Required (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry. (ii)Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis
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(a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000.
These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for
$8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate
consolidation
sales dr15000
cost of sales cr 13000
inventry cr 2000
defferd tex assests dr300
income tax expense cr 300
Required
(i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis
the correct adjustment entry.
(ii)Determine the consolidation worksheet entries in the following year, assuming the inventory
has been –sold, and explain the adjustments on a line-by-line basis
Step by step
Solved in 3 steps with 2 images
- Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000.These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for$8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriateconsolidation adjustment entries are as follows: Required(i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basisthe correct adjustment entry.(ii)Determine the consolidation worksheet entries in the following year, assuming the inventoryhas been –sold, and explain the adjustments on a line-by-line basis.WB Inc. reported profits of P 100,000 in its March 31, 2022 interim financial statements. Additional information is shown below (amounts are net of tax): • AP 10,000 cumulative-effect gain resulting from a change in inventory cost flow formula was recognized in profit or loss during the 1 quarter. • In March 2022, a component of an entity was classified as held for sale. Of the total loss on discontinued operations of P 12,000, only P 3,000 has been recognized in the 1" quarter. WB Inc. intends to allocate the remaining P 9,000 loss to the other quarters in 2022. REQUIRED: Compute for the restated profit after tax for the 1" quarter of 2022.Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date, shareholders' equity of Trinity Ltd consisted of: Share Capital 280,000 Retained Earnings 86,000 All identifiable assets and liabilities of Trinity Ltd were recorded at fair value except for the machinery which was recorded at $25 000 below its fair value on 1 July 2020. Machinery is depreciated at 25% straight line. Information about income and changes in equity for Trinity Ltd for the year ended 30 June 2021 is as follows: Trinity Ltd Revenue 260,000 Expenses 120,000 Profit before income tax 140,000 Income tax expense 28,000 Profit for the period 112,000 Retained earnings (1/7/20) 86,000 198,000 Dividend paid 12,000 Dividend declared 35,000 47,000 Retained earnings (30/6/21) 151,000
- A reconciliation of pretax financial statement income to taxable income is shown below for Chan Inc. for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. Pretax accounting income (income statement) $ 500,000 Inventory impairments in excess of deductible amount 40,000 Depreciation in excess of financial statement amount (120,000 ) Taxable income (tax return) $ 420,000 The inventory impairments relate to Chan's Columbian tax return. The depreciation relates to Chan's U.S. tax return. What amount(s) should Chan report related to deferred income taxes in its 2018 balance sheet? A) deferred tax asset of $16,000 and deferred tax liability of $48,000. B) deferred tax liability of $32,000 C) deferred tax asset of $16,000 and deferred tax liability of $48,000. D) deferred tax asset of $32,000.A reconciliation of pretax financial statement income to taxable income is shown below for Chan Inc. for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. Pretax accounting income (income statement) $ 500,000 Inventory impairments in excess of deductible amount 40,000 Depreciation in excess of financial statement amount (120,000 ) Taxable income (tax return) $ 420,000 The inventory impairments relate to Chan's Columbian tax return. The depreciation relates to Chan's U.S. tax return. What amount(s) should Chan report related to deferred income taxes in its 2018 balance sheet?The accountant for Indra Ltd (Indra) has determined the following information for the year ended 30 June 2020. Profit or loss P300,000 Share of total comprehensive income(after tax) of associates 20,000 Share of profit (after tax) of associates 15,000 Exchange difference gain (net of tax of P3,000) on translation of foreign operation up to the date sold (1 March 2020) 7,000 Exchange difference gain (net of tax of P9,000) on disposal of foreign operation recognized in profit for the year 21,000 Increase in asset revaluation surplus(net of tax) 45,000 What is the total amount of other comprehensive income for Indra for the year ended 30 June 2020? a. 72,000 b. 36,000 c. 51,000 d. 57,000
- The accountant for Indra Ltd (Indra) has determined the following information for the year ended 30 June 2020. Profit or loss P300,000 Share of total comprehensive income(after tax) of associates 20,000 Share of profit (after tax) of associates 15,000 Exchange difference gain (net of tax of P3,000) on translation of foreign operation up to the date sold (1 March 2020) 7,000 Exchange difference gain (net of tax of P9,000) on disposal of foreign operation recognized in profit for the year 21,000 Increase in asset revaluation surplus(net of tax) 45,000 What is the total amount of other comprehensive income for Indra for the year ended 30 June 2020?ABC Corporation, a retailer, has a gross sales of P1.4B with a cost of sales of P560M and allowable deductions of P150M for the calendar year 2021. Its total assets of P180M as of December 31, 2021 per Audited Financial Statements includes the land costing P50M and the building of P25M in which the business entity is situated, with an aggregate amount of P75M as fixed assets. Assuming CY 2021 is the 5th year of operation of ABC Corporation, compute the Income Tax Due.Asempa Ltd disposed of its entire holding in Daakye Ltd on 30the September 2013 for GH¢ 12 million, on which date the net assets of Daakye Ltd was GH¢9.6 million. It is the policy of measuring NCI at acquisition at proportionate of the fair value of identifiable net asset and no goodwill is impaired as at 30th September 2013. Tax is charged at 25%. Required Calculate the profit or loss on disposal for: (i) Asempa Ltd’s individual financial statements (ii) Consolidated financial statements
- The following information was taken from the records of Tamarisk Inc. for the year 2020: Income tax applicable to income from continuing operations $205,700: income tax applicable to loss on discontinued operations $28.050, and unrealized holding gain on available-for-sale securities (net of tax) $16,500. Gain on sale of equipment Loss on discontinued operations Administrative expenses Rent revenue Loss on write-down of Inventory $104,500 (a) 82,500 264.000 44,000 66,000 Shares outstanding during 2020 were 100,000. Cash dividends declared Retained earnings January 1, 2020 Cost of goods sold Selling expenses Sales Revenue $165,000 2.280,000 TAMARISK INC. 935,000 330,000 2,090,000 Prepare a single-step income statement (with respect to items in Income from operations). (Round earnings per share to 2 decimal places, e.g. 1.48.)DEF Co. reported taxable income of P8M in its income tax return for the 1st year of operations. The entity revealed the following temporary differences between financial income and taxable income for the year:Tax depreciation in excess of book depreciation, P800,000Accrual for product liability claim in excess of actual claim, P1,200,000Reported installment sales income in excess of taxable installment sales income, P2,600,000Income tax rate, 30%Compute for the deferred tax expense for the 1st yearThe following information relates to Hardin Limited's year-ended 31 December 2020: The statement of comprehensive income shows profit for the year of R154 000. The calculation of this profit included the following income and expenses: Impairment of building: R64 000 (before tax: R74 000) Profit on sale of plant: R23 200 (before tax: R32 000) • Inventory write-down: R10 000 (before tax: R15 000) • The statement of changes in equity reflected preference dividends of R3 450. 12 000 shares in issue throughout the year. Required: Calculate the basic earnings and the headline earnings and disclose the headline earnings per share for the year-ended 31 December 2020 The following information is provided for Present limited for the year ended 31 December 2020. Present Limited had basic earnings for 2020 of R520 000. This basic eamings figure was equal to its profit for the year. It had no components of other comprehensive income. Present Limited had 2 200 000 ordinary shares in issue throughout…