T3 2017
Internal Assessment – Individual Assignment 2
(100 marks – 20%)
This assignment is a comprehensive question on consolidation accounting which aims to help you to understand better this topic that is critical for the final assessment – the examination. The materials that are relevant to this part will be taught in between week 8 and week 10.
Each page should be numbered and must show the total number of pages (e.g. Page 1 of 8), and every page must have a header that identifies full name and I.D. of every contributing student, and the unit code MAA716. Poor presentation, including poorly formatted tables and worksheets, will attract penalty marks up to 20% of the assignment.
Submission
The assignment must be submitted electronically by the due date, 29 January 2018, Monday, 5:00 p.m., as a Microsoft Word/ Microsoft Excel/ PDF document by uploading it to the Dropbox in CloudDeakin. When uploading your assignment, give the document a name using the following syntax: <Name_ Assignment2 _MAA716>. Submitting a hard copy of this assignment is not required and will not be marked.
Please review the section on ‘Plagiarism’ in the Unit Guide. You need to check that your assignment does not contain plagiarism. This is done automatically when submitting your report to the ‘Dropbox’, using Turnitin, which checks your report for plagiarism and generates an originality report that you can use to be confident that your report does not contain plagiarism. Turnitin will tell us (but tell you first) the extent to which your work has copied material from others without appropriate recognition through referencing. If this is excessive you will lose marks or you may not receive any marks, or you may have some form of disciplinary action taken if the issue is severe. Take appropriate action to amend your report to avoid this from happening. Note that uploading your report to Turnitin via the prescribed link in CloudDeakin for this unit constitutes submission to this unit AND also constitutes a declaration regarding the contents of the assignment being all your own work, except where appropriate references to the work of others have been acknowledged. You can upload your report to Dropbox as many times as you like up to the due date. In order to avoid a late submission penalty, you must upload your report to Dropbox by the due date. Reports that are submitted after the due date can still be uploaded to the Dropbox. However, a penalty of 5% of the mark achieved for each calendar day will be imposed in case assignments are submitted past the due date. If the assignments are submitted 5 calendar days (or more) past the due date, they will not be assessed and a zero mark will be given.
Student/s that require a time extension in relation to this assignment should discuss this with the Unit Chair, supported by documentation (e.g. medical certificate). Such requests should be e-mailed to the Unit Chair (s.cheung@deakin.edu.au) no later than 12 noon, Wednesday, 24 January 2018. Students are also reminded that extensions will only be given for exceptional and unusual circumstances outside the students’ control.
Other relevant matters
The marking rubric shows you how your assignment will be marked will be available to you as soon as possible. Please monitor CloudDeakin for further updates.
Should you need further clarification on this piece of internal assessment, feel free to post your queries online.
Please allow 15 working days on marking. A solution of the assignment will be available on Cloud Deakin by 31 January 2018 5:00 p.m. to help you prepare for the examination. Once the solution has been released on Cloud Deakin, any submitted assignment after the release will not be assessed.
Group Accounting – Consolidation (100 Marks in total)
On 1 July 2014, PEACE Ltd purchased 448,500 shares of MIEL Ltd at a price of 1.95 per share. On that day, the retained earnings of MIEL Ltd was 280,000. At the time of acquisition, MIEL Ltd recorded all its assets at their fair values except for an item of plant and some land. PEACE Ltd considered that an item of plant shown in the accounts of MIEL Ltd was less than the fair value. The fair value should be 50,000 not 44,000 as shown in MIEL Ltd’s accounts. The plant was assessed to have a remaining useful life of 6 years and was to be depreciated on a straight-line basis. The land was recorded in the accounts of MIEL Ltd of $21,000 and PEACE Ltd considered its fair value to be $30,000. On 11 May 2018, the land was sold to an unrelated party of PEACE Ltd and MIEL Ltd. On 30 June 2018, the financial statements of PEACE Ltd and MIEL Ltd are as follows:
| Statements of Financial Position of PEACE Ltd and MIEL Ltd as at 30 June 2018 PEACE Ltd | MIEL Ltd | ||||||
| Assets | |||||||
| Cash | 683,502 | 154,744 | |||||
| Accounts Receivable | 56,642 | 37,010 | |||||
| Less: Allowance for doubtful accounts | 10,000 | 46,642 | 4,800 | 32,210 | |||
| Dividend Receivable | 120,000 | – | |||||
| Inventory | 17,158 | 38,950 | |||||
| Total Current Assets | 867,302 | 225,904 | |||||
| Non-current assets | |||||||
| Deferred Tax assets | 79,947 | 2,151 | |||||
| Investment in MIEL Ltd | 874,575 | – | |||||
| Land | 138,000 | 465,000 | |||||
| Property, Plant and Equipment (PPE) | 900,000 | 1,500,000 | |||||
| Less: Accumulated depreciation of PPE | 300,000 | 600,000 | 500,000 | 1,000,000 | |||
| Total non-current assets | 1,692,522 | 1,467,151 | |||||
| Total Assets | 2,559,824 | 1,693,055 | |||||
| Liabilities and Equity | |||||||
| Current Liabilities | |||||||
| Accounts Payable | 48,068 | 41,892 | |||||
| Dividend Payable | 23,498 | 24,738 | |||||
| Income tax payable | 109,228 | 54,400 | |||||
| Other payable | 21,643 | 11,783 | |||||
| Total current liabilities | 202,437 | 132,813 | |||||
| Non-Current Liabilities | |||||||
| Bank Loan | 280,000 | 80,000 | |||||
| Total Liabilities | 482,437 | 212,813 | |||||
| Shareholders’ Equity | |||||||
| Share capital ($1 per share) | 1,000,000 | 690,000 | |||||
| Retained earnings | 827,386 | 778,242 | |||||
| Revaluation Reserve | 250,000 | 12,000 | |||||
| Total shareholders’ equity | 2,077,386 | 1,480,242 | |||||
| Total Equity and Liabilities | 2,559,824 | 1,693,055 | |||||
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