Subject Code : 200109
Assignment Task:

Task:

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.

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/orAASB 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.

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  • Uploaded By : Pearl
  • Posted on : June 30th, 2019

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