Corporate Accounting

ACC3100 Corporate Accounting

Final Examination – Trimester 2, 2021


Assessment Type: Take-Home Examination

Weighting: 45%

Learning Outcomes Assessed: ULO 1, 2, 3 and 4

Due Date: 9 November 2021 (Monday) 5:00 pm (ASDT)

Please type your answers after each question and save the file as Word document. All submissions must be submitted via Moodle. Late submission will not be accepted.


Question 1 (10 + 2 = 12 marks)

Bright Ltd made an offer to the public for investors to subscribe for 500,000 shares. The shares were issued at $15.00 per share. Applications for shares closed on 8 September 20X1, with $5.00 being paid on application and a further $10.00 being payable within one month of allotment.

By 8 September 20X1 applications had been received for 600,000 shares, and it is decided that all subscribers will receive shares on a pro rata basis, with any excess paid on application to be offset against the amount due on allotment. The shares were allotted on 22 September 20X1.



a) Provide the journal entries to account for the above events. (10 marks)

b) What forms of preferential treatment can the holders of preference shares receive over and above the rights of holders of ordinary shares? (2 marks)



Question 2 (10 + 2 = 12 marks)

Victor Ltd owns two blocks of commercial land acquired in 20X1 for the purposes of future development. Block M cost $400,000 and Block N cost $300,000.

Valuations of the blocks are undertaken by an independent valuer on 30 June 20X3 and 30 June 20X5. The assessed values are:

  20X3 valuation 20X5 valuation
Block M $430,000 $455,000
Block N $272,000 $329,000



a) Assuming asset revaluations were undertaken for the land in both 20X3 and 20X5, provide the journal entries for both years. (10 marks)

b) If a reporting entity elects to use either cost or fair value as the basis for measuring its property, plant and equipment, can it elect to switch to the other method at a later time? (2 marks)


Question 3 (9 + 2 = 11 marks)

Charles Limited acquired Carlos Limited on 1 July 20X8 for cash of $3,800,000. At that date, Carlos Limited’s net identifiable assets had a fair value of $3,000,000. The fair value of the net identifiable assets of Carlos Limited are determined as follows:

Inventory $500,000

Plant and Equipment $1,000,000

Land $2,000,000


Less: Bank Loan $500,000

Net Assets $3,000,000

At the end of the reporting period of 30 June 20X9, the management of Charles Limited determines that the recoverable amount of the cash-generating unit, which is considered to be Carlos Limited, totals $2,300,000. The carrying amount of the net identifiable assets of Carlos Limited, which excludes goodwill, has not changed since acquisition and is $3,000,000.



a) Prepare the journal entry to account for any impairment of goodwill. (9 marks)

b) What are possible arguments for and against the prohibition of recognition of internally generated goodwill? (2 marks)


Question 4 (9 + 1 = 10 marks)

On 1 July 20X6, Parent Ltd acquired 70 per cent of the share capital of Subsidiary Ltd for $400,000, which represented the fair value of the consideration paid, when the share capital and reserves of Subsidiary Ltd were:

Share capital $350,000

Revaluation surplus $100,000

Retained earnings $50,000


All assets of Subsidiary Ltd were recorded at fair value at acquisition date.



a) Prepare the consolidation elimination and adjustment entries to recognise the pre-acquisition capital and reserves of Subsidiary Ltd, assuming that the non-controlling interest was measured at the proportionate share of the acquiree’s identifiable net assets (partial goodwill method). (9 marks)

b) Where only a proportion of a subsidiary’s shares are owned by a parent entity, what proportion of the intragroup transactions between the parent entity and the subsidiary will need to be eliminated on consolidation? (1 mark)











ACC3100 Final Exam T2 2021 4