Advanced Financial Accounting Revaluation of Money

Question: Describe about the Advanced Financial Accounting for Revaluation of Money. Answer: 1a. Date Particulars Amount Amount Revaluation of Machinery 07-01-15 Impairment Loss A/c Dr. 100,000 Accumulated Depreciation A/c. Dr. 100,000 To, Machinery A/c 200,000 30/06/2016 Depreciation A/c Dr. 50,000 To, Accumulated Depreciation A/c 50,000 Income Statement A/c Dr. 150,000 To, Depreciation A/c 50,000 To, Impairment Loss A/c 100,000 Impairment Loss A/c Dr. 100,000 To, Accumulated surplus A/c 100,000 In accordance with the paragraph 15 of AASB 116, the actual asset value could be evaluated with the help of machinery evaluation. In addition, paragraph 29 of AASB 116 states that the organisation needs to present the cost model used to value the asset. Furthermore, the paragraphs 73-79 of AASB 116 deal with the change in depreciation, which needs to be presented in the annual report (Aasb.gov.au, 2016). 1b. Adjustment for Unrecorded Expenses: Date Particulars Amount Amount 07-05-16 Outstanding Repairs A/c Dr. 17500 Deferred Tax Asset A/c Dr. 7500 To, Bank A/c 25000 30/06/2016 Retained Earnings A/c Dr. 17500 To, Outstanding Repairs A/c 17500 30/06/2016 Income Tax Payable A/c Dr. 7500 To, Deferred Tax Assets A/c 7500 The above journal entries are passed to comply with the paragraph 7 of AASB 116 to provide accurate figures in the annual report of the organisation. Additionally, the paragraphs 67-72 of AASB 116 represent the treatment related to outstanding repairs to be included while preparing the financial statements (Aasb.gov.au, 2016). 1c. In this scenario, Rainyday could not pass journal entries for share devaluation, since the investment on Bobsmith iss yet to be sold. Henceforth, the organisation has not suffered from any loss, which could be recorded in the form of journal entries or adjustments (AASB, 2016). As per the AASB standard, share sale is primarily taken into account under capital gain or loss, in which adjustments could be made after conduction of the share sale. 1d. Bad Debt Date Particulars Amount Amount Provision for Doubtful Debts A/c Dr. 900000 To, Bad Debt A/c. 900000 Bad Debt A/c Dr. 900000 To, Income Statement A/c. 900000 The above journal entries and adjustments are developed to comply with the paragraph 3 of AASB 137 (Aasb.gov.au, 2016). Thus, with the help of these entries and adjustments, the financial statements could be prepared accordingly. 2. In the Books of Sunny Ltd. Journal Entries Date Particulars Amount Amount 31/01/2016 Bank A/c Dr. 18930000 To, Share Application A/c 18900000 To, Share Option A/c 30000 (Applications for shares) Share Application A/c Dr 18900000 Share Option A/c Dr. 30000 To, Share Capital A/c 18012000 To, Share Allotment A/c 900000 To, Profit on Option A/c 18000 (Allotment from shares and profit from option) 02-12-16 Share Allotment A/c Dr. 6000000 To, Share Capital A/c 6000000 (Allotment of 6,000,000 shares) 03-12-16 Bank A/c Dr. 5080000 Calls-in-Arrear A/c Dr. 20000 To, Share Allotment A/c 5100000 (Amount received at allotment) 20/03/2016 Share Capital A/c Dr. 80000 To, Calls-in-Arrear A/c 20000 To, Share Forfeiture A/c 60000 (Forfeiting of shares) 04-05-16 Bank A/c Dr. 74000 Share Forfeiture A/c Dr. 60000 To, Share Capital A/c 80000 To, Profit on Forfeiture A/c 54000 (Share reissue) Cost of Re-Issue A/c Dr. 3600 To, Bank A/c 3600 (Expenses of reissue paid) 3a. Calculation for Current Tax Liabilities Particulars Amount Amount Accounting Profit Before Tax 190750 Add: Depreciation on Equipment: Taxable Amount 60000 Accounting Amount -40000 20000 Depreciation on Motor Cycle: Taxable Amount 12000 Accounting Amount -15000 -3000 Government Grant -30000 Entertainment Expenses 4500 Prepaid Insurance -3000 Rent Payable 6000 Taxable Profit Before Tax 185250 Difference between Book Value Taxable Value 5500 Deferred Tax Liability 1650 Current Tax 57225 Deferred Tax Worksheet Particulars Book Value Taxable Value Difference Deferred Tax (Assets/Liability) Equipment 400000 