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corporate accounting revision .docx

can you please help me

answer these 2 questions as i'm finding difficulty in doing so

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corporate accounting revision .docx

Question 1
The following data are taken from the trial balance of Bula Island Limited on 30 June 2018
with
selected comparative information provided for 30 June 2017.
2018
2017
9,245,000
Sales revenue
850,000
Interest revenue
1,450,000
Royalties revenue
150,000
Dividend revenue
147,500
Depreciation-building
262,500
Depreciation-plant
75,000
Depreciation-equipment
1,650,000
Research and development expenditure
4,005,000
Cost of goods sold
195,000
Warranty expense
3,475,000
Wages and salaries expense
235,000
Long service leave expense
305,000
Interest expense
145,500
Rates and taxes on property
142,500
Doubtful debts expense
675,000
375,000
Accounts receivable
182,000
95,000
Estimated uncollectible debts
300,000
275,000
Interest receivable
920,000
745,000
Royalties receivable
2,500,000
2,500,000
Land (at cost)
3,200,000 3,200,000
Buildings
442,500
295,000
Accumulated depreciation-buildings Plant
Accumulated depreciation-Plant
Equipment
Accumulated depreciation-equipment
Wages and salaries payable
Provision for long service leave
Provision for warranty claims
Interest payable 2,100,000 2,100,000
787,500
525,000
750,000
750,000
225,000
150,000
345,000
265,000
355,000
245,000
130,000
115,000
100,000
100,000 Additional Information
1. All depreciable assets were acquired on 1 July 2015. For financial reporting purposes,
depreciation is recognised on a straight line basis, over 20 years for buildings (estimated
residual value $250,000), eight years for plant and 10 years for equipment. For tax
purposes,
straight line depreciation is applied over 40, 10 and eight years respectively.
2. After reviewing all relevant information, the directors determined that, at 30 June 2018,
the
plant was impaired by $250,000 (this is not reflected in the amounts presented in the trial
balance).
3. On 30 June 2018, after careful consideration, the directors of Bula Island Ltd decided to
adopt
the fair value model for land; the fair value of land on 1 July 2017 was $3,500,000 and on
30
June 2018 was $3,250,000.
4. The research and development expenditure qualifies for the additional 25% taxation
deduction.
5. The tax rate at 30 June 2017 was 30%. On 15 June 2018, legislation was enacted
decreasing
Required:
the tax rate to 25% effective 1 July 2018.
1. Calculate the amount of current tax expense. Use an appropriately labelled table for this
task.
2. Prepare a deferred tax worksheet to calculate the amounts for deferred tax assets and
deferred
tax liabilities for the reporting period 30 June 2018. Use an appropriately labelled table for
this task.
3. Prepare journal entries for the income tax expense related items for the reporting period
30
June 2018. Question 2
Viti Ltd has three divisions, Dairy, Yoghurt and Chocolate, which operate independently of
each
other to produce milk products. The company has a headquarters and a research centre
located in
Nausori, with the divisions located throughout Fiji. The research centre interacts with all the
divisions to assist in the improvement of the manufacturing process and the quality of the
products manufactured by the entity.
There is not as yet any basis on which to determine how the work of the research centre will
be
allocated to each of the three divisions, as this will depend on priorities of the company
overall
and issues that arise in each division. The company headquarters provides approximately
equal
Neither the headquarters nor the research centre generates cash
services to each of the divisions, but an immaterial amount to the research centre.
inflows.
On 30 June 2018, the net assets of Viti Ltd were as follows: Dairy Yoghurt Chocolate Head Office Research Division Division Division Land $ 440,000 $ 280,000 $ 160,000 110,000 $ 67,000 Plant and 840,000 620,000 540,000 80, 000 45,000 (240,000) (200,000) (160,000) (10,000) (12,000) centre equipment
Accumulated
depreciation
Inventories
240,000
180,000
140,000
0
0
Management of Viti Ltd believes there are economic indicators to suggest that the
Accounts
120,000
100,000
60,000
0
0
company’s
assets may be impaired. Accordingly, they have had recoverable amount assessed for each
of receivable
the
divisions:
1,400,000
1,400,000
980,000
740,000
180,000
100,000
Dairy
Division$ 1,550,000
Yoghurt Division1,000,000
LiabilitiesDivision750,000
120,000
100,000
100,000
0
0
Chocolate
The land held by Dairy division was measured at fair value using the revaluation model
Net Assets
1,280,000
880,000
640,000
180,000
100,000
because
of the specialised nature of the land. At 30 June 2018, the fair value was $440,000. The land
held
by Yoghurt division was measured at cost, and had a fair value less cost to sell of $270,264
at 30
June 2018. Required:
Provide journal entries to account for the impairment of Viti Ltd as at 30 June 2018. Show
all
relevant working where required.

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