200109 Corporate Accounting Systems
Spring 2019
Practical Project
Due Date: Friday 4 October 2019 (week 11). Submit electronically to vUWS prior to 5:00pm.
Assessment Value: 20%
Topic: Acquisition of a subsidiary and consolidation analysis
Length: 1000 words maximum (comprising consolidation analysis and journal entries in Part A equivalent to 750 words and a written component of 250 words in Part B)
The practical project involves two parts:
• Part A is the preparation of a selection of consolidation elimination journals for an economic entity comprising a parent and a subsidiary.
• Part B is an explanation and discussion of business combination.
Part A
Sunnybank Ltd acquired all issued share capital of Sunnybank Hills Ltd on 1 July 2019 for a cash payment of $700,000. The share capital and reserves of Sunnybank Hills Ltd at the date of acquisition were:
Share capital $300,000
Retained earnings $200,000
Revaluation surplus $36,000
All assets of Sunnybank Hills Ltd were fairly valued at the date of acquisition, except for an equipment that had a fair value $20,000 greater than its carrying amount. The cost of the equipment was $75,000 and it had accumulated depreciation of $25,000. At the date of acquisition, it was expected that the equipment had a remaining useful life of eight years. There were no transactions between Sunnybank Ltd and Sunnybank Hills Ltd from 1 July 2019 to 30 June 2021.
On 1 January 2022 Sunnybank Hills Ltd sold an item of plant to Sunnybank Ltd for $55,000 when its carrying value in Sunnybank Hills’s books was $40,000 (original cost $90,000 and original estimated life of nine years). There were no other transactions between Sunnybank Ltd and Sunnybank Hills Ltd for year ended 30 June 2022.
On 30 June 2024 Sunnybank Ltd sold a property to Sunnybank Hills Ltd for $400,000 when its carrying value, and original cost, in Sunnybank’s books was $420,000 and estimated remaining useful life was twenty years. During financial year 2024, Sunnybank Ltd provided management consultation to Sunnybank Hills Ltd and this was the first time that Sunnybank Ltd provided such service to Sunnybank Hills Ltd. At the end of 2024, Sunnybank Hills Ltd paid $5,000 for these services and there is no payable for these services at year end. There were no other transactions between Sunnybank Ltd and Sunnybank Hills Ltd from 1 July 2022 to 30 June 2024.
Sunnybank Ltd incurred the following transactions with Sunnybank Hills Ltd for year ended 30 June 2025:
• Sunnybank Ltd made sales of inventory to Sunnybank Hills Ltd of $200,000, while Sunnybank Hills Ltd sold $250,000 of inventory to Sunnybank Ltd.
• Closing inventories on 30 June 2025 included the following amounts: Sunnybank Ltd $90,000 (bought from Sunnybank Hills Ltd) and Sunnybank Hills Ltd $150,000 (bought from Sunnybank Ltd). Intragroup sales of inventory policy applied.
• The opening inventory in Sunnybank Ltd included stock acquired from Sunnybank Hills Ltd, which had originally cost Sunnybank Hills Ltd $140,000. The opening inventory of Sunnybank Hills Ltd included stock acquired from Sunnybank Ltd, which had originally cost Sunnybank Ltd $160,000. Intragroup sales of inventory policy applied.
• Sunnybank Ltd declared and paid dividend $75,000. Sunnybank Hills Ltd declared and paid dividend $50,000 on 30 June 2025.
• Sunnybank Hills Ltd has a number of long-term loans, including an interest free five-year loan for $50,000 from Sunnybank Ltd. This interest free five-year loan was effective from 1 July 2024.
You were appointed as a financial accountant at Sunnybank Ltd and requested to prepare the followings:
I. acquisition analysis and adjustment/elimination journal entries for consolidation at acquisition, 1 July 2019;
II. adjustment/elimination journal entries for consolidation as at 30 June 2024, and
III. adjustment/elimination journal entries for consolidation as at 30 June 2025.
After meeting with your supervisor you gathered the following information which you might need to complete your work:
• Sunnybank Ltd has the following accounting policies for the economic entity:
? All property, plant and equipment are depreciated using the straight-line method with no residual value. For part-years, depreciation is to be calculated on the number of months the non-current asset is held in the relevant year.
? Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of any subsidiary;
? Intragroup sales of inventory to be at a mark-up of 50% on cost.
? All calculated amounts are to be rounded to the nearest whole dollar. Companies in the group do not show cents in any journals, worksheets, or financial statements.
• Management team of Sunnybank Ltd believes that goodwill acquired from business combination is impaired by $5,000 in the current financial year (1 July 2024 - 30 June 2025). There is no previous impairment of goodwill.
• The company tax rate is currently 30% and this rate has not changed for a number of years.
• Journal narrations are required.
