Includes
consideration of all relevant
contextual factors in depth.
2 marks
Identify strategies
and propose
solutions
Identifies an approach for
solving the problem that is
difficult to evaluate
because it is vague or only
indirectly addresses the
problem statement.
0 mark
Identifies an approach for
solving the problem with
some consideration of the
contextual factors of the
problem. The evaluation of
the solution lacks depth.
0.5 mark
Identifies multiple
approaches for solving the
problem and proposes a
solution that indicates some
comprehension of the
problem. Includes an
evaluation of the solution
that considers some of; the
history of the problem,
logic/reasoning, feasibility
and impacts.
1.25 marks
Identifies multiple
approaches for solving the
problem and proposes a
solution that indicates a
comprehension of the
problem. Includes a
rationale of the solution
that considers the history
of the problem,
logic/reasoning, feasibility
and impacts.
1.5 marks
Identifies multiple approaches
for solving the problem and
proposes a solution that
indicates a deep comprehension
of the problem. Includes an
elegant rationale for the
solution that deeply and
thoroughly considers the
history of the problem,
logic/reasoning, feasibility and
impacts.
1.75 marks
Identifies multiple approaches
for solving the problem and
proposes alternative solutions
that indicate a deep
comprehension of the
problem. Includes an elegant
rationale for the solutions that
deeply and thoroughly
considers the history of the
problem, logic/reasoning,
feasibility and impacts.
2 marks
Presents with
clarity: references
and paraphrases
correctly and uses
clear prose style:
sentence structure,
grammar and
spelling
Writing style is poor and
difficult to follow and/or
marred by many
grammatical and/or
spelling errors. In-text
citation and/or
paraphrasing and/or
reference list missing or
substantially incomplete.
0 mark
Writing style is unclear at
times. There are a number of
grammatical and/or spelling
errors. In-text citation and/or
paraphrasing and/or reference
list have a number of errors.
0.5 mark
Writing style is coherent,
with a few grammatical
and/or spelling errors.
Satisfactory in-text citation,
paraphrasing and reference
list, possibly with a few
errors.
0.65 mark
Writing style is coherent,
with possibly a few
grammatical and/or
spelling errors. Satisfactory
in-text citation,
paraphrasing and reference
list, possibly with a few
minor errors.
0.75 mark
Writing style is coherent, with
possibly a few grammatical
and/or spelling errors. Excellent
in-text citation, paraphrasing
and reference list.
0.85 mark
Writing is clear and error-free
and demonstrates superior
written communication skills.
Excellent in-text citation,
paraphrasing and reference
list.
1 mark
Late submission -10% per day
Total marks: 20
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Project Preparation
• The practical project is to be submitted as an individual attempt. It must be prepared
using Microsoft Word document only and be entirely your own work. Submit
Microsoft Word (electronic) copy through vUWS (Turnitin) by 5:00pm Friday, 27
May 2022 (week 12). An electronic individual assignment cover sheet is required.
• The file name for the electronic submission is your student ID. For example, if your
student ID number is 12345678, the file name should be 12345678.
• The practical project marking guide is on page 5 and page 6 of this document. Use the
marking guide sheet to see what is expected and how your work will be marked. The
marker will use the marking sheet to calculate your assessment result and provide you
with feedback on the standard you achieved against each of the criteria.
• Your practical project will be scanned using the anti-plagiarism software Turnitin®.
The Turnitin plagiarism prevention system is being used with this unit. It is an
important tool to assist students with their work by promoting awareness of
plagiarism. Please use this tool to improve your work and iron out any plagiarism
issues prior to your final submission. The system will allow you to overwrite your
submission up until it is due.
If you have copied material from the textbook, the internet or other sources
improperly, you will be penalised. Staff in the unit will perform a check on the
similarity of your work to others. The scanning will tell us if you have copied from
another student, or from an assignment from another unit. Severe penalties apply to
cases of plagiarism (e.g., copying internet resources without referencing, copying
other students’ answers, copying other unit’s assignments etc.).
• All late submissions will be penalised as per WSU policy – a deduction of 10% of the
possible mark for each day, or part day, late. Submissions will not be accepted by
email.
• Staff will not assist students with their answers, nor review draft answers to confirm if
students are “on the right track” or not. Any queries about the requirements of the
practical project must be directed to the Unit Coordinator only, not to other teaching
staff.
• vUWS Assessment Zone: under the ‘Assessment Zone’ link on vUWS there is a
folder titled ‘Assessment 3: Practical Project’. Here you will find the submission link.
• This is the final financial accounting unit in the accounting major where you will have
to produce complex journal entries at a professional level. Therefore, a high standard
is expected. Marks will be lost if journals are not presented in a clear and professional
manner (i.e. poor or unclear presentation can include showing the debit entry on one
page but the credit entry on another, or not clearly distinguishing between debit and
credit entries).
Your preparation cannot be late for the board meeting and the directors carefully
review all of the information you give them. They pay you well, but they expect
quality work. It needs to be technically correct and presented well.
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Checklist
When submitting the final version, check you have:
• Clearly answered both parts of the project and included an electronic assignment
cover sheet and a reference list.
• Proof-read the assignment for spelling and grammar: use “spell check” in Word to
help if you have any concerns.
• Met the requirement for the word-limit (1000 words).
• Submitted the practical project through the electronic submission link prior to 5:00pm
on Friday 27 May 2022.