AFM305 Advanced Financial Accounting Assignment 1 T2, 2025 | UNE

AFM305 Assessment criteria: 

While this assignment relates to the following three learning outcomes (LOs) of the unit: 

1. demonstrate a broad and coherent understanding of advanced issues in financial accounting with depth in corporate group structures with subsidiaries and distinguish it from extended group structures with associate and joint arrangements, and how to read and interpret/analyse contemporary financial reports for them underpinning accounting standards (AASBs), and apply to business-related contexts;
2. demonstrate professional knowledge of consolidated financial statements, in particular preparing consolidation journals, worksheet and statement of comprehensive income (Profit and Loss) and statement of financial position (Balance Sheet); 
3. use a range of cognitive and communication skills to review, analyse, consolidate and synthesise relevant accounting information drawn from financial statements in order to demonstrate critical thinking and judgement in solving complex business-related problems; 
4. work independently and/or collaboratively to plan and execute tasks to enhance professional knowledge and skills in advanced financial accounting;

You are expected to demonstrate the ability to produce, describe, analyse, and/or explain the underlying concepts and accounting frameworks to which the assignment questions are linked.

The following marking criteria and weightings will be used:

• Completion ofacquisition analysis under the method(s) suggested and preparation of appropriate journal entries after the acquisition. (45%);
• Preparation of appropriate consolidation journal entries and worksheet for consolidation (25%); and
• Adequatediscussion on the specified topic or issue raised by providing relevant and reasonable opinions/comments. There must have sufficient analysis of reporting practices of the selected companies/entities in compliance with the relevant accounting standards along with a solid comparison between the companies. Also requires logical flow from introduction to conclusion according to academic standards of essay writing. (30%)

b) At the time acquisition, all assets were considered to be fairly valued.
c) Included in C Ltd's administrative expenses is an amount of $21 500 paid to B Ltd for providing management and administrative service for the year.
d) During the year ended 30 June 2020, C Ltd made sales to B Ltd amounting to $84 500; C Ltd had always sold goods to B Ltd at a mark-up of 25% on cost.
e) On 30 June 2020, the directors decided that goodwill arising on the acquisition on B Ltd had been impaired by 40%.
f) Inventory at 30 June 2020 was as follows:
B Ltd C Ltd
$42 400
$27 800
g) of the inventory B Ltd had on hand at 30 June 2019, $12 600 was purchased from C Ltd.
h) of the inventory B Ltd had on hand at 30 June 2020, $15 400 was purchased from C Ltd.
i) On 30 June 2020, a final dividend amounting to $28 000 was provided by B Ltd, while $20,000 was provided by C Ltd, and the decision to pay the dividend communicated to shareholders on that date. B Ltd has recognised its share of the dividend receivable from C Ltd in its financial statements on 30 June 2020.
j) Tax is charged at a rate of 40%.

Required:

1. Complete the acquisition analysis on 1 July 2016 for B Ltd's investment in C Ltd as required by AASB3 and AASB10 and determine the amount of goodwill or gain on bargain purchase following the fair value/full goodwill method.
2. Prepare the acquisition journal entries on 1 July 2016.
3. Prepare all consolidated journal entries including non-controlling interest and their posting to consolidated worksheet for the year ended 30 June 2020 for consolidation purpose of B Ltd and C Ltd.