• Number each year consolidation elimination/adjusting journal entries by 1, 2, 3, …, etc;. Where more than one journal entry is needed for an event to be completely accounted for add the letters a,b,c,…etc to them as necessary.
Part B
The consolidated financial statements for year ending 30 June 2025 for the economic entity have been prepared on the basis of your journals from Part A (III). These statements have been presented to the Board of Directors.
The Board noted that its subsidiary, Sunnybank Hills Ltd, generated a tax loss for tax purposes for financial year ending 2025. Some board members inquire if it is possible to use subsidiary’s tax loss to offset parent’s taxable income. Is this feasible? What is your solution and recommendation for the Board? (250 words maximum)
You may make reference to relevant paragraphs of Australian Accounting Standards and/or AASB Framework and to other sources of material.
Harvard Style referencing is expected. For details on the Harvard referencing system go to: http://library.westernsydney.edu.au/uws_library/guides/referencing-citation (and click on ‘Harvard’ link).
Note: students successfully applied for NCP programme will need to complete a different task in Part B.
Marking Criteria
Part A (15 marks)
CRITERIA FAIL PASS CREDIT DISTINCTION HIGH DISTINCTION FULL MARK
Part A (I)
Correct /complete acquisition analysis; correct/complete consolidation journal entries at the date of acquisition Acquisition analysis has not prepared, and/or three journals
not correctly recorded and/or missing and/or included incorrectly
0 mark Acquisition analysis has not prepared and/or two journals not correctly
recorded and/or missing
and/or included incorrectly
1 mark Acquisition analysis has error and/or two journals not correctly recorded and/or missing and/or
included incorrectly
1.3 marks Acquisition analysis is clear and correct but two journals not correctly recorded and/or missing and/or
included incorrectly
1.5 marks Acquisition analysis is clear and correct but one journal not correctly
recorded and/or missing
and/or included incorrectly
1.7 marks
Acquisition analysis is clear and correct and all required journals are
correct, with none missing or included incorrectly
2 marks
Part A (II)
Correct /complete events and consolidation journal entries at 30 June 2024 Five or more events not correctly recorded and/or
missing and/or included incorrectly
0 mark Four events not correctly recorded and/or missing and/or included incorrectly
1.5 marks Three events not correctly recorded and/or missing and/or included incorrectly
1.95 marks Two events not correctly recorded and/or missing and/or included incorrectly
2.25 marks One event not correctly recorded and/or missing and/or included incorrectly
2.55 marks Every required event/journal is clear and
correct, with none missing or included incorrectly
3 marks
Part A (III)
Correct /complete events and consolidation journal entries at 30 June 2025 Nine or more events not correctly recorded and/or
missing and/or included incorrectly
0 mark Seven or eight events not correctly recorded and/or
missing and/or included incorrectly
4 marks Five or six events not correctly recorded and/or
missing and/or included incorrectly
5.2 marks Three or four events not correctly recorded and/or
missing and/or included incorrectly
6 marks One or two events not correctly recorded and/or
missing and/or included incorrectly
6.8 marks Every required event/journal is clear and
correct, with none missing or included incorrectly
8 marks
Part A work presentation, account names, numbering
journal entries and narrations
Nine or more journals are not presented clearly and/or not
complete and/or not numbered
correctly and/or no narration
0 mark Seven or eight journals not presented clearly and/or not complete and/or not
numbered correctly and/or no narration
1 marks Five or six journals not presented clearly and/or not complete and/or not
numbered correctly and/or no narration
1.3 marks Three or four journals not presented clearly and/or not complete and/or not
numbered correctly and/or no narration
1.5 marks One or two journals not presented clearly and/or not complete and/or not
numbered correctly and/or no narration
1.7 marks All events/journals are presented clearly and
numbered correctly.
2 marks
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Part B (5 marks)
CRITERIA CLO 4:
PROBLEM
SOLVING
FAIL PASS CREDIT DISTINCTION HIGH DISTINCTION FULL MARK
Define Problem Superficial problem statement. Does not
Include consideration of relevant contextual factors
0 mark Problem statement is superficial. Includes
consideration of major relevant contextual factors.
0.5 mark Problem statement is clear.
Includes consideration of most relevant contextual factors.
1.25 marks Clear and insightful problem statement.
Includes consideration of most relevant contextual factors.
1.5 marks Clear and insightful problem statement. Includes
consideration of all relevant contextual factors.
1.75 marks Clear and insightful problem statement. Includes
consideration of all relevant
contextual factors in depth.
2 marks
Identify strategies and propose solutions Identifies an approach for solving the problem that is difficult to evaluate because it is vague or only indirectly addresses the problem statement.
0 mark Identifies an approach for solving the problem with
some consideration of the contextual factors of the
problem. The evaluation of
the solution lacks depth.
