JIMMA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE
Individual & Group Assignment on Course Advanced Financial Accounting I
General Instructions
 This Worksheet contains Individual & group assignment questions!
 Group Assignment questions should be done by group formed by course instructor.
 Well-ordered and neat hand writing has a reward.
 Focus only on the specific topic of your group when writing notes.
 There is a presentation by each member of the group.
 The last Submission date is FINAL EXAM DATE
PART ONE: INDIVIDUAL ASSIGNMENT QUESTIONS
1. Included in the accounting records of the home office and Oda Branch, respectively, of Geda
Company were the following ledger accounts for the month of July 2008:

Investment in Oda Branch (in Home Office accounting records)

Date Explanation Debit Credit Balance
2008
July 1 Balance 59,000 dr
9 Shipment of merchandise 5,000 64,000 dr
21 Receipt of cash 2,600 61,400 dr
27 Collection of branch trade
accounts receivable 2,100 59,300 dr
31 Shipment of merchandise 7,000 66,300 dr
31 Payment of branch trade
accounts payable 3,000 69,300 dr

Home Office (in Oda Branch accounting records)

Date Explanation Debit Credit Balance
2008
July 1 Balance 59,000 cr
10 Receipt of merchandise 5,000 64,000 cr
19 Remittance of cash 2,600 61,400 cr
28 Acquisition of furniture 2,200 59,200 cr
30 Return of merchandise 3,200 56,300 cr
31 Remittance of cash 3,500 52,500 cr

Instructions
 a. Prepare a working paper to reconcile the reciprocal ledger accounts of Geda Company’s
home office and Oda Branch to the corrected balance on July 31, 2008.
b. Prepare journal entries on July 31, 2008, for the (1) home office and (2) Oda Branch of
Geda Company to bring the accounting records up to date. Both the home office and the
branch use the perpetual inventory system.
2. Assume that TANA Company, which prepares financial reports at the end of the
calendar year, established a branch in Motta on July 1, 1998. The following transactions
occurred during the formation of the branch and its first six months of operations, ending
December 31, 1998.
1. The home office sent $ 28,000 cash to the branch to begin operations.
2. The home office shipped inventory to the branch. Intra company billings totaled
$60,000,which is the home office cost. (Both the home office and the branch use a
periodic inventory system.)
3. The branch acquired merchandise display equipment, which cost $ 12,000 on July
1, 1998.(Assume that branch fixed assets are not carried on the home office books.).
4. The branch purchased inventory costing $ 43,000 from outside vendors on account.
5. The branch had credit sales of $ 85,000 and cash sales of $ 35,000.
6. The branch collected $ 44,000 on accounts receivable.
7. The branch paid outside vendors $ 28,000.
8. The branch incurred selling expenses of $ 15,000 and general and administrative
expenses of $12,000. These expenses were paid in cash when they were incurred and
include the expense of leasing the branch‟s facilities.
9. The home office charged the branch $ 2,000 for its share of insurance.
10. Depreciation expense on the merchandise display equipment acquired by the branch is
$ 1,000 for the six month period. (Depreciation expense is classified as a selling
expense.).
11. The branch remitted $ 10,000 cash to the home office.
12. The branch‟s physical inventory on December 31, 1998, is $ 33,000, of which $
25,000 was acquired from the home (there was no beginning inventory). The
home office‟s physical inventory on December 31, 1998, is $ 150,000 (the beginning
inventory was $ 135,000 and invest 15,000). (Home office purchases were $ 285,000.).
Cost of goods sold is determined and recorded in a separate account for each
accounting entity. (Note that the year-end inventory accounts are adjusted in this
entry to the year-end physical inventory balances).
13. The branch closes its income statement accounts.
14. The home office prepares its adjusting entry to reflect the increase in the branch‟s
net assets resulting from the branch‟s operations.
Required
a) Record the above transactions on Book of home office and Branch
b) Compute the balance of reciprocal ledger accounts
c) Prepare adjusting & closing entries on the book of both parties
3. The following transactions were related to Allman Company during the year of 2016. During
2016, the product warranty liability accrued for book purposes was $200,000, and the actual
paid for warranty liability was $44,000. Allman expects to settle the remaining $156,000 by
expenditures of $56,000 in 2017 and $100,000 in 2018. In 2016, nontaxable municipal bond
interest revenue was $28,000. Again, In 2016, nondeductible fines and penalties of $26,000
were paid. Pretax financial income for 2016 amounts to $412,000 and Tax rates enacted up to
2016 were 50% and for 2017 and later years 40%.
Required
a) Identify temporary and permanent differences?
b) Determine taxable income of 2016?
c) Computes income taxes payable for 2016?
d) Compute future taxable amount (DTL) at the end of 2016?
e) Compute future deductible amount (DTA) at the end of 2016?
f) Compute net deferred tax expense (DTL - DTA) for 2016?
g) Compute total income tax expense (deferred + current) of 2016?
h) Records income taxes payable, deferred income taxes, and income tax expense of 2016?
i) Show the financial presentation.
4. Assume an entity on adoption of IAS 41 has reclassified forest as biological assets. The total
value of the group’s forest assets is $2 million comprising
Freestanding trees …………$1,700
Land under trees………………... 200
Roads in forests …………………..100
Required
a) Show how the forests would be classified in the financial statements.
5. Identify whether each of the following biological assets is bearer or consumable

Biological Asset Agricultural Produce Bearer or consumable?

Sheep Wool
Trees in a plantation forest Logs
Cotton Cotton
Sugarcane Harvested cane
Dairy cattle Milk
Pigs Carcass
Bushes Leaf
Vines Grapes
Fruit trees Picked fruit
PART TWO: GROUP ASSIGNMENT QUESTIONS

Prepare short and brief notes for the following contents. Your note should follow the
subsequent arrangements.
1. Introduction to Insurance Contract ,Accounting for Insurance contracts, Initial Recognition
of Insurance Contracts & Initial Measurement of Insurance Contracts (G-1)
2. Importance of statement of cash flows, Classifications of cash flows, and Preparing the
statement of cash flows ( G-2)
3. Asset Valuation For Financial Reporting, Overview of International Valuation Standards
(IVS) & Valuation approaches (G-3)