400000 Less : Depreciation 40000 60000 Net Value 360000 340000 20000 6000 Motor Cycle 60000 60000 Less : Depreciation 15000 12000 Net Value 45000 48000 -3000 -900 3b. In the Books of Blaze Ltd. Journal Entries Date Particulars Amount Amount 30/06/2016 Profit Loss A/c Dr. 58875 To, Provision for Income Tax A/c 57225 To, Deferred Tax Liability A/c 1650 (Charged tax liability) Deferred Tax Assets Dr. 6000 To, Revenue Reserve A/c 6000 (Increased reserves by adding Tax assets) Revenue Reserve A/c Dr. 900 To, Deferred Tax Liability A/c 900 (Decreasing the reserves by deducting tax liability) 4. In the Books of Sunshine Ltd. Journal Entries Date Particulars Amount Amount 07-01-13 Equipment A/c Dr. 800000 To, Bank A/c 800000 (Equipment bought) 30/06/2014 Depreciation A/c Dr. 152000 To, Equipment A/c 152000 (Depreciation charged on equipment) Income Statement A/c Dr. 152000 To, Depreciation A/c. 152000 (Depreciation charge adjusted with the income statement) 07-01-14 Equipment A/c Dr. 82000 To, Revaluation Surplus A/c 82000 (Inclusion of valuation hike in revaluation surplus) 30/06/2015 Depreciation A/c Dr. 136000 To, Equipment A/c 136000 (De[recitation charged on equipment) Income Statement A/c Dr. 136000 To, Depreciation A/c 136000 (Depreciation charge adjusted with the income statement) Revaluation Surplus A/c Dr. 82000 To, Income Statement A/c 82000 (Inclusion of valuation hike in revaluation surplus) 30/06/2016 Depreciation A/c Dr. 136000 To, Equipment A/c 136000 (Depreciation charged on Equipment) Income Statement A/c Dr. 136000 To, Depreciation A/c. 136000 (Depreciation charge adjusted with the income statement) 06-01-16 Loss on Revaluation A/c Dr. 48000 To, Equipment A/c 48000 (Subtraction of valuation fall in revaluation surplus) 30/06/2016 Depreciation A/c Dr. 18000 To, Equipment A/c 18000 (Depreciation charged on Equipment) Bank A/c. Dr. 390000 To, Equipment A/c 382000 To, Profit on Sales A/c 8000 (Inclusion of profit from bank revaluation) 5a. Calculating the Impairment Loss Cinema DVD Sales Assets: $ Amount $ Amount Inventory 4,000 85,000 Furniture and fittings 250,000 35,000 Less: accumulated depreciation -45,000 -10,000 Electrical equipment 165,000 25,000 Less: accumulated depreciation -55,000 -15,000 Land and buildings 650,000 185,000 Less: Accumulated depreciation (buildings) -25,000 -6,000 Licence 25,000 - Goodwill 45000 15000 Carrying amount of cash generating unit 1,014,000 314,000 Fair Value, less, Cost of Sales 780000 318000 Value in Use 900000 290000 Recoverable Amount (Higher of Fair Value Value in Use) 900000 318000 Impairment Loss 114,000 0 Impairment Loss Exchange Goodwill 69,000 0 Apportionment of Impairment Loss, Exchange Goodwill Particulars Amount Percentage Amount Inventory 4,000 0.41% 284.8 Furniture and fittings 205,000 21.16% 14597.5 Electrical equipment 110,000 11.35% 7832.8 Land and buildings 625,000 64.50% 44504.6 Licence 25,000 2.58% 1780.2 Total 969,000 1 69,000 5b. In the Books of Movies Ltd. Journal Entries Date Particulars Amount Amount 30/06/2016 Impairment Loss A/c Dr. 69,000 To, Goodwill A/c 45000 To, Inventory A/c 285 To, Furniture Fitting A/c 14598 To, Electrical Equipment A/c 7833 To, Land Building A/c 44505 To, License A/c 1780 (Charged impaired loss from assets) Impairment Loss A/c Dr. 4000 Accumulated Depreciation A/c Dr. 6000 To, Land Building A/c 10000 (Deducting the impairment loss and accumulated depreciation) The entries pertaining to impairment loss have been framed in accordance with the paragraph 5 of AASB 136 (Amiraslani, Iatridis Pope, 2013). Thus, the exact amount of impairment loss has been represented to gain an overview of the financial disclosures of the organisation. References: AASB, C. A. S. (2016). Consolidated Financial Statements. Aasb.gov.au. (2016). Retrieved 27 August 2016, from https://www.aasb.gov.au/News.aspx. Amiraslani, H., Iatridis, G.E. Pope, P.F. (2013).Accounting for asset impairment: a test for IFRS compliance across Europe. Centre for Financial Analysis and Reporting Research (CeFARR).