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Assignment II

This document provides instructions for Assignment II for the ACC614 Intermediate Financial Accounting II course at Solomon Islands National University School of Business and Management. The assignment is worth 15% and is an individual assignment. It must include a title page, bibliography, and be properly referenced and cited to avoid plagiarism. It must be typed and submitted by the due date of September 29, 2017 via email. The assignment contains 4 questions worth a total of 68 marks related to biological assets, joint ventures, and determining if a joint marketing arrangement qualifies as a joint venture.

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freddy kwakwala
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93 views

Assignment II

This document provides instructions for Assignment II for the ACC614 Intermediate Financial Accounting II course at Solomon Islands National University School of Business and Management. The assignment is worth 15% and is an individual assignment. It must include a title page, bibliography, and be properly referenced and cited to avoid plagiarism. It must be typed and submitted by the due date of September 29, 2017 via email. The assignment contains 4 questions worth a total of 68 marks related to biological assets, joint ventures, and determining if a joint marketing arrangement qualifies as a joint venture.

Uploaded by

freddy kwakwala
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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SOLOMON ISLANDS NATIONAL UNIVERSITY

SCHOOL OF BUSINESS AND MANAGEMENT

INTERMEDIATE FINANCIAL ACCOUNTING II

ACC614 – ASSIGNMENT II INSTRUCTIONS

• The assignment weighs 15%.


• This assignment is an individual assignment.
• Please include a Title Page and Bibliography
• The cover page of this assignment must have your name, ID number and
must be clearly worded as “Assignment 1”.
• Provide proper referencing of materials cited, copying other people’s work
without properly acknowledging it is known as plagiarism and is not allowed.
• Copying from another student is NOT allowed. Anyone found doing so will
get ZERO mark.
• This assignment must be Word Processed (typed); hand written assignment
will not be accepted nor marked.
• Please submit original copy of your assignment as photocopied copy will not
be accepted.
• Due date – 29 September 2017
• Submit only soft copy of WORD DOCUMENT of your assignment to email:
[email protected] PDF Document format will not be accepted
• Assignment mark composition
Question 1 15
Question 2 17
Question 3 30
Question 4 6
TOTAL MARKS 68

Best wishes
Toncan

1
1. Biological Asset - Plant
Plantation Ltd began operation on 1 January 2016 by purchasing 5000 tree samplings at a cost of $2.00
per sapling. It cost $3600 to transport and plant the trees on land purchased 3 years earlier for $100
000. On 15 August an additional 1000 saplings were purchased for $3.00 each, with additional $1800
for transport and planting costs. During 2016, the only expenses were insecticides spraying and
pruning costs totalling $8000. In November a bush fire destroyed 25% of all the planted saplings. The
year-end market valuation of all the remaining plants was $11000.

REQUIRED:

Show all journal entries for the calendar year 2016 and the calculation of net profit/loss for the year.
Assume all transactions are cash based. [15 marks]

2. Biological Asset - Animal


A herd of twenty 2 year old animals was held on January 1, 2105. Five animals, aged 2.5 years old,
were purchased on 1 July 2015. On the same date, 4 animals were born. 10 animals were sold at 31
December 31, 2015, aged 3 years old at a fair value. Per unit fair value less estimated cost to sale
were as follows:

January 1, 2015
2 year old animal $15 000
July 1, 2015
New born animal 8 000
2.5 year old animal 20 000
December 31, 2015
New born animal 8 500
0.5 year old 9 500
2 year old 16 500
2.5 year old animal 23 000
3 year old animal 28 000

REQUIRED:

a) Provide Journal entries for July 1 to reflect the purchase of animal and change in fair value due
to physical change. [ 4 marks]
b) Provide Journal entries for December 31 to reflect the sale of animal, change in fair value due to
physical change and change in fair value due to price change. [5 marks]
c) Show your calculation of how you derive your Price Change and Physical Change. [8 marks]

2
3. Joint Venture
Yandina Ltd has a 30% interest in a joint venture, Lungga Ltd, in which it invested $50 000 on 1July
2014. The equity of Lungga Ltd at the acquisition date was:

Share capital $30,000

Retained earnings 120,000

All the identifiable assets and liabilities of Lungga Ltd were recorded at amounts equal to their fair
values. Profits and dividends for the years ended 30 June 2015 to 2017 were as follows:

Profit before tax Income tax expense Dividends paid

___________________________________________________________________

2015 $80 000 $30 000 $80 000


2016 70 000 25 000 15 000
2017 60 000 20 000 10 000
___________________________________________________________________

REQUIRED

a. Prepare Journal entries in the records of Yandina Ltd for each of the years ended 30 June 2015
to 2017 in relation to its investment in the joint venture, Lungga Ltd. (Assume Yandina Ltd does
not prepare consolidated financial statements). [14 marks]
b. Prepare the consolidation worksheet entries to account Yandina Ltd’s interest in the joint
venture, Lungga Ltd. (Assume Yandina Ltd does prepare consolidation financial statements.) [16
marks]

4. Joint Venture
Two companies enter into a joint marketing arrangement that both publicly referred to as a “joint
venture”. Each company agrees to collaboratively produce marketing materials and use their
existing sales channels to market the product and service of the other. Each company contractually
agrees to share a specified percentage of the revenues received from the sale of products and
services made under the joint marketing arrangement. However, no separate entity is established
to conduct the joint marketing activities and each company retains its own assets and conducts its
activities separately from the other. The companies are not related parties.

REQUIRED

Discuss in no more than one paragraph of about sixty to seventy words whether there is a joint
venture or not. Substantiate your discussion with clear reasonings where applicable quoting the
relevant accounting standard. [6 marks]

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