0.5 mark Identifies multiple approaches for solving the problem and proposes a
solution that indicates some comprehension of the
problem. Includes an
evaluation of the solution
that considers some of; the history of the problem,
logic/reasoning, feasibility and impacts.
1.25 marks Identifies multiple approaches for solving the problem and proposes a solution that indicates a
comprehension of the problem. Includes a
rationale of the solution
that considers the history of the problem,
logic/reasoning, feasibility and impacts.
1.5 marks Identifies multiple approaches for solving the problem and proposes a solution that
indicates a deep comprehension of the problem. Includes an elegant rationale for the
solution that deeply and
thoroughly considers the
history of the problem, logic/reasoning, feasibility and impacts.
1.75 marks Identifies multiple approaches for solving the problem and
proposes alternative solutions that indicate a deep
comprehension of the
problem. Includes an elegant
rationale for the solutions that deeply and thoroughly
considers the history of the problem, logic/reasoning,
feasibility and impacts.
2 marks
Presents with clarity: references and paraphrases correctly and uses clear prose style: sentence structure,
grammar and
spelling Writing style is poor and difficult to follow and/or marred by many
grammatical and/or
spelling errors. In-text citation and/or
paraphrasing and/or
reference list missing or substantially incomplete.
0 mark Writing style is unclear at times. There are a number of grammatical and/or spelling
errors. In-text citation and/or
paraphrasing and/or reference
list have a number of errors.
0.5 mark Writing style is coherent, with a few grammatical
and/or spelling errors.
Satisfactory in-text citation, paraphrasing and reference list, possibly with a few errors.
0.65 mark Writing style is coherent, with possibly a few grammatical and/or
spelling errors. Satisfactory in-text citation,
paraphrasing and reference list, possibly with a few minor errors.
0.75 mark Writing style is coherent, with possibly a few grammatical
and/or spelling errors. Excellent in-text citation, paraphrasing and reference list.
0.85 mark Writing is clear and error-free and demonstrates superior
written communication skills.
Excellent in-text citation, paraphrasing and reference
list.
1 mark
Late submission -10% per day
Total marks: 20
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Project Preparation
• The practical project is to be submitted as an individual attempt. It must be prepared using Microsoft Word document only and be entirely your own work. Submit Microsoft Word (electronic) copy through vUWS (Turnitin) by 5:00pm Friday, 4 October 2019 (week 11). An electronic individual assignment cover sheet is required.
• The file name for the electronic submission is your student ID. For example, if your student ID number is 12345678, the file name should be 12345678.
• The practical project marking guide is on page 5 and page 6 of this document. Use the marking guide sheet to see what is expected and how your work will be marked. The marker will use the marking sheet to calculate your assessment result and provide you with feedback on the standard you achieved against each of the criteria.
• Your practical project will be scanned using the anti-plagiarism software Turnitin®. The Turnitin plagiarism prevention system is being used with this unit. It is an important tool to assist students with their work by promoting awareness of plagiarism. Please use this tool to improve your work and iron out any plagiarism issues prior to your final submission. The system will allow you to overwrite your submission up until it is due.
If you have copied material from the textbook, the internet or other sources improperly, you will be penalised. Staff in the unit will perform a check on the similarity of your work to others. The scanning will tell us if you have copied from another student, or from an assignment from another unit. Severe penalties apply to cases of plagiarism (e.g., copying internet resources without referencing, copying other students’ answers, copying other unit’s assignments etc.).
• All late submissions will be penalised as per WSU policy – a deduction of 10% of the possible mark for each day, or part day, late. Submissions will not be accepted by email.
• Staff will not assist students with their answers, nor review draft answers to confirm if students are “on the right track” or not. Any queries about the requirements of the practical project must be directed to the Unit Coordinator only, not to other teaching staff.
• vUWS Assessment Zone: under the ‘Assessment Zone’ link on vUWS there is a folder titled ‘Assessment 3: Practical Project’. Here you will find the submission link.
• This is the final financial accounting unit in the accounting major where you will have to produce complex journal entries at a professional level. Therefore, a high standard is expected. Marks will be lost if journals are not presented in a clear and professional manner (i.e. poor or unclear presentation can include showing the debit entry on one page but the credit entry on another, or not clearly distinguishing between debit and credit entries).
Your preparation cannot be late for the board meeting and the directors carefully review all of the information you give them. They pay you well, but they expect quality work. It needs to be technically correct and presented well.
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Checklist
When submitting the final version, check you have:
• Clearly answered both parts of the project and included an electronic assignment cover sheet and a reference list.
• Proof-read the assignment for spelling and grammar: use “spell check” in Word to help if you have any concerns.
• Met the requirement for the word-limit (1000 words).
• Submitted the practical project through the electronic submission link prior to 5:00pm on Friday 4 October 2019.
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